Investment Property Tax Checklist

It is common that inexperienced or newbie investors often miss out on great tax deductions and end up paying more than they should from their pockets, simply because they are unaware of the rules set by the tax office. In Australia, where many parts of the country are still experiencing a strong real estate market, naïve investors don’t know what tax deductions they can claim.

In order to maximise such deductions from your investment property , we have created a checklist of all the details, items and statements you will be asked to present at the tax office once you go to claim these tax deductions. It’s time you become a pro and have all the requisites in order.

Details of the investment property

In order to claim your deductions on a rental property, the owner must provide the taxation office with the following details:

  • Address of the investment property
  • Legal ownership papers
  • Settlement date
  • Price at which the property was purchased
  • Present a Quantity Surveyors report if you are claiming taxes the first time

Details of the loan

The taxation office will also demand details of the loan you borrowed in order to make the claimed tax deductions.

  • 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 income

  • Details of your annual rental income in full
  • any other source of income generated through tenants, agent or the insurance company

Details of the costs incurred

There are two different types of tax deductions which an owner can claim. For your assistance, we have tried to break them down separately.

1.  Obvious Tax deductions

  • Advertising costs
  • Fees of agents to manage your investment property
  • Fees charged by the bank
  • Gardening & Mowing Costs
  • Body Corporate Fees
  • Costs incurred to maintain the property
  • Council Rates
  • Insurance Fees
  • Land Tax
  • Interest Paid on the loans
  • Legal Fees
  • Fee to obtain Quantity Surveyors Report
  • Repairs to the investment property
  • Postage, telephone and stationery costs of your investment
  • Water Rates

2.  Non Obvious Costs

  • Cleaning products to renovate and repair the investment property
  • Wages paid to repair man, lawn mowers or garbage man to keep up your maintenance property.
  • Payments made to spouse or your children to keep the records of the investment property such as bookkeeping.
  • Details of your travels related to your investment property such as travelling to the bank, going to your insurance agent office, visiting your accountant’s office etc. In addition to this, also present the office with your travel details and the type of car you used for transit.
  • Details of any purchases made for your office (stationary, cutlery, paintings, sofas etc) so as to enhance the outlook of the place to meet your investors and prospective buyers
  • Details of any gifts bought related to your investment property. These may include a bottle of champagne, flowers, books or chocolates for your tenants and their children when you visited them on any special occasion.
  • Details of your internet bills if it was used to stay in touch with your tenants, accountants’ agents or property manager.

Once you provide the tax office with all these details, you can claim tax deductions on your investment property, save most of the money and invest it in another property. This is exactly how pro investors work. They make the most of such tax savings and continue to invest in the real estate market for better tax deductions.