Australian Property News

Deduction tips for property investors

Posted on Friday, June 29 2012 at 11:56 AM

The Australian Taxation Office (ATO) has put together tips for investment property owners as the end of financial year approaches.

The list is aimed to help investors correctly claim deductions and avoid a follow up from the ATO.

Things you can claim straight away:

• Interest on a loan to purchase a rental property or land to build a rental property. You can also claim loan interest from the purchase of a depreciating asset (eg. an air conditioner) or the finance of renovations (eg. a deck).
• Cost of repairs and maintenance.
• Tenancy costs, including fees for preparing a lease agreement or the cost of evicting a tenant.

What you can claim over a number of years:

• The cost of depreciating assets such as stoves, kitchen cupboards, air conditioning and hot water systems.
• The cost of building construction and structural improvements made by you or a previous owner.
• Borrowing costs such as stamp duty charged on a mortgage, loan establishment fees and title search fees charged by your lender.

Things that can’t be claimed:

• Travel expenses when the main purpose of the trip is a personal holiday.
• Stamp duty charged by a state or territory government on the transfer of the property title.
• Legal fees for the purchase of the property.
• Deductions for rental properties that aren’t genuinely available for rent.
• Borrowing expenses or interest on the portion of a loan you use for private purposes (eg. buying a new car).

You may have a capital gain or loss that you’ll need to include in your tax return if you sold a rental property in the 2011-12 financial year, unless you acquired it before September 20, 1985.

To work out whether you’ve got a capital gain, visit www.ato.gov.au/cgt for details.