Straight From The Australian Taxation Office
ATO investment property tax deductions are pretty straight forward. This video explains the basics.
ATO Investment Property Tax Deductions
Let’s talk about expenses you can claim.
- the actual cost of buying and selling the property
- initial repairs I had to make
- those costs of use when working out any profit known as capital gain when I sell the property.
- If I own the property equally with my wife I could only claim half the expenses and I would have to declare half the income.
We’ve talked about what you can’t claim what can you claim?
- mortgage set up costs
- loan establishment fees these are usually claims over five years
- you can also claim for wearing out of assets known as depreciation such as
- carpets and appliances
- building costs these are generally claimed at two-and-a-half percent per year
What happens if you only rent your property out for some of the year?
What if you rent the property out at a reduced rate?
Say to two family or friends in that case what I can claim is usually limited to the amount of rent that I received.
There are specific exemptions for properties managed by Registered Housing Providers click below to find out about those “extra savings”
It sounds complicated but its not really. Let’s look at what happens when Michael stays in his house for one month. This is for his personal use so he can’t claim deductions for this period.
Here’s how we’d work it out. For all the expenses that occur evenly he could simply divide them by 12 to get a monthly rate that includes
- council rates