We are fast approaching that time of the year where property investors need to get prepared and take the time to understand their tax obligations.

Whether you plan on preparing your tax return or working with an accredited accountant, the following can assist you in getting organised, including a couple of helpful tips to better understand rental income and expenses.

Rental income is simply the total amount of rent and other associated payments, such as refunded bond money at the end of the tenancy, reimbursements, insurance payouts, and booking or cleaning fees received.

Rental expense is the total amount incurred or paid that is directly associated with renting the property.

There are three (3) categories of rental expenses:

Non-claimable deductions
Immediate claimable deductions
Deductible over several income years

NON-CLAIMABLE DEDUCTIONS (EXPENSES)

Acquisition and disposal cost of the property.
Expenses not incurred by you, such as water or electricity usage paid by the tenant.
Expenses related to periods where the property was not available for rent.
Travel and seminar expenses related to the prior purchase of a property.
Travel expenses relating to the management of the property incurred from July 1, 2017.

IMMEDIATE CLAIMABLE DEDUCTIONS (EXPENSES)

We have created a checklist-style summary of these deductions to assist our property investors in ensuring they have accounted for all expenses.

RENTAL PROPERTY STATEMENTS

Administration costs (stationery and postage)
Advertising for tenant costs
Agent’s fees and commissions
Body corporate fees
Cleaning & caretaking fees
Council rates
Electricity and gas
Gardening and lawn mowing
Inspection costs (including annual certificate fees)
Insurance premiums (landlord, building, contents, public liability
Pest control
Repairs and maintenance
Water charges

PRIVATE RECORD STATEMENTS

Accounting fees
Bank charges
Home office expenses (where deductible)
Interest on loans
Land tax
Legal expenses
Mortgage discharge expenses
Quantity surveyor’s fees
Stamp duty fees
Stationery and postage
Tax-related expenses
Travel and car expenses (where deductible)
Borrowing expenses, depreciation (as per schedule), and capital works

DEDUCTIBLE OVER SEVERAL INCOME YEARS

There are three (3) types of expenses deductible over several years as outlined below, which can be a more complex part of the overall tax return that will require professional advice, reports, and the preparation of schedules.

Borrowing expenses
Depreciation
Capital works

The above is a brief overview of understanding tax time so that you can be more prepared. We recommend that all investors organise a pre-tax planning meeting with their accountant or financial advisor to ensure you claim the maximum benefits.

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