Property Tax Time Tips
It’s tax time and property investors should show caution when preparing their returns.
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
About Shukri Barbara
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.