Owners of rental properties are entitled to tax deductions with regards to various expenses incurred. However, not all expenses are claimable and even of those claimable, not all are deductible in full in the same income year as some are to be deducted over a number of years instead. Here are some other expenses on investment property one can claim in the same income year they are incurred.
- Sundry Costs which would typically be deductible are:
- Cost of calls or post to tenants or real estate agents.
- Fee or commission paid to real estate agents to collect rent or let properties.
- Council Rates and Land Tax.
- Interest on loan taken out to purchase the rental property.
- Insurance premium paid for public liability or building contents.
- Advertising for tenants.
- Pest Control.
- Body corporate fees that are incurred to cover day-to-day maintenance.
- Cutting new keys.
- Rubbish removal (cleaning) or gardening expenses.
- Maintenance of security systems.
- Advice about taxation matters relevant to the property.
However, some expenses are not claimable for rental properties like repairs & maintenance done prior to the property being leased. Renovation expense cannot be claimed in full but only at a rate of 2.5% a year over a period of 40 years.
2017 Federal budget also brought the following changes to claims:
- Depreciation: Depreciation deduction on capital items like cooktop, dishwashers etc. is now limited to only those expenses incurred directly by investors. Changed with effect from 09 May 2017 (after 7:30pm) the claims can no longer be made if the items were purchased by a previous owner.
- Travel expenses: tax deductions for travel expenses related to an investment property are no more claimable.
Expenses one cannot claim also include the following:
- Expenses paid by the tenant like electricity or water charges.
- Interest on loan from the date the property is no more rented out and used for private purposes instead.
- Expenses unrelated to property rental like for a period when used for private purpose although the property is otherwise rented out for rest of the year.
Circumstances vary from one individual to another. We therefore advise you to consult us for understanding your best possible claims from rental property expenses.
For further assistance, please contact Taxplanners on 1300 000 TAX (1300 000 829), 03 9600 0143 (10 Lines).
You can also visit our office for assistance –
Melbourne CBD – Suite 411-413, Level 4, 343 Little Collins Street, Melbourne
Werribee Office – 88 Watton Street, Werribee, Contact – 03 901 MY TAX (03 9016 9829)