Property Investor Newsletter April – May 2012
ATO landlord tips that you may not have known!
We do appreciate that the focus of every landlord is to optimise their tax returns and maximise their income. However, be aware of when you can claim repairs and work on the property as a legitimate tax deduction.
CAN YOU CLAIM THE COST OF REPAIRS BEFORE YOU RENT THE PROPERTY OUT?
You cannot claim the cost of repairing defects, damage or
deterioration that existed when you obtained the property, even if you carried
out these repairs to make the property suitable for renting. This is because
these expenses relate to the period before the property became an income-producing
Example: Mr House needed
to do some repairs to a rental property he recently purchased before the first
tenants moved in. He paid tradespeople to repaint dirty walls, replace broken
light fittings and repair doors on two bedrooms. He also had to have the house
treated for damage by white ants.
Because Stephen incurred these expenses to make the property suitable for rental, not
while he was using the property to generate rental income, the expenses capital expenses. This means he cannot claim a deduction for them.
WHAT RECORDS DO YOU NEED TO KEEP?
You need to keep proper records in order to make a claim, even
if you use a tax agent to prepare your tax return or you do it yourself. You
must keep records of the rental income you receive and the deductible expenses
Did you also know that you must keep your ownership of the
property and all the costs of purchasing/acquiring it and selling/disposing of
it records for five years as well – from the date you sell/dispose of your
As capital gains tax may apply if you sell your rental property,
we recommend you keep records of every transaction over the period of ownership
of the property. This would include contracts of purchase and sale, and
conveyance and loan documentation.
Keeping these records will help you work out your capital gain
or loss correctly and ensure you do not pay more tax than you need to.
Beware — White ants
About Jhai Mitchell
Jhai is an award winning Internet Marketing Real Estate Agent for Elders Toongabbie and Kings Langley. After running his own internet marketing business he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to market themselves online. Jhai is now fixed on one goal. To teach real estate agents that they can market online so much better than they currently are.
Since then he has been consistently quoted in the Sydney Morning Herald and Real Estate Business online. He is a regular guest blogger on TheHomePage.com.au, sharing his expertise of marketing aspects for the Real Estate Industry. His biggest passions are his wife, martial arts, dogs and most of all property.