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Tax time tips for landlords

May 30, 2022

The end of the financial year is fast approaching, which means for landlords it is time to take stock of the tax deductions you can make on your investment property.

Claiming for expenses is one of the advantages of being a landlord so it is important to have a basic understanding of what you are eligible to claim as a tax deduction.

Expenses as a landlord you can you claim as deductions include:

  • Maintenance and repairs, property insurance, accounting fees.
  • Advertising for a tenant
  • Land tax
  • Council rates
  • Water charges
  • Body corporate fees
  • Legal costs
  • Management fees.

Still time to maximise the tax benefits

To maximise your 2022-23 tax return, it might help to engage the services of a qualified accountant who specialises in property.

If there are repair or maintenance jobs you need completed at your investment property, make sure you get to before June 30, so you don’t miss the cut off period to claim the expense as a deduction in this tax year.

While claiming a repair bill for damage to the bathroom caused by a tenant is considered an immediate tax deduction, fixing damage caused before you purchased the property is considered a ‘capital improvement.’ Capital improvements will have to be claimed over a few income years as a “depreciable asset”. Simply put, depreciation is the wear and tear on the property and equipment such as carpets, curtains. Deduction rates of 2.5% or 4.0% apply when depreciating plant or equipment, depending on the date on which construction began, the type of capital works, and how they're used[i].

Understanding what can be deducted and is a depreciable asset is important and your accountant can discuss the distinctions with you in more detail. For example, as a landlord if you repair a deck it is classified as a repair and is therefore fully deductible. On the flip side, a newly constructed deck is deemed a capital improvement and is subject to depreciation, rather than a straight deduction.

A specialist quantity surveyor can help prepare a “Tax Depreciation Schedule” on your property. Better still you can claim the depreciation schedule as a tax deduction – so consider this before 30 June.

How can your Property Manager help?

Your local Raine & Horne Property Manager can provide a statement of costs incurred for the financial year. This should include any maintenance costs and other expenses. They can also recommend a qualified accountant to help you.

To discuss other great tax-time tips, contact your Raine & Horne Property Manager today.

[i] https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/capital-works-deductions/