Solving your tax problems investment properties

There are various ownership structures for owners of investment properties.

These range from a trust to a company – or having the property in your own name.

When lodging your investment property tax return you should therefore tailor your tax return according to the relevant ownership structure.

A good rule of thumb is to always keep records of any expenses from the very start, and to determine which of these expenses can be claimed as deductions.

This applies whether you invest in an entire rental property – or just rent out some of your current property.

And always remember these expenses can be claimed as  deduction in your investment tax return.

Where the investment property is held in your own name, the income and deductible expenses should also be included on your individual tax return.

Any losses incurred on the property, such as the interest on the mortgage and depreciation, can also be offset against your salary and other income.

This is called ‘negative gearing’, and it can significantly reduce your tax liability and boost your refund.

Investment property tax deductions

Where the rental property is owned by a trust or company, any income (or loss) should be included on the company or trust’s tax return.

However, there is no negative gearing offset or tax loss on company or trust investment properties against your salary income, as any such losses are quarantined within the trust or the company.

When the investment property is held in your name or in a trust, you can reduce your capital gain debt significantly when you sell by claiming a 50 percent deduction on the capital gain.

This benefit is not available to a company, however.
Before buying an investment property, it is important to seek advice from an experienced tax accountant in order to get your ownership structure right and also, to save tax.

Obtaining a depreciation schedule for your investment property from an experienced quantity surveyor should also reduce your tax significantly.

Spending as little as $450 can help maximize your depreciation deduction for the life of the property – while also saving you up to $3000 in tax; depending on your situation.
To find out more about investment property tax deductions, contact a registered Tax Return Perth consultant to maximize your tax savings.

Preparing your rental property tax return

When preparing your rental property tax return, it is important to consider the following key points:

  • Record all incomes received from rental properties or short-term rentals, such as holiday homes
  • Claim only those expenses incurred when the property was being actively rented, or when you were trying to rent out the property for commercial terms
  • Don’t miss out on depreciation on building and appliances
  • Keep an appropriate record of all income, purchase, expenses, sales, and all transactions related to the rental property.

At Tax Return Perth, our experts are adept at helping you to better understand the applicable Australian rental income tax rate, and also how to get the maximum return on your tax liability.

Take our advice on investment tax returns

At Tax Return Perth, we specialise in doing tax returns for rental properties, and giving advice on other property tax matters. Your first consultation is free so contact us today.

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