It is no secret that Australians love investing in property. And while it can be an exciting prospect, it is essential to consider the finer details before jumping in, especially any ongoing costs and expenses you’ll have to pay.
It is vital that you’re aware of what you can and cannot claim as a tax deduction as a landlord.
For starters, did you know there is a difference between repairs and maintenance completed on the property versus improvements made?
The reason why this is so important to understand is that repairs and maintenance costs are claimable immediately as a tax deduction, while property improvements are claimable over several years (generally 2.5% every year for 40 years from the date that the improvements were completed). For example, lawn mowing, and land taxes can be claimed immediately, whereas renovating the kitchen needs to be claimed over several years.
Have repair or maintenance work that you have been putting off or trying to save for? Completing these repairs before the end of the financial year may allow you to immediately claim these expenses as a tax deduction, resulting in instant tax savings. Costs related to fixing a leaking pipe or regular servicing of appliances fall into this category.
Even though capital improvement expenses can only be claimed over several years, if you incur those expenses shortly before the end of the financial year, you can start claiming them a lot sooner than if they were completed in the first half of the financial year, for example.
Buying your investment property is just the start of your landlord journey. Once you have acquired your property, engaging a property manager to rent it out and manage it on your behalf may take a lot of the stress out of maintaining your property. They can identify the best candidates for your property and manage any simple repair work or major improvements.
Along with a property manager, your accountant is an important ally in your property investment endeavour. They will be your best source for information on claimable expenses and tax deductions and will also ensure your tax obligations are correctly lodged with the ATO.
And finally, above all else, enjoy your property investment ride. We guarantee it will be an interesting one!
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
Shanley Financial Planning Pty Ltd trading as Steve May Financial Services (ABN 19 612 825 180) is a Corporate Authorised Representative of (1265706) of Sensibly Pty Ltd (AFSL 533923)
Nick Shanley, Steve May and Luke Styles are Authorised Representatives of Sensibly Pty Ltd (AFSL 533923)