Utility fees (where it’s not paid by the tenant)
You are able to claim the basic costs for any electricity, gas, or
water supply fees that you pay during tenancies.
Usually, this is all paid by the tenant, but this is helpful in
the case where there is a gap between tenancies - in this case, supply charges
and any usage charges incurred between tenants can be legitimately deducted
from any income.
Pest
control
Professional pest control costs are tax-deductible and you or your
tenant can claim this expense depending on who paid for it.
Repairs and maintenance
Repairs and maintenance can be claimed as a tax deduction in the
same income year if the repairs are a result of wear and tear, like fixing a
broken appliance or repairing storm or flood damage.
However, the difference between repairs and improvements can be
confusing for property investors.
If you improve the property this is not the sort of expense you
can write off immediately.
A repair replaces a part of something or corrects something that’s
already there and has become worn out or dilapidated.
On the other hand, an improvement makes something better than it
was originally.
Generally, an improvement makes something function more
efficiently than it used to and will increase a property’s market value or
extend its income-producing potential.
Some legal costs and lease document preparation
expenses
If you have to hire legal professionals for something related to
the tenant, such as eviction or an unpaid lease, you can claim this as a tax
deduction.
However, you can’t claim the legal fees for initially buying the
property – these are called capital costs.
Capital
gains discount
If you make a capital gain on the sale of your investment
property, you need to pay tax on this profit - called Capital
Gains Tax (CGT).
If you bought and sold your property within 12 months, your net
capital gain is simply added to your taxable income, which, in turn, increases
the amount of income tax you pay.
However, if you held onto the property for more than a year before
selling it, you’re eligible for a capital gains discount of 50%, which means
you only need to incorporate half of the capital gain into your personal tax
return.
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Jason Gwerder
Monday, 27 June 2022
