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Is your apartment tax ready?

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Are you and your apartment tax ready? With the financial year end fast approaching it’s time to get your investment apartment tax ready.

Part of the challenge is understanding what can and can’t be claimed as a tax deduction. Then you need to pull all the information together for your accountant.

Yes I know .. I am not an accountant and not qualified to provide financial or tax advice so this is just flagging some things to be aware of and give you a gentle prod to get everything ready.

A recent story in the Sydney Morning Herald said, “Nine out of 10 landlords are getting their income tax returns wrong, and the ATO is watching”.

The article covered mistakes such as expensing vs capitalising costs. In other words, if you spent money on your investment apartment this year, can you claim the entire amount as a tax deduction, or should it be depreciated over time? It also touched on how you can treat costs associated with working from home.

The article states about 2.2 million investment properties are negatively geared meaning the tax deductable expenses are greater than the taxable income. Even if your property is not negatively geared every permitted deduction reduces your tax burden.

You are probably aware the cost of travel to your investment property is also no longer tax deductible.  The other common mistake is miscalculating the interest component of an investment loan. Sometimes loans for a principal place of residence and investments cross over or can be difficult to separate.

The ATO provides lots of information on what is and is not tax deductable for residential rental properties.

This is another article about what is and is not tax deductible for landlords.

Understandably with rents rising, owners are looking for every way to minimise their tax. As the late Kerry Packer said in 1991 before the House of Representatives select committee on print media “…If anyone in this country doesn’t minimise their tax, they need their head read…”

Once you understand which cash payments can be deducted you then need to get your head around the non-cash amounts. Otherwise known as depreciation or capital allowance. Depreciation is the notional decline in value of the buildings and fixtures each year. This value drop can be claimed as a tax deduction. How much of that can you claim? Well, I am now way out of my depth on advising you here. Fortunately, our very good friends at MCG Quality Surveyors are the experts and can answer all your questions.

Here is their property investor tax time toolkit. It answers questions like
– Do I need a depreciation schedule?
– What is a repair or maintenance?
– What are improvements?

If you do need a depreciation schedule, please make sure you tell them Wood Property sent you to get our special rate. Their contact details are here.

After 30th June, Wood Property send all its clients a full statement of their income and expenses incurred in the last 12 months. This can be simply forwarded on to your accountant. If we pay all the bills (rates, OC fees etc) on your behalf, then it is super simple for you. If there are any bills we are not paying please let us know and we can set that up easily for you so next tax time you are all set.

The best news is, all property management and leasing fees are tax deductible. 😊

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Written by a 4th generation real estate agent Apartments Made Easy gives you the tools and tells you all you need to know about how to buy, sell, own, lease, and manage your apartment successfully.

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