Tax tips for property investors

Savvy Australian property investors can save a large amount on their tax bill by deducting associated expenses.

Negative gearing allows property investors to claim any shortfall between their income and expenditure on an investment property as a deduction against their total taxable income.

Most property investors are aware of the usual expenditure deductions that they can use to offset any income earned by an investment property. Regular costs such as maintenance, repairs, interest on loans and management fees can all be used to offset rental income.

However, there are a few lesser known tax strategies that property investors may care to look at for this financial year:

Refinancing your mortgage
Refinancing your mortgage usually incurs  a couple of one-off costs and fees. Investors who are planning on refinancing their mortgage may care to consider doing so before June 30 in order to claim these costs as a deduction in the 2014-15 financial year.

Renovations by previous owner
Individuals may be eligible for a deduction for depreciation on the cost of improvement by a previous owner, provided items are identifiable and itemized in a depreciation schedule.

Repairs at time of purchase
Expenses for repairs to the property are deductible provided that they relate to wear and tear or any other damage as a result of earning rental income

Depreciation schedule
A depreciation schedule prepared by a qualified quantity surveyor outlines the deductions available on an investment property. This can help to add a significant tax deduction for depreciation and also maximise an individuals cash return. The cost of a depreciation schedule is tax deductible.

Stay on top of your paperwork
Make sure that you are aware of the depreciations on any fittings or repairs, as well as any other costs you have incurred, for example, strata fees, management fees or rental losses.

It is important to keep all receipts to be able to prove deductions and show why the expense was incurred to derive assessable income.

Property investors are highly advised to discuss their tax situation with a property tax accountant to ensure that their activities are compliant and that tax savings are maximised.

If you wish to discuss this further or you have other rental property related questions please contact Property Tax Specialists  on or email

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