2017 Tax Tip #6 - Rental Property Deductions

Posted by Georgia Kirby on Jun 28, 2017 7:00:42 AM

Owners of rental properties that are either rented or are readily available for rent can claim immediate deductions for a numerous amount of expenses, such as:

  • interest on investment loans
  • land tax
  • council and water rates
  • body corporate charges
  • insurance
  • repairs and maintenance
  • agents’ commission
  • gardening
  • pest control
  • numerous leases (preparation, registration and stamp duty)
  • advertising for tenants
  • travel to inspect properties (within reason)

In the case of declining value of depreciable assets (such as stoves, carpets and hot water systems), and capital works deductions spread over several years for structural improvements like remodelling a bathroom, landlords may also be entitled to annual deductions.

It’s worth noting that the government has proposed that it will change the law from 1 July 2017, to no longer allow travel deductions that relate to inspecting, maintaining, or collecting rent for a rental property . This is to address concerns that such deductions are being abused, therefore being used as an integrity measure .

Further, the government announced that from 1 July 2017 plant and equipment depreciation deductions will be limited to outlays actually incurred by investors in residential real estate properties.

Plant and equipment forming part of residential investment properties as of 9 May 2017 will continue to give rise to deductions for depreciation until either the asset reaches the end of its effective life, or the investor no longer owns said asset.

To clarify if expenditure relates to repairs and maintenance that can be claimed immediately, or improvements which need to be claimed over time you can contact your CPA Australia-registered tax agent .

Topics: TAX


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