Your tax liabilities as a property investor differ from those who own the home they reside in. Fortunately, the majority of these tax differences are beneficial, and you will be eligible for a number of tax benefits.

Tax deductions are available for a variety of rental property-related expenses for property investors. Before filing a claim, double-check your eligibility, but here are a few examples:

1. Interest payments on your property home loan

All interest paid towards a mortgage is tax deductible for property investors. This often is a substantial tax deduction but there is more when it comes to the mortgage:

  • Loan maintenance expenses (annual/monthly)
  • Offset account expenses
  • Any fees associated with withdrawing funds from redraw facilities

While you can deduct your interest payments, it’s still a good idea to shop around for the best interest rate. You’ll be able to claim all of your interest-only payments if you have an interest-only home loan.

2. Repairs & Maintenance

As a property owner, you’ll almost certainly have to spend on repairs to damaged parts of the property. Repairs, fortunately, are tax deductible.

Any damage must be repaired by returning the object or feature to its original state to be deemed a repair. This implies you won’t be able to covertly improve the broken item and claim it as a repair. It is considered an upgrade, for example, to replace the panels of a broken fence with steel when they were originally made of wood.

You can also claim Improvements, but you won’t be able to deduct them all at once. Instead, depreciation can be claimed over time.

Maintenance is also a tax deduction that can be deducted right away. It refers to maintenance work done on a property to keep it in livable shape, such as plumbing and lawn mowing. A lot of maintenance work can assist in preventing damage and, as a result, save money in the long run.

3. Depreciation assets and building structure

The depreciation of the rental property’s construction can be claimed by investors. Depreciation is not a tax benefit that can be deducted all at once; instead, a Quantity Surveyor must create a depreciation schedule that summarizes the deductions available over the useful life of your property.

You can claim any changes you make under the capital works or capital allowances categories. Any improvements you make to a property can raise its value or desirability. The following are some examples of improvement:

  • New appliances
  • Extensions to a property
  • Fencing upgrades
  • Renovations to the kitchen and bathroom
  • Landscaping
  • You can even claim the depreciation of previous owners’ upgrades.

4. Advertising

To begin your hunt for tenants, you may need to spend some money. Paying for an agent, photographs, or an internet listing are examples of this. This is all tax deductible.

5. Fees for strata, council rates, and some invoices

Your body corporate fees will be deducted if your property is on a strata title (usual with apartments). Council rates, water, energy, gas, and electricity costs can all be recovered in the same way.

6. Other expenses such as:

  • Fees for property management and real estate agents
  • Legal fees
  • Stationery
  • Travel expenses
  • Property tax
  • Pest control

Can you claim tax deductions for your investment property even if you aren’t renting it out?

If you choose to leave an investment property unoccupied, you won’t be able to claim the standard rental property tax deductions. However, keeping track of your expenses is still a good idea because they may be used to offset capital gains tax when you sell in the future.

If your property is currently vacant but you are actively looking for renters, you can still file a tax return. Evidence of your search for tenants, such as online rental listings and proof of interactions with a real estate firm, may be required by the ATO.

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