In short, rental property expenses are expenses that are directly related to income earned from an investment property. To help you maximise your next tax return, I have compiled the following list of general expenses that you may be eligible to include in your tax return as a deduction.
Obviously, like all articles you read on the Internet, you should actually confirm all of this by speaking to your accountant before claiming them in your next tax return.
So, the first expense is advertising. If your property was vacant for part of the last financial year, and you spent money advertising for tenants, then you are probably using an agent and this will generally be deducted with the first month rent or property maintenance fees.
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If you use a property manager, then any of their fees, along with items such as bank fees on an investment loan or the account the rent is paid into, are also included. As are any body corporate costs, associated typically in Australia with apartments, or flats and units, townhouses and duplexes. Also you can claim the costs of any general administration fees, property management software, maintenance, insurance, etc
With strata fees, each owner is allocated their share of the expenses, annual budgets and maintenance plans are prepared by the owners corporation. You can also claim any establishment fees and costs for the setup of the original loan or refinancing interest on investment loans.
Then there are items such as cleaning of premises once the tenant has vacated the property, council rates on a property, garden and pool maintenance, these expenses are covered by the rent and are generally added to the cost of rent paid by the tenant. These costs are deductible for the owner.
Many landlords find that they have peace of mind from being in control of the garden and pool maintenance, knowing that their investment property will always be looked after, and at its best. This helps negate the risk of tenants failing to do so.
Are you aware also, that contents insurance is deductible and the amount will vary with your level of insurance. So this contents insurance typically covers floor coverings, window furnishing, appliances, light fittings and fully furnished properties, depending upon circumstances it may be other deductibles for insurance.
Then there is landlord insurance, that covers the landlord for financial losses related to the investment property such as theft, vandalism by tenants or their guests, and or tenants and failure to pay the rent. It is always wise to shop around for an insurance company that meets the needs of you as an owner.
Water, taxes and land tax are generally not paid if the property is deemed to be a principal place of residence. Any associated legal counsel fees for tribunal expenses associated with collecting overdue rent or the process of securing a warrant for tenant eviction. Obviously I hope you never need to claim that!
Then there are costs such as pest treatment for fleas, termites and other related nasties on the property. Property repairs, which also cover tenants who have the right to spend up to $1,800 for urgent or emergency repairs, if they have tried contacting either the property owner or the agent and have not received the same day communication.
So what situations are deemed an emergency? Well items such as hot water burst, serious lift or staircase fault, damage to premises that has caused it to be unsafe or insecure, storm or fire damage and so on. More information on this topic can be found in the residential tenancy act.
Then there is property maintenance such as gutter cleaning, painting, replacement of capital items such as carpets, kitchens, pool pumps, dishwasher, heating units or even the oven. You can also claim stationary expenses, such as postage, telephone calls related to the property, travel expenses to view the property, such as petrol.
Always remember to keep a log of kilometers involved, as well as any airplane tickets, accommodation and meals. Certain conditions apply around meals and you should seek clarification from your accountant before incurring these.
Any other related expenses should always be checked with your accountant to see if they are allowable.
If you’re looking for advice on the best way to finance your investment property or looking for an accountant with sound knowledge of investment properties and their tax benefits please contact your local professional Accounting association.