Property people and tax time deductions
propertyman | Jul 31, 2011 | Comments 0
Property deductions , come tax time becomes a major focus for property people with Investment properties and and property investment portfolio. Its that time of the year where you get to minimize your tax due to owning property via depreciation and so many other expenses borne out of the property.
The other benefit from owning real estate which can be appreciation of value of your property plus possibly a regular income flow but also significant tax benefits. some tips to benefit from property ownership during tax time.
Tax deductions for property *
If you own a property and you are getting rental income from it you can qualify for certain tax deductions based on your circumstances. Some standard claimable deductions are listed below.
- Advertising costs ( To find tenants)
- Agents Commission (To collect the rent)
- Rates and Land Taxes
- Depreciation
- Travel costs to inspect property
- Repairs
- Security costs
- Insurance on buildings
- Water and sewage
- Interest on borrowings
Rent and rental expenses
Tax needs to be taken out from rent received by you when its received into or credited into your account. Rental expenses claimed can be disallowed if you are renting a house or property to a relative or family and you are not charging them the going commercial rate in the market.
Capital gains Reductions
If you sell a investment property 12 months after you buy it only 50% is taxable. This can apply to Land as well as Holiday homes.
Residence exemption
Claiming tips
Keeping a separate account for your property income and expenses can ease the pain of record keeping.
It is not necessary for you to get a Australian Business Number (ABN) if you want to lease a residential property.
Keep all your receipts for expenses for yuour tax deductible expenses to be easily verified.
More technical property deductions
In some cases a building write off deduction can also be claimed at the rate of 2.5 % per year
If you make a capital gain after you retire and turn 60 from the sale of the property , the gain could be tax free if that property was owned by your self managed superfund and would be not included in your taxable income.
Capital gains can be reduced on sale of holiday homes by holding on to receipts of non –deductible expenses incurred while maintaining the house.
In some cases depreciation schedule will be necessary to maximise your allowable tax deductions on any property that you own as an investment.
* Before claiming deductions it is advised to see a professional accountant or tax agent to verify that you are correctly claiming the deductions that are allowed to be claimed without incurring any penalties in the future.
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Filed Under: 2011 • investment property • Property Market • rental properties • Tax Deductions
