Investment Tax Deductions For Australian Real Estate

Posted on Jan 24, 2014 | 0 comments

There are several ways Australians are able to use their individual savings to improve their financial status. After you have determined what your objectives are, and what you hope to achieve by investing your money, you can start to look at the opportunities available for putting your money to work.

Evidently, one of the most common ways is by investing in property. Whereas having possession of a block of land has become something of a national pastime, owning a second or third property which returns a rental income is something many of us wish for. However, it is vital to comprehend the tax implications of owning rental properties, as well as the deductions available, to make the investment really worthwhile for your bank balance.

Investment property maintenance may reduce the investor’s income taxes when some expenses related to investments are subtracted from the income. Expenditures relating to the upkeep of rental properties are generally deducted from the investor’s gross income. Once accepted as a tax deduction, the sums claimed lowers the total taxable income and reduce the investor’s bill of tax. Australian Tax Office permits only particular costs as investment properties tax deductions. These require appropriate recording and upkeep of records to verify expenses.

Investment Tax Deductions For Australian Real Estate

Devaluation: Furniture and home appliances used in rental property premises undergo ordinary deterioration over a period of time. This gradual wear and tear reduces the items’ value which is measured as depreciation. This doesn’t include an actual cash expense. However, it has the effect of releasing some money when subtracted from the investor’s income.

Borrowing expenditures: These are the costs related to borrowing the cash used to purchase property. Deductible costs from borrowing include mortgage insurance, registration of mortgage, title search fees and mortgage establishment fees.

Commissions and management charges: These include the fees paid to the agents in charge of renting out the property. It’s frequently expressed as a percentage of the rental cost.

Insurance: These include insurance on building, public liability, contents of the building and landlord insurance that covers the investor against nonpayment of rental fee. Insurance on mortgage is deductible; however, not all of it at once and it is usually repaid over the loan period as part of the borrowing costs.

Garden and yard work: Costs related to the upkeep of a rental property are often deductible and include mower expense, replacement garden tools, dump fees, tree lopping, sprays, fertilizers and replacement plants.

Interest expenditure: The interest expenses made of the loan used to buy, build, repair or improve property for income purposes is deductible.

Repairs: These will be deducted only if an investor can prove that the costs were incurred for reinstating the property to its previous condition without changing its essential character. Examples include the costs for cleaning, repainting and other renovation works.

Telephone and travel costs: These costs are deductible from income when used for rent collection, repairs, and inspections as well as preparing the property for the new tenants.

Lastly, other costs which can be appealed as investment tax deductions for Australian real estate include lease expenses, land tax, cleaning, gas and electricity expenses, legal and management fees, pest control, pest control, rates of water and sewage among others

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