Navigating tax time with the complexities of rental properties can be daunting. Here's a concise guide to help you:
Understanding Rental Income
Rental income includes all payments received for the use of your property, such as:
Rent: Monthly or weekly rental payments.
Utilities: If you pay utilities on behalf of the tenant and charge them for it.
Late fees: Penalties charged for late rent payments.
Claiming Expenses
You can deduct expenses directly related to owning and operating your rental property, including:
Advertising: Costs to advertise the property to potential tenants.
Body corporate fees: Costs charged by the body corporate if applicable.
Cleaning: Costs to keep the property clean after a tenant's exit or ongoing maintenance.
Council rates: Costs charged by the local council.
Depreciation: A deduction for the wear and tear of the property.
Gardening: Costs to maintain the property's landscape.
Insurance: Property insurance premiums.
Interest: Mortgage interest payments.
Land taxes: Costs charged by the State Revenue Office.
Pest control: Costs to keep the rental property pest-free.
Property management fees: Costs associated with finding tenants and managing the property.
Repairs and maintenance: Costs to keep the property in good condition.
Water rates: Costs charged by the local providers.
Sundry: If rented via Airbnb, you could claim internet expenses, linen and other supplies.
Record-Keeping Tips
Maintain detailed records: Keep meticulous records of all rental income and expenses, including receipts, invoices, and bank statements.
Separate accounts: Use separate bank accounts for your rental property to keep personal and business finances separate.
Property management: Consider hiring property managers to streamline record-keeping and financial tracking.
Depreciation Claims
Depreciation allows you to deduct a portion of the cost of your rental property over its useful life. To claim depreciation, you'll need a depreciation schedule. Consult with a quantity surveyor or contact Tru Advisory for an introduction to one to obtain a depreciation report.
General Warnings
No of weeks available for rent: If your rental property is being renovated or advertised while vacant, you may have limited deductions.
Personal use: If you use the property for personal purposes, you may need to allocate expenses between personal and rental use.
Capital improvements: Costs for capital improvements, such as additions or renovations, may not be fully deductible in the year they are incurred.
Home Loan Review: If you haven't had a review of your home loan, consult with your mortgage broker or contact Tru Advisory for an introduction to one.
Hopefully, this guide has been helpful. For personalised advice tailored to your specific situation, please consult with your accountant.
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