Being able to maximise all of the property investment tax benefits available will make a great difference to being able to return a year on year profit from your property investment portfolio. It will require hard work and time to really understand how the whole system works. It would make good sense to take on a financial specialist to assist you. This would be a particularly good idea if you have a full time job and little time to dedicate to the necessary research and administration to make sure you achieve this goal.
It is important to get organised and understand the five key areas where you can maximise your tax benefits in Australia. Collect all the invoices and details of payments you have made to help your property investment portfolio and gain the best return on your investments.
Depreciation is an important contributor; each year your accountant will advise you of the amount you can depreciate your assets as acceptable by the Australian tax authorities. Depreciation allows you to reduce the value of fixtures and fittings because of wear and tear. Many property investment owners chose to install expensive fixtures and fittings, so that the depreciation amount is greater and this helps them to offset any gains they make on their other positive cash gearing properties. Take note that depreciation does not exactly match real wear and tear. For example, a cooking range from a top supplier can be perfectly operational after 5 years use. However, for the purposes of depreciation, the cost may have been already completely written off. The result will be that you can rent the property out at top rental rates again without having to complete a makeover.
Mortgage interest will probably be your biggest tax-deductible expense. As a landlord, you are perfectly entitled to claim a deduction on all the mortgage interest you are required to pay. Don't forget that stamp duty payments are also completely tax deductible. If you have had the need to take out home improvement loans to maintain you property investment portfolio, remember the interest these loans attract can be added to your tax deductions claim.
As a landlord in Australia, you are required by law to pay landlord's liability insurance for the properties in your property investment portfolio. The good news is that these payments are completely tax deductible. This also applies to employee worker's compensation insurance; so don't forget this important contributor to your tax deductions.
Maintenance and repairs are essential and necessary to maintain your property investment portfolio in good condition. You are able to claim for these costs too, together with land tax fees, gardening and landscaping maintenance and corporate fees. So, remember to gather these together in your tax benefit claim. Don't forget that painting and decorating, as well as the costs for repair of broken windows or a broken water pipe are also eligible.
Should you need to travel to collect rent or go to the properties in your property investment portfolio, you can claim for your travel expenses. Of course you do need to be able to provide evidence to support that your travel was really to attend to your properties. If you can be sure tenants and suppliers you may have visited can confirm you were there, then there should be no problems.
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