The Ultimate Checklist: 15 Tax Deductions for Investment Property Owners

Property investment comes with plenty of advantages and rewards, such as increased financial freedom, diversified income streams as well as the ability to build long-term wealth. However, tax season can feel both messy and confusing. With multiple deductions available, it’s hard to know what you’re entitled to claim, and whether or not you’re missing out on some major savings. To help out, we’ve compiled the most important tax deductions to ensure you are not leaving money on the table this tax season.

How to maximise your Investment property tax benefits

Savvy property investors should always have an eye on maximising profits while minimising expenses. Tax time presents a great opportunity to do just that. When you better understand the deductions you are eligible for, you can avoid overpaying taxes and make sure that you get the most out of your investment.

The first step to maximising your property investor tax return is to deduce whether your property is positively or negatively geared before planning any claims. To do this you need to calculate whether the rental income generated is higher or lower than your expenses. For example, if your total deductible expenses exceed your rental income, you have a negatively geared property and can claim expenses to offset your other income. Alternatively, if your rental income is higher than your expenses, this means that your property is positively geared. At tax time, the income earned from these properties will be added to your taxable income. In this instance, knowing which deductions you are eligible to claim to reduce tax liability is important.

What isn’t a tax deductible expense?

To ensure your investment property is profitable, always ensure your claims are valid and directly related to the income earned from your property. Furthermore, knowing what you cannot claim on your investment property will help you avoid making any costly mistakes. Generally, you cannot claim expenses related to:

The cost of purchasing a property (such as agent’s fees and legal costs)
Stamp duty
Renovations or repairs carried out before renting out the property
Capital work that enhances the property’s value
Bills paid by tenants
Property selling costs.

It’s also important to note that any expenses incurred when the property is not available for rent or when you use it for personal reasons are also not claimable. Knowing what you can’t claim is not only crucial in ensuring the validity and accuracy of your tax return but also in maximising your allowable deductions

Preparing for your tax return

Now that you understand deductions and what is not claimable, it’s time to get ready for filing your property investor tax return. The best way to do this is by keeping track of your expenses throughout the duration of ownership and making sure that all documents are organised in one place.

Land tax, interest payments, maintenance repairs, and administration fees are all examples of items you should keep a record of. Store this documentation safely and consider backing it up digitally or physically. Not having this evidence can result in penalties or fines, so it’s important to take the time to prepare correctly.

The 15 tax deductions you need to know

Property maintenance — Expenses like cleaning, gardening, and pest control are tax deductible.
Property repairs — These repairs must be solely for practical purposes and not aimed at increasing the value of your property (i.e. no capital repairs).
Property management and administration fees — You can claim fees for the property management team you hire to help manage your investment property.
Interest — Any interest you pay on a loan to purchase the property or any loans used in relation to the investment is claimable.
Council rates — The expenses you pay for local government services like water, sewerage, and rubbish collection can be deducted.
Insurance — Protecting your property from any unforeseen circumstances is a sensible move and the expenses for this can be deducted.
Depreciation — This will allow you to claim a tax deduction on the wear and tear of your investment property.
Travel expenses — If you must travel to view the property, undertake repairs, or inspect it in any way, the cost of travel can be deducted.
Land tax — As long as your property is tenanted, you can claim deductions for the amount of land tax you pay.
Utilities — Any utilities that your tenants didn’t pay for can be deducted.
Advertising — Any costs for advertising your rental property can be claimed.
Legal fees — Any legal fees incurred from managing your rental property can be deducted.
Quantity Surveyor fees — If you’re claiming a significant amount of depreciation, it’s recommended to obtain a quantity surveyor report and have a tax depreciation schedule put together. The cost of this can be deducted.
Body Corporate fees — The same applies to renting out a property in a body corporate. Body corporate or strata management fees are deductible.
Tax preparation — Any fees you incur from hiring an accountant to manage your investment property tax return can be claimed.

As you can see, there are a number of tax deductions associated with investment property ownership. Knowing what rental expenses you can claim will help you to save time and money in the long run. It’s important to seek professional advice when it comes to tax deductions, as the rules can change over time. With the right information and advice, you can ensure that your investment property provides you with a great return for many years to come.

Final thoughts

Investment property ownership can be a great way to build wealth and create financial freedom. Knowing what tax deductions you can claim will help you to reduce the amount of tax you pay and ultimately increase your return on investment. It’s important to regularly review your deductions in order to make sure that they are up-to-date. By staying informed and taking advantage of the deductions available to you, you can ensure that your investment is as profitable as possible.

Owning a portfolio of Investment properties is the key to long-term wealth and financial freedom. Taking full advantage of the tax deductions available will help you maximise your return on investment and make sure that your portfolio provides you with the best possible return.

At Ironfish, we understand the complexities of investment property ownership and are here to help you make the right decisions for your situation. Our team of experienced property managers are passionate about caring for your property and ensuring that it remains a lucrative asset for years to come. With our property management services available in all the major cities in Australia, we can help alleviate the stress of managing your investment property and allow you to focus on reaching your financial goals. Contact us today to find out more about how we can help you make the most of your investment property.

Perth Property Manager

Meet Katrina Mili

With over two decades of experience in the Perth Property Management industry, Katrina Mili has established herself as a highly respected property leader. Renowned for her proactive communication, meticulous attention to detail, and astute market intelligence, Katrina is a trusted professional in the industry. Having successfully managed an impressive $3.75BN in real estate assets throughout her career, she brings a wealth of experience that few can match.

Katrina’s expertise in property management, market-leading leasing techniques, and strategic approach ensures her clients achieve optimal outcomes. By tailoring her services to meet the unique needs of each client, she maximizes investment property returns while effectively managing risks. Her unwavering goal is to assist clients in building a secure financial future through property.

When it comes to navigating the complexities of the real estate market and unlocking the full potential of your investments, trust in Katrina Mili’s extensive knowledge and market leading results. Experience the difference she can make for you today.

Katrina Mili

T: 08 6399 6688

M: 0449 688 618

E: Katrina.Mili@ironfish.com.au

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