It is not surprising that property is one of the
preferred methods of investing in Australia due to its many tax benefits. But,
with tax time upon us, it is essential for investors to know their obligations before
filing a claim with the tax office. Whether you are submitting the return
yourself or working with an accredited accountant, here are tips to help
investors to get the most out of the tax return when it comes to Brisbane investing in property.
Determine What You Can Claim
Property investors may claim a considerable
amount of tax deductions, and knowing these in advance could help you save lots
of money. You may claim council rates, gardening costs, advertising for
tenants, insurance, management fees, and reasonable travel expenses, for
example, to inspect the property. It is better to consult with your accountant
to get a comprehensive list of what you are eligible to claim.
Know What You Cannot Claim
You cannot claim the expenses that the tenant
pays. Also, you cannot claim the expenses that you accumulate through your
personal use of the property. In most states in Australia, you cannot claim
those expenses that relate to purchase or disposal of the property, for
example, advertising costs, conveyancing fees, purchase cost of the property,
stamp duty, and building inspections. But remember that these costs can create
part of the cost base of your property.
Identify the Income You Have To Declare
When investing in property, make sure to have a
clear idea of the income you need to declare. The main form will be the rent
payments you obtain. You also need to include any additional income, including
money from your bond, insurance payouts, or additional lump sum payouts
connected to your property.
Solve the Cost Base
The cost base comprises the expenses associated
with the acquisition and sale of your investment property. Knowing the correct
cost base is crucial, as it can affect the capital gains tax you may need to
pay. The cost base is deducted from the overall proceeds, while the remaining
amount is the gross capital gain. However, the tax you will need to pay depends
on various factors.
Save Your Records
It is a requirement of the Australian Tax Office
that investors keep records like their purchase contract, financial records,
proof of any expenditure of improvements on the property, and all documents
associated with capital gains tax. These are the kinds of documents that
contribute to creating your cost base, which is necessary for
the years to come. Store them in a safe place to prevent loss of income or
headaches if you decide to sell eventually.
Remember To Claim Interest
You can include in your claim any loan interest
you are paying that has been used when investing in property. If you have one
designated loan for your property, you qualify in claiming the full interest
amount. However, if you have an account you use personally and for the property,
you need to identify which interest payments are for property buying.
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