Investing in real estate can be a lucrative venture, especially when you take advantage of the many tax deductions available in Australia.
Tax plays a crucial role in maximising returns for property investors. Strategic use of tax deductions, such as depreciation, loan interest and maintenance expenses, can significantly reduce taxable your income. By effectively managing these deductions, investors can enhance their net returns. Here are the key categories to consider:
Claim depreciation on your property's structure and fixtures. This non-cash deduction reduces your taxable income, boosting your return on investment. Using a quantity surveyor to prepare a depreciation schedule is where you start.
Interest on your investment property loan and associated bank fees are deductible. This includes setup fees, ongoing charges and early repayment penalties, directly reducing your taxable income.
Your premiums for insurance policies are tax deductable, ensuring your property is protected while providing a tax benefit. This covers building, contents and landlord insurance.
Fees paid to property managers for their services are deductible, a great reason to have your property managed by a professional. The types of services you can claim for are tenant placement, rent collection and maintenance coordination.
Immediate repairs and maintenance costs, including pest control, can be claimed in the year they occur. However, improvements may need to be depreciated over time.
Immediate repairs and maintenance costs, including pest control, can be claimed in the year they occur.
Expenses for preparing and lodging your tax return, including accountant fees, are deductible, helping manage your tax obligations efficiently.
Council rates and charges for water, electricity and gas are deductible, provided they are not paid by the tenant.
Costs incurred in advertising for tenants, such as online listings or agency fees, are fully deductible.
Leveraging these deductions can significantly enhance the profitability of your investment property. DPN recommends you work with an experienced accountant or qualified tax planner to ensure you achieve both your maximum return, while ensuring a compliant return to the Australian Taxation Office (ATO).
To maximise your tax deductions on investment properties, you can claim on these areas:
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