Landlord’s Guide to Rental Property Tax Deductions – Image Property

Landlord’s Guide to Rental Property Tax Deductions

By Tayla Truman, Senior Property Manager - West End.

Published on July 2, 2024. Last updated on July 2, 2024

Tayla Truman,
Senior Property Manager - West End at Image Property.

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Landlord’s Guide to Rental Property Tax Deductions

Maximising your rental property tax deductions can significantly enhance your financial returns. As a landlord, it’s essential to understand the various expenses you can claim.

These include typical costs like maintenance and insurance, among others.


Immediate Deductions

Numerous expenses related to your rental property can be claimed right away. These include costs such as advertising for tenants, council rates, and maintenance fees.

Additionally, expenses for pest control, gardening, and legal services fall under this category, provided they are incurred while the property is rented out.

Examples of Immediately Deductible Expenses:

– Property Management: Advertising, agent fees, legal expenses
– Property Maintenance: Repairs, pest control, gardening, cleaning
– Utilities and Rates: Council rates, strata fees, water charges
– Insurance: Building, contents, public liability premiums
– Loan Costs: Interest, bank fees, accounting fees


Claim Over Time

Certain expenses must be claimed gradually over several years. These include borrowing costs and depreciation on buildings.

Renovation costs can also be depreciated at a rate of 2.5% annually over 40 years. Note that for properties acquired after May 9, 2017, depreciation on previously used appliances is not claimable.


Non-Deductible Expenses

Some expenses are not deductible. These include costs such as those paid by tenants or unrelated to the rental property.

Additionally, acquisition costs like stamp duty and expenses for personal travel (unless for a rental property business) are not deductible.


Maximising Your Rental Property Tax Deductions

Effective tax planning can significantly boost your cash flow. Keeping detailed records of all expenses, including property management, repairs, insurance, and loan interest, is crucial. If the property is used for both personal and rental purposes, ensure expenses are accurately divided.

Consider obtaining a professional property depreciation report to identify all depreciable assets, thereby increasing your claims. Consulting a quantity surveyor for this report can further optimise your deductions.


Negative Gearing and Landlord Taxes

Negative gearing allows you to offset rental property losses against other income, reducing your taxable income. This can lead to substantial tax savings.

However, remember that some deductions, such as those for capital works and borrowing expenses, must be claimed over time.


Navigating Rental Expenses and Your Tax Return

When filing your rental property tax return, you must declare all income received from the property, including rent, booking fees, tenant reimbursements, and insurance payouts. Calculate your net rental income or loss by deducting expenses.

For co-owned properties, income and expenses should be divided based on ownership share. Upon selling the property, calculate any capital gains or losses separately for tax purposes.


Record Keeping

Maintaining thorough records throughout the year is vital.

Essential documents include:

– Income and expense statements
– Property management reports
– Loan details
– Co-ownership agreements
– Receipts for deductions
– A depreciation schedule
– Capital gains tax valuations


At Image Property, we’re here to help you every step of the way. Get in touch today to learn how our expert property management services can simplify your tax planning.

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