Know the property traps before end of financial year
THE end of each financial year means paperwork for people who have invested in property, and there are traps you will need to avoid.
"Knowing what expenses can be claimed over the short and long term can make a big difference to a tax refund. In preparation for lodging a tax return, now is a good time for property investors to organise any receipts and statements that relate to their rental property or properties," said Mortgage Choice spokeswoman Belinda Williamson.
She added that there were a range of expenses that could be claimed as tax deductions that may have slipped your mind. These include:
- agents' fees;
- body corporate fees;
- capital expenses;
- building maintenance and repairs;
- home loan fees and interest payments;
- council and water rates; and
- the cost of travel to and from the property for inspections.
"One aspect that property investors often overlook when lodging their tax return is depreciation deductions," Ms Williamson said
"Depreciation applies to new and existing residential properties and in most cases owners of an investment property or properties are likely to be able to claim something.
"Depreciation on the original costs of construction can be claimed on any residential property built after 17 July 1985, however it is always a good idea to check with the Australian Taxation Office or a depreciation specialist as there may be exceptions to this rule.
"Claims can also be made for items that are falling in value over time, such as fixtures and fittings, floor coverings, appliances and built-in wardrobes.
Ms Williamson said owners in strata buildings should keep in mind that they may be able to claim depreciation on a portion of the value of items and equipment in common areas, such as carpets and furniture in foyer areas.
"Each investor's situation is different and for this reason it is important to consult a financial planner and/or accountant to help determine any tax deductions," she said.