None of the
expenses associated with your home are tax-deductible but if you decide to rent
it out, the situation regarding tax, changes.
When you rent out your property, the net rental
income needs to be declared in your tax return.
You will be able to claim costs like rates,
water and non-cash costs like depreciation.
If you have a mortgage, you are limited to claiming
interest on the loan value before any other drawings, which is the balance of
the loan that was originally used to buy the property.
When you sell the property it becomes a taxable
asset and you will need to calculate gain made on the sale, but the gain is
reduced based on how long you used it as your home.
If you rent out part of your home, for example, one
or two rooms, you will still need to declare your rental income and deduct a
proportion of the expenses depending on what percentage of the property is
rented out. You will also pay some capital gains tax when you sell the
RealRenta recommend investors obtain financial
advice specific to their situation before making any investments or decisions
regarding their finances.
RealRenta is disrupting the Real Estate industry
with our Self Management platform.
RealRenta is for Smart Investors, who realise that
they are no longer bound to traditional property management and the associated
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Friday, 22 May 2020