Investing in property is something many people do. However, are you aware that when you decide to rent it out there are tax implications? Some of these are deductions for your benefit.

Here are some of the deductions you can and cannot claim for. This list is by no means comprehensive and if your want advice from leading tax accountants in Parramatta, Sydney give us a call on 0414 731 757.

Rental Properties: Focus Area by the ATO

The ATO has announced that it will double the number of audits and closely review rental deductions.

Rental Properties: Travel Deductions

From the 1st July 2017, expenses for travel to residential investment properties are no longer deductible. You cannot claim a travel deduction if you are an individual, Self Managed Super Fund (SMSF), partnership or private trust.

Rental Properties: Airbnb

If you rent all or part of a property out as an Airbnb you need to include this as part of your income tax return. The ATO receives details from Airbnb and other providers which will be data matched against tax returns. Any interest on loans claimed must be proportioned where required. 

Rental Properties: Holiday Homes

To claim deductions for holiday homes you must be able to prove that it was genuinely available for rent. 

Rental Properties: Depreciation

You can no longer claim depreciation on second hand assets for rental properties. 

This applies to second hand assets:

• acquired at or after 7.30pm on 9 May 2017, unless acquired under a contract entered into before this time.
• acquired before 1 July 2017 but not used to earn income in the 16-17 year.

For example, for properties acquired from 9 May 2017, landlords can no longer depreciate assets that were in the property at the time of purchase. However, should they purchase a new (not used or refurbished) asset, they can depreciate that asset. 

This applies to properties owned by individuals, Self Managed Super Funds (SMSF), partnerships and private trusts. 

Please note that the new rules do not apply to capital works so the deduction for structural and fixed items contained within an investment property are still allowed.

Rental Properties: Tax Deductions you are entitled to claim:

• Advertising for tenants.
• Interest on investment loans.
• Strata/body corporate fees.
• Cleaning costs.
• Insurance such as building and landlord insurance.
• Land tax.
• Pest control.
• Property agent fees.
• Repairs and maintenance.
• Water rates.
• Council rates.
• Gardening.
• Lease preparation fees.

Rental Properties: Apportioning Ownership Correctly

Splitting rental income is based on the legal ownership. 

For example, if a husband and wife legally own the property as joint tenants then the income is shared 50/50. This is the case even where one party pays the majority of the expenses. Where one party pays more expenses than the other you need to take that up with each other and not the tax office.

If a husband and wife owned the property as tenants in common and legally own the property 99% and 1% respectively, then the income is shared 99/1.

If you are looking for an accountant in Parramatta or Campbelltown who can help with income from rental investment, call Davis Accounting. Our tax agents are ready to help you. 0414 731 757

Cryptocurrency

On the subject of investments, one that has risen in popularity is Cryptocurrency. Buying, selling and spending this virtual currency has tax consequences.

Are you investing in cryptocurrency?

Cryptocurrency such as Bitcoin is an asset for capital gains tax and needs to be included as part of your income tax return.

If you purchase or sell any cryptocurrency you must keep records for all transactions.

This includes the date the transaction took place, the value of it in Australian dollars, as well as who the transaction was with, and what it was for. 

This is an area that the Australian Taxation Office is monitoring. 

In Conclusion

The upshot of having investments is you must keep detailed records for tax purposes. The Australian tax laws are constantly changing, and you need to make sure you keep up to date with them. This ensures that you pay the tax you should and also that you claim the deductions you are entitled to. 

The alternative is to consult tax agents or accountants like Davis Accounting who are experts in these fields.

Need help with the tax implications of your investments? Davis Accounting can help. Our Parramatta and Campbelltown accountants can help you take full advantage of your investments. Call us now on 0414 731 757. 

Davis Accounting Services Pty Ltd ABN: 44 131 659 857 Liability limited by a scheme approved under Professional Standards Legislation

**Disclaimer: Be advised this information is of a general nature only. Specific advice needs to be obtained for your individual situation. Neither the firm nor any of its employees accepts any liability for any loss or damage to any person as a result of reliance on the rates and information set out on this newsletter.