What you can and cannot claim in your tax returns for your property.

Tax time can often be confusing for landlords. Below is a list of claimable and non-claimable items:
    
• Capital works deductions – extensions, alterations and structural improvements can be claimed but not the land itself as this is subject to capital gains tax.

• Some depreciating assets can attract a tax deduction such as curtains, blinds, dishwashers, fridges, stoves, televisions and hot water systems. (The tax office has compiled a full list of depreciating
assets on their website.)

• Repairs such as replacing guttering due to storm damage or repairing electrical equipment. Maintenance such as painting, oiling, cleaning or maintaining plumbing are all deductible. Check the ATO website as there are certain time frames in which these claims can be made. Also, please note these are only claimable during the period that the property is actually rented out.

• Interest on a loan for capital improvements is tax deductible but only for that portion used for improving the property.

• Travel to and from your rental property for inspections is tax deductible as long as this is the sole purpose of your trip.

• Holiday lettings are tax deductible unless they are used by you or your friends free of
charge. This will need to be declared as a non-deductible period on your tax return.

• Borrowing expenses of over $100 are tax deductible and should be spread over a five year period or over the term of the loan. These include stamp duty on the mortgage (but not on the transfer of the property title); loan establishment fees; title search fees; costs for preparing and filing mortgage documents; mortgage broker fees; valuation fees; and lenders mortgage insurance.

• Legal expenses are not claimable on the purchase or sale of your property such as solicitors’ fees but you can claim the cost of preparing a lease agreement or evicting a non-paying tenant.

• Other smaller items that are deductible include advertising costs; body corporate fees that apply; council rates including sewerage and water; gardening and lawn-mowing costs; insurance (such as landlord insurance); pest control; property agent fees or commissions; office supplies; phone; and water charges.

It is important to keep accurate records of:
    
• Any rental income you receive;
• Any deductible expenses you pay;
• Proof of ownership of the property;
• Purchasing costs;
• Sale costs.