Property investment has many benefits regarding finances, resulting in significant returns for many owners. But how does investing in property affect tax deductions?

This guide will detail the top tax deductions Australian investment property owners should know. 

When Property Owners Can Claim Deductions

Deductions can only be claimed when investors have a property available for rent or are in tenancy periods. All expenses towards the property for business purposes must be accounted for, with sufficient records proving these expenses. 

Landlords and property owners have several ways to lower their annual tax bills, and efficiently identifying which expenses can be deducted is an excellent way to establish a healthy cash flow. Let’s consider the top tax deductions that can be claimed;

  1. Council Rates

Investment property owners can claim deductions on council rates in the year the costs occur, but this only applies to periods in which the property has been rented. For instance, if you have an investment property rented for six months, you can only claim rates for those six months. This would work out on paper as claiming 50% of the total amount you paid in council rates for investment property during that year. 

  1. Rental Advertising Costs

You must complete a specific level of advertising to get people to rent your property, spreading awareness of your listing and reaching potential tenants. Advertising can be pursued through online campaigns, printed media such as signs and brochures, and even features in news articles. 

When you use these advertising mediums, you can claim these expenses against your annual income as long as the payments occurred in the same year.

  1. Land Tax

Land tax can be used as a deduction if your property is currently let or rented. This tax is slightly more complicated than most as it differs between states and the timings of when the claiming can occur. Consulting with a tax advisor and checking your state government guidelines will ensure you claim correctly. 

  1. Depreciation

Depreciation is another tax deduction you can take advantage of which involves claiming deductions for gradual wear and tear of both your property and its assets over time. 

You can claim depreciation on both the building structure (capital works deduction) and the assets within the property (plant and equipment deduction), but it’s crucial to do so accurately. 

Because of this, property owners tend to hire quantity surveyors to assess the depreciable assets and calculate any eligible deductions.

  1. Insurance

The cost of insuring a rental property can be deducted by checking quarterly statements or requesting an annual breakdown from your insurance provider. 

  1. Interest Deduction

And lastly, property owners can also claim deductions on any of the interest paid on loans that were used to purchase, renovate, or generally just maintain their investment property – anything that’s used for income-producing purposes.

Need Help Organising Your Taxes? We Can Help

Whether you’re working out tax deductions for the property you own or for your business, we have advisors who can help you succeed. Get in touch today to learn more.