Tax­ing time for in­vestors

Pilbara News - - Property - Hay­den Groves

The start of a new fi­nan­cial year means one thing to most peo­ple — tax time.

If you rent out a prop­erty, it is im­por­tant you gather all your records, ex­penses and pa­per­work in prepa­ra­tion for do­ing your tax re­turn.

Be­ing dili­gent with keep­ing records from when you first buy your in­vest­ment prop­erty will make this time of year less daunt­ing.

Your prop­erty man­ager can as­sist by pro­vid­ing fi­nan­cial year state­ments de­tail­ing all trans­ac­tions re­lat­ing to your prop­erty through­out the 12-month pe­riod. You will need proof of all ex­penses so you can claim every­thing you are en­ti­tled to.

If you have car­ried out any main­te­nance or made any im­prove­ments to the prop­erty, you will need to pro­vide ev­i­dence of this ex­pen­di­ture.

It is vi­tal records are kept for a min­i­mum of five years and, in some cases, for at least five years af­ter the prop­erty is sold.

In your tax re­turn you must in­clude the full amount of rent and other ren­tal-re­lated in­come you re­ceive.

In ad­di­tion to reg­u­lar rent pay­ments, ren­tal in­come can in­clude ren­tal bond money you were en­ti­tled to re­tain, let­ting and book­ing fees you re­ceive and any in­sur­ance claims that were paid.

Come tax time, you will be look­ing to claim de­duc­tions for re­lated ex­penses for the pe­riod the prop­erty has been rented out.

The Aus­tralian Tax Of­fice has re­cently ad­vised it will be tar­get­ing ex­pense claims on in­vest­ment prop­er­ties this year, es­pe­cially for travel claims, so it is very im­por­tant to be pru­dent when making claims.

De­duc­tions can be made on things like man­age­ment and main­te­nance costs, which can be claimed im­me­di­ately, and bor­row­ing ex­penses, de­pre­ci­a­tion and cap­i­tal works spend­ing, which are usu­ally de­ducted over sev­eral years. The im­por­tant thing to re­mem­ber is de­duc­tions can be claimed only if the prop­erty is be­ing rented out or is gen­uinely avail­able for rent.

Be­ing avail­able to rent ref­er­ences the pe­riod when the prop­erty is ad­ver­tised for rent and re­ceiv­ing wide­spread ex­po­sure to po­ten­tial ten­ants.

If you have sold your in­vest­ment prop­erty in the past fi­nan­cial year, any cap­i­tal gain made on your prop­erty will be sub­ject to cap­i­tal gains tax.

Find out more about how to lodge your tax re­turn as a prop­erty in­vestor at ato.gov.au, or from your reg­is­tered tax agent. Hay­den Groves is the pres­i­dent of the Real Es­tate In­sti­tute of WA.

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