Key items that you may be able to claim as expenses against your rental property in your tax return include the following:
| Key Rental Property Deductions |
| Advertising for tenants |
| Water and Council Rates |
| Land Tax |
| Cleaning / Gardening |
| Property Agent Fees / Commission |
| Mortgage Interest* |
| Travel to inspect your rental property* |
| Pest Control |
| Insurance |
| Repairs & Maintenance |
| Strata / Body Corporate Fees |
| Depreciation |
Mortgage Interest
Mortgage interest is only tax deductible for the period in which the property was available for rent or tenanted. For example if a property is rented out for half a year and lived in for the other half, interest for the financial year can only be claimed in relation to the 6 months that the property was rented out.
It should also be pointed out that if you draw down on your investment loan for personal purposes, the resulting additional interest on your mortgage is NOT tax deductible.
Depreciation on Rental Property Plant & Equipment
The federal government has also announced a change in the rules to the way investors can claim depreciation for “plant and equipment” in an investment property.
Rental Property Plant & Equipment are generally accepted as items that can be moved from a property. Examples include blinds, air conditioning units, ceiling fans and dishwashers.
Traditionally, investors have been able to add these items to their “depreciation schedule”. In doing these, these items effectively become a tax deduction over a number of future years.
Assets purchased after May 9, 2017 can be added to depreciation schedules by the current owner of that investment property, however subsequent owners may not claim depreciation on these items. Whilst it has been said that the result of these changes will be minor for the majority of current investors, these changes will likely be a hit for buyers of second hand rental properties in the future.
Changes regarding travel to visit rental properties
The ATO is carefully scrutinizing deductions regarding travel to visit rental properties. From 1 July, 2017; trips to inspect your rental property will no longer be tax deductible. This means that in 2017 Financial Year Income Tax Returns, you may still claim travel deductions; however it is warned that the ATO is likely to very carefully review these claims. It is estimated that the government is likely to gain a whopping $540 million as a result of this change!
How do I submit my Rental Property Information for Preparation of my Tax Return?
We advise that you tally up your total rental income collected, along with the totals of all associated rental expenses bearing in mind the above points. Once you have prepared your summary, you may submit this to us online via our online personal tax return submission. Or, if preferred you may email this through to us.
Don’t hesitate to contact us for further information
