Year End Tips for Property Owners

Borrowing Cost
Borrowing costs may be written off over the lesser of five years or the term of the loan.

Personal Expenses
Ensure that any claims or interest on borrowings for investments can be clearly separated from interest on borrowings of a personal nature.

Renovations By Previous Owner
You may be eligible for a deduction for depreciation on the cost of improvement by a previous owner, provided items are identifiable and itemised in a depreciation schedule.

Capital Gains Tax
The ATO is closely monitoring undisclosed capital gains including gains from disposing of assets to invest in superannuation. Ensure any capital gains on the sale of property are correctly recorded.

Get The Help Of A Quantity Surveyor
Having a depreciation schedule prepared by a qualified quantity surveyor may help add a significant tax deduction for depreciation. The cost is also tax deductible and helps substantiate any capital allowance claim you may have.

Be Able To Prove Your Claim
Make sure you keep receipts to prove your deduction and show why the expense was incurred to derive assessable income.

Self Education Expenses
You may claim the cost of obtaining educational material such as investment related books, seminars and magazines.

Pre-pay Interest
If allowed by your lender, this is a strategy to defer the payment of tax. Factors such as anticipated future income, interest rates and cash flow impact should be considered fully beforehand.

Repairs at Time of Purchase
Expenses for repairs to property are generally deductible provided that they relate to wear and tear or other damage as a result of earning rental income. The cost of initial repairs at the time of purchase are not deductible.

Short Term Holdings
If you have renovated a property with the view to selling it at a profit in the short term, you may find yourself taxed as a ‘profit making scheme’. This means you will not be able to take advantage of CGT concessions.