The Australian Taxation Office
(ATO) states that more than 1.2 million tax payers report greater
expenditure than income from their investment property. These
investors are reaping the benefits of a negatively geared
investment property.
Negative gearing is when the costs associated with purchasing and
maintaining an investment property are greater than the income
generated through rent. This situation provides the greatest
property investment tax benefits, as any expenses associated with
the investment can be used to legitimately decrease taxable income,
thus reducing the amount of tax paid. This tax benefit can be
claimed as a lump sum at the end of the financial year or can be
paid each pay packet giving greater cash flow throughout the
year.
Some of the costs which can be claimed to maximise property
investment tax benefits include:
- Interest paid to the finance lender
- Council and water rates
- Insurance
- Property Management Fees
- Cost of repairs or improvements
- Travel to inspect the property
- Depreciation on fixtures and fittings such as carpet, curtains.
It is estimated that thousands of
dollars go unclaimed by investors who ignore depreciation.
As a property and its fixtures age their value depreciates. The
ATO acknowledges this depreciation and allows investors to claim
tax benefits. The amount that can be claimed for each fitting
and fixture is outlined in the depreciation schedule.
The depreciation schedule is one of the most important documents
for the accountant to review to ensure maximum taxation benefits
are experienced. A professionally developed depreciation
schedule for each investment property is crucial to ensure maximum
tax benefits are enjoyed.
Taxation laws are complex and it is advisable to seek the
expertise of an accountant experienced in property
investment.
ParkTrent professionals are available to assist with arranging the
development of a depreciation schedule and ensuring each investor
is aware of their full property investment tax benefits.
If you would like more information, please contact our Customer Service and Sales team on 1800 652 224 or email contact@parktrent.com.au
