Investment property tax deductions you can claim before EOFY

As the end of the financial year (EOFY) sneaks in, now is the time for property investors to consider and leverage the various tax deductions they’re entitled to.

By understanding what’s available, savvy investors can strategically plan their spend and potentially reduce their tax bill before June 30 comes around.

Here’s a few things to consider:

Maintenance, Repairs and Improvements

Expenses incurred for the maintenance and repair of investment properties are generally tax-deductible. This includes costs associated with fixing plumbing issues, electrical problems, roof repairs, pest control, and general wear and tear.

Keep in mind the difference between repairs (deductible) and improvements (capital expenses).

While improvements are not immediately tax-deductible, they can be claimed over time through depreciation.

Capital improvements are enhancements that increase the property’s value or extend its useful life.

If you choose to renovate the kitchen or bathroom, install a security system, or recarpet the bedrooms, these big or small improvements can be depreciated and claimed as deductions over a specified period.

Depreciation

Property depreciation refers to the wear and tear that appears over time and can be claimed as a tax deduction.

Both capital works depreciation (building structure) and plant and equipment depreciation (fixtures and fittings) can be claimed.

Engaging a quantity surveyor can help determine the accurate depreciation schedule and maximise the available deductions.

Interest Expenses

Interest payments on loans taken out for investment property purposes are typically tax-deductible.

This includes mortgage interest, loan establishment fees, and interest on credit cards used for property-related expenses.

Ensuring accurate record-keeping of these expenses is crucial to claim the maximum deduction.

Property Management Fees and Marketing Costs

Investors can also claim on the incurred property management fees, including monthly management fees, maintenance coordination and advertising costs like photography and online listing adverts.

Be sure to keep records of all invoices and statements to substantiate these deductions.

By claiming eligible deductions, investors can potentially reduce their taxable income and increase their overall return on investment.

For more information get in touch with UFinancial at ufinancial.com.au/accounting

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