Top deductions for investment properties in Australia part 2

Property management fees

 A great real estate agent or property manager helps you achieve the best results from your investment property, with the added bonus of any fees charged being tax-deductible.

The fees of any other expert including a valuer, depreciation expert, accountant, landscape designer, or interior designer are also tax-deductible.

Depreciation, relating to the wear and tear of the building and its contents

To claim depreciation you’ll need to get a depreciation schedule prepared at a cost of around $600-$700 (this fee is tax-deductible too).

According to the ATO, a depreciating asset is "an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is in use".

Examples of assets that deductions for decline in value can be applied to include:

timber flooring, carpets, curtains, appliances like a washing machine or fridge, and furniture

Negative gearing

Negative gearing is a tax strategy that Australians have been using for many years (if not decades) to make the prospect of owning investment properties more manageable and more profitable.

In simple terms, negative gearing takes place when you own an asset, in this case, property, that costs you more than you are earning from it.

For example, the interest you are paying on your mortgage and all other associated costs with the property, equal more than the income or rent you earn from that property.

As a result, you are making a financial loss and you can claim this as a tax deduction.

Gardening expenses

Property owners can claim the upkeep and replacement of plants and structures as an immediate deduction.

However, you can’t immediately claim the cost of any new plants or changes that add extra value to the property, as these are deemed as "improvements”.

Land tax

If the dwelling on your investment property is rented out, you can claim land tax as a deduction.

Some state governments offered land tax discounts for landlords who provided rent relief for their tenants impacted by Covid-19.

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Jason Gwerder
Friday, 24 June 2022

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