Rental Property Investment Deductions

It is important to know that if you do have a rental property, then you can claim a deduction for certain expenses you have incurred. For the most part, you can claim anything that you have had to spend money on for the rental property. However, it is also important to be aware of the things that you are not allowed to claim.

There are two different categories of rental property deductions:

1.) Expenses that you are able to claim a deduction for the same year that they are incurred. For example: advertising expenses, insurance on the property, loan interest, or any minor repairs.
2.) Expenses that are deductible over a number of years, such as a major renovation cost, borrowing coats, and deductions for the decline in a value of depreciating assets. Depreciation is known to be a tax deduction without spending any money. In any rental property you will need a quantity surveyors report, which will include various depreciating assets, which can range from ovens, to carpets or curtains.

List of examples of Rental property deductible costs:

• Borrowing costs
• Interest on loans related to the rental property
• Accountant’s fees
• Home loan insurance
• Maintenance and Repairs
• Rates and taxes
• Bank charges
• Quantity surveyor reports
• Deposit bond fee
• Body corporate fees
• Agents fees/commissions
• Legal costs
• Postage or stationary
• Depreciation
• Land tax
• Council and water
• Insurance premiums
• Travel costs to the rental property
• Advertising expenses
• Any lease preparation cost
• Mortgage discharge expenses
• Penalty interests
• Telephone, gardening, and cleaning

What things CAN’T be deducted?

Generally speaking, and rental expenses that relate to private or capital costs cannot be claimed. For example, the cost of buying or selling the rental property, or expenses connected to your own personal use of the property, such as using it as a holiday home. As far as capital gains costs that you cannot deduct, it includes a building inspection report, purchase of legal fees, or stamp duty.

Example of Items on a property that are NOT depreciating assets:

• Taps
• Switchboards
• Cables
• Mirrors
• Swimming pools

If you are unsure of any of these items or rules, it is wise to use a quantity surveyors report and also consult your accountant so that you can be clear.

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