Sydney, Melbourne and the Sunshine Coast are in the midst of a real estate boom that has seen a lot of people become property investors overnight. A beach shack in Coolum has just sold at auction $35,000 over the reserve price. While owning rental property is an exciting enterprise, it is one that comes with a bit of a learning curve, especially once tax time rolls around in Australia. Tax laws are not written to be easy to understand, and that can leave many investors unsure of what they can and cannot claim. It’s always smart to leave your tax filing to the pros, but let’s take a quick look at some of the items that can and cannot be claimed.
The first issue that investors are going to run across is that they can no longer claim for travel on their tax forms, even if said travel was to the property they own to collect rent. This is a new change that is expected to put an extra $40 million in their coffers. This change went into effect on July 1, 2017, and while investors can still claim on their travel for the year prior to that change, they can expect every claim to be reviewed very closely by the Australian Taxation Office.
Another grey area for investors is their ability to claim the interest deductions on an investment loan. If said monies are used strictly for investment purposes, then there should be no problem claiming. If, on the other hand, an investor is using the loans to offset the loan on their own home, then a claim cannot be made. This could prove to be somewhat tricky for Airbnb hosts and those who rent out their home for some portion of the year. Interest can be claimed during the periods when the home was made available for rent.
The federal government has also made changes to the way in which depreciation can be claimed on plant and equipment with an investment property. The items in question are those that can be removed from the property, with things like appliances, ceiling fans, and window dressings the most common. While the changes will not have much of an impact on most investors, they could be rough on those who buy second hand investment properties, as they would be unable to claim depreciation on the items in the property. This change alone may prompt investors to steer clear of properties that have already been used as an investment property.
These are just a few of the changes that have been made that will have an effect on investors at tax time. The tax laws are in a constant state of flux, which is why it is so important to have a qualified tax professional on your side. Everyone wants their tax filing to go smoothly, and that can only happen when you are sure that everything that is being claimed is in fact valid. If you are new to property investment or are unaware of how the changes may impact you, it is recommended that you talk to an industry pro that does know.
For Property Depreciation and Tax Allowances on investment properties please complete the information worksheet relevant to your property type. Submit online or print and fax.
Our fees are tax deductible as an expense and a receipt is included with your report.