Guide for rental property owners

The Australian Tax Office (ATO) has recently released the 2015 Rental Property Owners Guide. This contains a large amount of information relevant to investment owners including what income and expenses you have to declare on your tax return and what deductions you can claim. Here are a few points of interest:

What do you have to disclose?

  • Rental income
  • Products or services received in lieu of rental income. e.g. you rent your house to a friend, but he had no cash to pay the rent, instead, he bought furniture to put in the house, that furniture can be treated as rental income.
  • Bond retained from tenants as the result of property damage or defaulting on rent payments.
  • Payment received from tenants to cover damage to property.
  • Insurance payouts. e.g. compensation payments from homeowners insurance.
  • Government incentives/rebates. e.g. for the installation of a solar power system etc.

What can’t you claim?

  • Expenses incurred in the disposal or acquisition of property.
  • Expenses you are not required to pay. e.g. water or electricity expenses borne by tenants
  • Expenses incurred during a period of self occupancy.
  • Expenses incurred while buying a property. e.g. travel costs and inspection fees.
  • Expenses from process of finding a property.e.g. rental seminars.

What can you claim immediately?

  • Advertising costs for acquiring tenants
  • Bank charges
  • Body corporate fees and charges
  • Cleaning
  • Council rates
  • Electricity and gas
  • Water charges
  • Gardening and lawn mowing
  • Audio & video service charges
  • Insurance
  • Interest on loans
  • Land tax
  • Lease document expenses
  • Legal expenses
  • Mortgage discharge expenses
  • Pest control
  • Property agent fees and commission
  • Quantity surveyor’s fees
  • Repairs and maintenance
  • Secretarial and bookkeeping fees
  • Security patrol fees
  • Stationery and postage
  • Telephone calls
  • Tax-related expense
  • Travel and vehicle expenses

What can you claim by instalment?

  • Borrowing expenses, including loan establishment fees, title search fees, valuation fees, mortgage insurance.
  • Amounts for decline in value of depreciating assets
  • Capital works deductions: 4% depreciation rate for the properties purchased before 16th September 1987, 2.5% for the purchases after that.

 

To get your copy of the guide for rental property owners, simply visit the ATO website – it is free to download.

If you have any questions in regards to your tax return feel free to contact me at Ricki@test2.gpla.com.au or call (07) 5444 1022 to make an appointment to meet with one of our friendly team.

Ricki Liang

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