Tax deductions for Landlords
Today, we’re continuing the tax-time conversation. I know it’s still not the most exciting subject but tax returns are something we need to do. This week’s topic is especially important if you have an investment property.
In addition to bring all the things you need to your tax agent to get your tax done (which we spoke about in last week’s episode here), you’ll need to bring a few other things with you to ensure you’re optimising your deductions.
We also cover the one hidden tax deduction that we see most Landlords missing: Depreciation.
What extra information to have available for your Tax Return if you’re a Landlord
In addition to everything we spoke about last week, as a Landlord, to prepare your Tax Return you’ll also need:
- Property (or real estate) Agent’s Statement: The agent should be able to provide an annual statement of all the rent they have collected on your behalf, all the management fees such as advertising, any repairs and maintenance they arranged on your behalf etc. The statement is an important basis to calculate your potential deductions.
- Bank Statements: You will need your statement for the mortgage you have over the asset for the whole twelve-month period. This will enable your tax agent to identify how much interest you’ve paid directly to the mortgage.
- Repairs & Maintenance documents & receipts: Include any details pertaining to repairs and maintenance you’ve done in addition to those arranged by the property agent.
Ask yourself: what other deductions can landlords have?
- Depreciation on the asset: This refers to the house, the property or the apartment that you’ve invested in. Things like the kitchen, the bathroom or any renovations that you may have performed can be depreciated. In order to claim depreciation correctly, we advise people to appoint a registered conveyancer to help. There are some specialists out there try (in order of our preference due to the quality we see):
Make sure who ever you ultimately choose will go to your property in order to prepare the tax depreciation schedule (they can organise access with your property manager).
- Purchase/sale date of property: Another thing you may want to look into is whether or not you’ve purchased or sold the investment property in the current financial year. In either case, you’ll need to bring the contract of sale with you to your tax advisor so that they can make the correct capital gains adjustments.
Handy Hint – Keep copies of receipts!
Remember that every time you claim more than $300 of deductions in your personal tax return you must keep the receipts for five years. We therefore recommend you take a scanned copy of those so that you have an electronic copy just in case something happens to the physical receipt.
If you have an investment property, make sure that you download our checklist below and then you can ensure that you have the complete list of everything you are able to claim.
Remember that this is general information. To get specific, personalised advice for your current situation, you’ll need to get specific tax advice from your tax advisor.
If this blog and video were of help to you, please share with your fellow Property Investor friends and on Social Media.
In the meantime, have yourself a great week and we will see you in next week’s episode of Catalyst Plus TV.