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