Claiming property investment tax deductions

NRAS Property 2According to IAS 40, investment property is property (land or a building or part of a building or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both. It is property that you hold for investment purposes; to earn rentals or to realise a capital gain.

The rental income received by owners of investment property is taxable to the owners in the same proportion as the ownership interest shown in the title. There are certain expenses associated with owning an investment property that you can claim as deductions when working out your tax liability.

Tax Deductible Expenses Related To Investment Property

You can deduct the interest that you pay on property loans provided that you use all the money from the loan(s) to purchase the property. If you use your bank account both as a line of credit and as a private account, you need to apportion the interest claims for the private expenses. In addition to interest on loans/mortgages, other deductible expenses include advertising for tenants expenses, insurance premiums, electricity, water and gas costs, repairs, maintenance, renovations and home improvements, property agents’ fees, council rates and corporate body rates.

Investment Deduction On Building Write Off’s

If the building is under 25 years old you will be entitled to claim a deduction of 2.5% per year of the original cost of construction of the building for up to 40 years from the original date of construction.

Ask us more about family trusts v SMSF’s and what claims or write offs you can claim for investment property.

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