It’s tax time again, the chillier time of the year when you may or may not be looking forward to going through your property management and allowable deductions statements.
Here are a few tips for landlords
1. You will receive a statement from your professional property manager at the end of financial year itemizing your income, fees and other expenses. You should present this to your accountant.
2. Have your ‘tax deductable’ expenses and receipts itemised and listed. A tax deductible item is an expense you incurred through owning your rental property. They are only allowable if they are for the sole purpose of benefiting the rental business – things like accountancy expenses, advertising, insurance against loss of rents, insurance fees, rental warranty and legal expenses among others are also considered deductible.
3. Maintenance and repairs can be deducted from your taxable rental income – plumbing, carpentry and services to fix or improve the property.
4. Travel depreciation – don’t overlook the value of those possible small trips to visit your property. According to news limited, there are about 700,000 landlords who claimed a combined $738.6 million in 2008 for travel expenses. This includes visiting the property to collect rent, inspect and make improvements.
5. Rental Insurance – covering both damage to property by tenants, through weather events ( if applicable ) or through non payment of rent
6. Your home office – having a home office where the rental property is monitored/ accounted for from is another means to offset tax on a rental property.
7. Furnished – having a fully furnished rental property creates additional benefits – check with your accountant
8. Legal Fees – any legal fees associated with the rental property are deductible
Disclaimer: Contact your professional licensed tax agent for advice on rental property deductions. This article is general in nature therefore investors are advised to use the services of a professional.