Tax Time Tips for Property Investors: Make the Most of Your Deductions

July 3, 2024
July 3, 2024 Luke

Tax Time Tips for Property Investors: Make the Most of Your Deductions

With the end of the financial year approaching, it’s time for property investors to review their finances and ensure they are maximising tax deductions. While tax time can feel tedious, it presents an opportunity to put more money back in your pocket. Follow these tips from the experts to claim all the deductions you’re entitled to.

Understand What You Can and Can’t Claim

The Australian Tax Office (ATO) categorises rental expenses into three groups:

1. Fully claimable this financial year – Expenses like loan interest, rates, insurance, repairs/maintenance under $300.

2. Claimable over several years – Capital works, borrowing costs, decline in asset value.  

3. Not claimable – Personal expenses if you occupy the property, capital expenses, used assets purchased after May 2017.

Check the ATO rental property guide to clarify what is deductible in your specific circumstances.

Apportion Expenses Correctly

If you rent your property as a holiday home or share it with tenants, you’ll need to calculate the portion of expenses that relate to income-producing rental activities versus private use. Expenses must be apportioned correctly between the two. This also applies if you rent below market rates.

Claim Ongoing Deductions 

You can claim deductions for certain expenses over a number of years. This includes borrowing costs, capital works, and decline in asset value. Your quantity surveyor can provide a depreciation schedule to maximise these ongoing claims.

Attend to Maintenance

Completing repairs and maintenance before June 30 means you can deduct the costs this financial year. Tackle overdue pest control, smoke detector servicing, repairs identified in inspections. The work will improve your property and reduce your taxable income.

Remember Finance and Insurance 

Most loan interest, fees and insurance premiums can be claimed as tax deductions. Review policies to ensure they adequately cover loss of rent, building, contents, and public liability. An expert can check if your investment loan offers maximum tax benefits.

The Bottom Line

With the right preparation you can ensure tax time works in your favour as a property investor. Record-keeping is key, so keep invoices and receipts. And don’t hesitate to seek professional advice regarding maximising your deductions. A little time invested now can save thousands come tax return time.

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