Common Questions about Property and Tax
As the 2019–20 financial year has quickly wrapped up, it’s left many of us thinking about our tax. For people who have purchased an investment property, tax time may look a little different than previous years. To give a bit of an overview of considerations you’ll need to make, we’ve covered some commonly asked questions.
What are the key dates I need to keep in mind?
The financial year ends on June 30, which means from July you can lodge your claim. We thoroughly recommend keeping records and organising yourself throughout the year to make tax time a little less stressful. Once the financial year has ended, you have until the 31st of October to lodge your claim. However, if you use a registered tax agent there are some instances where you can lodge your claim after this date.
I have a rental property, should this be declared as income?
The income you need to declare will depend on your personal circumstances, but for the most part rent and rent-related income needs to be declared to the ATO. Rent-related income may be things like rental bonds you are allowed to keep due to damage or unpaid rent, or insurance payouts in some instances.
What kind of expenses can I claim?
This too is unique to the individual, but some expenses you may be able to claim include management costs, maintenance expenses, body corporate fees, insurance and depreciation.
What is property depreciation?
If you own a residential investment property, you may be able to claim property depreciation each financial year. In its simplest form, depreciation is the wear and tear that occurs over time to a property and permanent fixed items, such as dishwashers and carpets. If you’re eligible to claim depreciation deductions, it can have a positive impact financially as it reduces your taxable income.
Unfortunately, there is no simple answer to how much you can claim and it will depend on a number of factors, such as the type of property you own, how old it is and whether it has been previously lived in. To help you and your accountant determine how much you can claim, you can organise a depreciation schedule through a quantity surveyor. This depreciation schedule is usually broken down in two sections: the building structure and the items within the property (oven, fittings etc.).
The schedule usually covers the life of the building, but you may choose to get a new report if you complete renovations.
Of course, tax laws change from time to time so it’s always best to seek the latest information and how this applies to your personal circumstances.
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While we are experts in inspections, we are not tax accountants. We’ve done our best to keep information updated and correct, but all our material is intended for general purposes and shouldn’t replace professional advice from a tax accountant. Always speak to an expert before making any investment, legal and business decisions.