What’s deductible & What’s not for Property Investors?
Below is a list of items which you can claim as a deduction against rental income for this year. Further below is a list of items which are not deductible, usually questioned by ATO or deductible over a number of years. I trust this will help you compile your information and make it easier to prepare your income tax return and improve your decisions in relation to managing your rental properties.
Tax Whitholding Variations
Analysis of Proposed Property
Deductible – Immediately
- Property management & maintenance expenses
- Advertising for tenants – directly by you or where the agent charged you
- Body corporate fees or Strata Title fees and charges
- Gardening/Lawn Mowing
- Pest control
- Security patrol fees
- Rates & Taxes
- Water rates, charges & usage
- Council rates
- Land tax – first time owners have to lodge an initial land tax return with the Office of State Revenue in each state – YOU have to initiate this. They will not chase you up but they will penalise you for late lodgement
- Property Agent Fees/commissions – including GST
- Postage & petties,
- Statement fees and
- Bank charges/fees
- Lease document expenses
- Letting fees
Click here to read more.
Deductible – Over a number of years
- Borrowing Expenses – deductible over the period of the loan where the loan is less than five years. Otherwise deductible over five years. Expenses deductible include:
- Loan Application fee
- Lenders legal fees
- Title search fees
- Lenders mortgage insurance
- Stamp duty on mortgage
- Mortgage registration fees
Depreciation on Plant & Equipment – ATO calls it Decline in Value of depreciating assets please note changes in the rules from 2018 onwards, no depreciation on items purchased as part of a second hand house.
Depreciation on the building construction – ATO calls it Capital Works deduction
Cost of installing any plant & equipment such Hot Water Systems – are considered part of the cost of system – to be depreciated
Set of assets e.g. dining table and 6 chairs – is to be depreciated in accordance with their effective life
Each item cannot be separately deducted for being under $300
Click here to download full list of what is deductible and what’s not.