As financial year end approaches, many people will be considering end-of-financial year tax issues, so we believe this is a good time for investors to be thinking about depreciation on their asset.
It is important to know what you can and cannot claim as a tax deduction on an investment property. This is because the Taxation Office spends a great deal of time checking through investment property owners’ tax returns. There are some expenses you can’t claim. For instance these include stamp duty and legal costs associated with purchasing the property. Keep a record of these as they should be added to the property’s initial cost to determine a capital gain or loss when you eventually sell the property.
Tax deductions
If you have been thinking of making improvements to your investment property, it is worth remembering that repairs attract tax deductions against the year’s income. Ideally, you should not take action purely to secure a taxation benefit. Rather, repairs should improve a property’s ability to attract and retain tenants or to achieve a higher rental. In making claims, you need to be careful. The repair of a gas appliance for instance will be fully tax deductible whereas the purchase of a new oven will not; that comes under depreciation allowance. Depreciation allowance is one area that many investors fail to take full advantage of when determining deductions because it can be difficult to understand latest rulings and qualifications. To obtain the maximum tax benefit from your investment, it can be a good idea to talk with people who have expertise in this complex field, such as a property tax depreciation expert. They are able to provide Tax Depreciation Schedules which often help to maximise tax deductions. If you would like further information on this topic, please feel free to call us.