Property Tax Time Tips

It’s tax time and prop­erty investors should show cau­tion when pre­par­ing their returns.

A kid in need of some tax tips

Here are some tips: All rental income from your invest­ment prop­erty must be included in your return. Your rental property’s rates, interest, insur­ance, real estate agents fees, depre­ci­ation and cap­ital works can all be claimed as a deduc­tion. Repairs and improve­ments are totally dif­fer­ent and are to be claimed in dif­fer­ent ways. Seek pro­fes­sional account­ing advice. Keep receipts, state­ments etc. Main­tain source doc­u­ments such as loan agree­ments and depre­ci­ation schedules.


10 tips on rental prop­erty include


  • 1. get pro­fes­sional advice before sign­ing the con­tract — there may be a bet­ter own­er­ship struc­ture. Ask the ques­tion — in whose name should the prop­erty be in


  • 2. Land Tax implic­a­tion — Thresh­hold can effect­ively be exten­ded from where invest­ment prop­erty is in dif­fer­ent names instead of joint names


  • 3. Look at you risk pro­file — is asset pro­tec­tion necessary


  • 4. Neg­at­ive gear­ing in the name of someone with high income may res­ult in a sav­ing of tax But on sale the cap­ital gains may be taxed at the higher rates


  • 5. using your home as secur­ity for neg­at­ively gear­ing into an invest­ment prop­erty which does not per­form and allows the neg­at­ive to be com­poun­ded in a line of credit will risk your home and abil­ity to repay in the long term


  • 6. A depre­ci­ation report from a Quant­ity Sur­veyor will help increase the deduc­tions against rental income and save some tax


  • 7. Cost of repairs under­taken imme­di­ately after pur­chase of a prop­erty is con­sidered part of the cost base and will not be tax deduct­ible. Order the Depre­ci­ation report after the repairs


  • 8. Major repairs are con­sidered renov­a­tions, form­ing part of the cost base. as a rue of thumb, if it sstck on the wall or the floor it is part of cost base. If it restores func­tion­al­ity, it is a repair


  • 9. 50% dis­count on cap­ital gains for prop­erty owned for longer than 12 months is NOT avail­able for non-residents (for Aus­tralian tax purposes)


  • 10. Prop­erty wealth sem­inars attend­ance fees are allowed as a tax deduc­tion only when the topic relate to improv­ing rental income or redu­cing rental expenses. It is not deduct­ible where the dis­cus­sion is on cre­at­ing wealth through invest­ments in property


Win­ner of ‘Your Invest­ment Prop­erty’ Magazine’s Read­ers Choice Award as Best Prop­erty Tax Spe­cial­ist for 2011 and 2012
Shukri Bar­bara is a CPA with over 30 years’ exper­i­ence in pub­lic prac­tice.
He is Prin­cipal Adviser at Prop­erty Tax Spe­cial­ists, advising cli­ents on
– prop­erty invest­ments,
– pro­tect­ing assets and
– plan­ning to min­im­ise tax.
– Own­er­ship struc­tures
– Prop­erty in Super funds
– They also do tax returns
Shukri com­bines his worldly exper­i­ence, busi­ness and mar­ket­ing exper­i­ence together with his prop­erty tax spe­cialty provid­ing prop­erty investors with
– prac­tical com­mon sense advice as well as
– tech­nical advice.
A great asset for your team of prop­erty experts, Shukri has been inter­viewed on Foxtel’s ‘Your Money your Call’ pro­gram with Chris Gray.
He also writes a tax column for Smart Prop­erty Investor magazine.

seven hills real estate agent NSW
Cnr Federal Road Prospect Highway Seven Hills NSW 2147 Australia