Claiming and Prepaying your Investment Property Expenses

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Tracking all expenses on your investment property and claiming proper tax deductions means that you can offset much of the cost of owning that property.


When you own rental property that is currently being rented, you can usually claim any expense associated with earning that income. These landlord expenses are deductions from your taxable income – or split deductions if you own the property jointly – and there are lots of them to consider.

An expense must be incurred in the line of earning an income from the property, so if it was not rented out, there is usually no deductions applicable.

Your accountant will do all the checking... but just to be sure you claim all the allowable deductions on your next tax return, here is a list of 25 Rental Property expenses for you to consider:

  • Advertising for tenants

  • Bank charges if a separate property mortgage account

  • Body corporate fees, if in a Strata Title

  • Cleaning costs, e.g. if they moved out and a cleaner had to be assigned

  • Council rates

  • Electricity and gas bills – portion you paid

  • Gardening and lawn mowing

  • Insurance – landlords, building, possibly contents, public liability

  • Interest on loans

  • Land tax, if you are a multi-property owner

  • Legal expenses related to managing the property. (Legal fees on the purchase of the property are not claimable).

  • Lease costs – preparation, registration, stamp duty

  • Mortgage discharge expenses

  • Pest control

  • Property agent’s fees and commissions

  • Capital Works – a deduction on the cost of altering the fixed building or surrounds (see the ATO description)

  • Quantity surveyor’s fees (such as for a rental property deduction schedule)

  • Repairs and maintenance

  • Bookkeeping fees

  • Security patrol fees

  • Servicing costs, e.g. servicing an A/V system or water system

  • Stationery and postage

  • Tax-related expenses

  • Water charges

Some investors would perhaps like an instant tax deduction. If you prepay one or more of your rental property expenses (e.g. insurance) that covers a period of 12 months, and the period ends on or before June 30, you can claim an immediate deduction. Some prepayments that don’t meet these two criteria might still be claimable but will need to be spread out over two or more years. (Just check with the accountant first).

Note:  From 1 July 2017, travel to inspect rental properties or collect rental for individual, residential property investors cannot be claimed as an expense

 

Claiming your Expenses on the Fly

When you looked at the list above, did you realise that you haven’t been claiming all the expenses you could have? At Team Accounting, we’re happy to answer all your questions on what is allowable.

We could also implement a system whereby you scan receipts straight away (on your smartphone) and enter them in categories in the app of a SAAS bookkeeping tool (e.g. Xero, Quickbooks). This will save the data to the Cloud for later tax return analysis. Custom expense categories can also be created inside the Chart of Accounts area.