House Tax: EOFY Property Taxes
Tax time is quickly approaching, and getting your finances in order is a must. This can be a difficult endeavor, especially when you own a revenue-generating investment property. Our financial experts have put together some top tips to help save on your house tax bill at the EOFY. Find out these in House Tax: EOFY Property Taxes below.
Rental Properties are Tax Deductable
You can claim significant tax back on a large amount of the costs incurred when renting a property. Some examples of these are below:
- advertising for tenants
- body corporate fees
- bank charges
- and more!
In order to claim these deductions on your house tax, the ATO must be provided with the following at the EOFY
- Address of the investment property
- Legal ownership papers
- Settlement date
- Price at which the property was purchased
- A quantity surveyor’s report if you are submitting your taxes for the first time
- Date of loan issuance
- Loan amount
- Details of the loan contract
- Copies of paperwork of the loan and details of the charges the bank charged to issue the loan. these details may include:
- Fee of Establishment
- Fee of Admission
- Lenders Mortgage Insurance
- Mortgage Stamp Duty
- Legal costs of lenders
- Details of any other costs incurred
- Details of your annual rental income in full
- Any sources of income generated through tenants, agent or the insurance company
Fair few details! If you require help putting this information together, get in touch with us here!
Get Tax Back With Your Depreciation
A property experiencing general wear and tear with use, falling out of fashion, or experiencing some sort of external factor that reduces its value will result in smaller rental income, leading to depreciation. This depreciation can be offset through tax deductions around EOFY.
To claim this depreciation, a tax depreciation schedule is required. This shows how much depreciation you should be able to claim over the lifespan of the property. In order to have this depreciation officially documented, you will need to enlist the services of a quantity surveyor. A quantity surveyor is the only type of licensed contractor that the ATO will accept a depreciation schedule from.
- measure, photograph, and document all depreciable items in the property;
- work out the construction costs of the building (for buildings completed after July 1985);
- calculate the value of all plant and equipment items; and
- create a detailed report that itemises the building allowance costs and all plant and equipment item costs, along with the rates at which you can depreciate them and over what period.
The cost of obtaining the depreciation schedule is a one-off fee, typically between $300 – $800, and is normally tax-deductible. Once the depreciation schedule is completed, your accountant can start claiming deductions on your behalf, up to 40 years. In most cases, arranging a depreciation schedule ends up financially beneficial, however it is worth arranging a call with a reputable surveyor to determine whether it is right for you.
Tax Deductible Interest and Mortgage Expenses
Did you know that you could actually claim mortgage expenses at the EOFY as house tax deductions if you opt for a rental property? The ATO allows you to deduct borrowing expenses like loan establishment fees that you paid, the cost of preparing and filing documents, and of course, the title search fee if they are above $100.
You can also claim interest charged on loans. These can be:
- to purchase depreciating assets, or
- for renovations, or
- for repairs to the property required due to you using it to produce rental income
- or for the outright purchase of the house
On the other hand, there are certain mortgage expenses that you cannot claim with the ATO.
- Stamp duty charged by the state or territory where the property is located
- You are not allowed to set off fees paid to the solicitor for preparing mortgage documents
- Legal costs relating to resisting land resumption or defending your title of the property.
For a more information on this, click here.
How Vision Can Help
As mentioned in the above House Tax: EOFY Property Taxes article, putting together the right information for the right type of house tax deduction can be a difficult and time-consuming process. Our award-winning property and finance experts have helped hundreds of clients in this area. If you’d like our help, please get in touch with us here!