Perth, Western Australia & Nannup, South West WA – Tax Choice

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Investment Properties

Are You Claiming Depreciation on Your Investment Property?

You may not be aware that as an investor, you can claim depreciation on many aspects of your property such as plant and equipment including ovens, light fittings, blinds and carpet.

You can also claim depreciation on the construction costs of the building itself. Chances are your property is eligible. Each property is different but historical evidence suggests that more than 98% of investment properties can be depreciated. So just about anyone who buys a property as an investment is eligible for a tax benefit.

It’s simple to find out what you are entitled to.

Contact our office and we can recommend a reputable Quantity Surveyor that may be able to assist.

Investing in Property

Investing in property can be an ideal tax deduction, however correct book work is imperative to make the most of your deductions. Before buying an investment property it is crucial you talk to your accountant to discuss your options and the records you will need to maintain.

What is Gearing?

Gearing is another term for borrowing.  Negative gearing means the income from the investment is less than the expenses incurred.

Structure

Deciding on the person or entity in which the property should be purchased is very important and should be discussed with your accountant prior to signing the offer and acceptance.

Typical Tax Deductions

  • Advertising
  • Interest
  • Agents Fees
  • Maintenance
  • Bank Charges
  • Postage
  • Borrowing Costs Rates & Taxes
  • Depreciation
  • Stationery
  • Gardening
  • Telephone
  • Insurance
  • Travelling

What Records Should I Keep?

All documents relating to:

Acquisition

  • Offer & Acceptance
  • Borrowings
  • Settlement Statements
  • Travel Diary

Rental

  • Estate Agents Statements
  • Rental Receipts
  • Bank Statements
  • Expense Receipts
  • Cheque Butts
  • Travel/Telephone Diary

Who Can Manage the Property?

A real estate agent can be appointed to manage the property (usually for a percentage of the rental income plus inspection and leasing fees).

The investor can self manage the property, however, in the case of a residential property it is absolutely necessary for the investor to be aware of the requirements of the Residential Tenancies Act 1987.

Capital Gains (for individuals)

Investment properties when sold will be subject to Capital Gains Tax.

For properties acquired after 21/09/1999 and held for at least 1 year, 50% of the capital gain is exempt.

For properties acquired before 13/05/1997, the special building write-off deduction results in a “bonus” to the taxpayer by reducing taxable income each year but with no corresponding reduction to the cost of the property for CGT purposes.

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