Property Investment Guide: Tax Deductions

Whether you go about it alone or through a joint venture partnership, property investment requires a great deal of resources on your part. You will realise this once you see that your expenses don't end once you acquire the property. You will also have to spend money to advertise it, to pay for the required fees, and also for its maintenance.

However, the great thing is that many of your expenses can be tax deducted. This is important if you wish to maximize your money, which should be one of your priorities as an investor. We're listing what you could count as tax deductions below, starting with:

  1. Advertising. This is a crucial part of attracting tenants to your property. Unless you advertise it, people won't even know that you're putting it up for rent. However, things are a little different if you're advertising to sell the property. It would be considered as a capital expense, making it a part of the property's cost base.
  2. Body Corporate Fees. If a body corporate oversees the maintenance of your property, you will pay fees for things such as repairs, pest control, and gardening. You could deduct the fees you paid from your taxes.
  3. Gardening. If you handle the gardening and the mowing of your property, you could also deduct your expense on this from your taxes.
  4. Insurance. As an investor, chances are that you cover yourself and your property with insurance. Coverage for repairs due to accidental damage and coverage for injuries to tenants caused by defects in your property would be taken care of by your insurance. This costs money but is also tax deductible.
  5. Land Tax. If you own the land upon which the property is built, the local tax office will also tax you for this. The amount you'll pay depends on the estimated value of the land.
  6. Repairs. Your expenses for regular repairs and maintenance you perform on the property (such as fixing taps, changing bulbs, repainting walls) may also be deducted.

For more information on your tax-deductible expenses, consult your accountant. Meanwhile, if you're looking for a home loan or have a current one that you wish to pay off sooner, contact our qualified advisors at Rate Detective. They will look into your personal circumstances and provide you with rate comparisons from Australia's top lenders. Contact us today!

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Published on November 11-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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