Thinking of turning your home into an investment property?
More and more Australians are becoming Investors through property by changing their primary place of residence (PPoR) to an income producing asset. If you are thinking of doing this too, here are some important things you should be aware of…
• The income received is taxable to the owners of the property in the same proportion as the ownership interest as shown on the title.
• The rent received must be at normal market rates to be able to claim all the expense in full.
• The rent must be declared in the year it is received.
2. Interest Claims
• Interest paid on the loan used to purchase the property is deductible, provided that all the money borrowed was used to purchase the property.
• For accounts that are a line of credit and used privately as well, the interest claim needs to be apportioned for the private expenses
• Repairs made to the property during the period it is leased are deductible but generally not repairs carried out within the initial 12 months of owning the property (these can be used to reduce a capital gain on disposal).
• Improvements you make to the property are not deductible in full. They need to be depreciated and claimed over their effective life
• Other expenses can include Advertising for tenants; Cleaning; Gardening; Insurance; Lease costs; Property agent’s fees; Security; Telephone; Bank charges; Council rates; Lawn mowing; Land tax; Pest control; Travel expenses; Stationery; Body corporate fees; Electricity and gas; In-house audio/video service charges; Legal expenses, leases etc; Mortgage discharge expenses; Quantity surveyor’s fees; Postage; Water charges
4. Building cost write-off.
If the building is under 25 years old you will be entitled to claim a deduction of 2.5% per year of the original cost of construction of the building for up to 40 years from the original date of construction. If you do not know the building cost you can contract a quantity surveyor to determine the building costs and prepare the depreciation schedules for the property and determine what can be claimed. The service of a quantity surveyor costs approximately $700 and is tax deductible.
We provide other tax services and tax solutions for property investors you may find handy. Call to make an appointment with one of you highly trained and trusted accountants.
At Your Accounting Partners you’ll get independent advice that cuts through all the BS! Give us a call and see how simple it is to have it all.
Disclaimer Waiver – This information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained here. Whilst care has been taken to ensure the validity of our content, we accept no responsibility for any loss suffered as a result of any party using or relying on this materials.