Halloween could be a little scary for a much more grown up reason for some: as the official deadline of filing your tax return, it could see you fined up to $900.
Worst still, it could land you some unwanted attention, as H&R Block report that “it is widely believed that taxpayers who lodge late are at increased risk of being reviewed or audited by the ATO”.
So in case you didn’t realise, this is your last week to get your tax return in to the ATO by deadline.
We thought we’d give you a leg up by reminding you of some of the lesser-known tax deductions for investors that could see your tax return fatten up a little:
Property magazines and books
Have you been reading up a storm, devouring property magazines and books, or even purchasing online resources to help you make better property investing decisions? If so, these resources may be tax deductible, so dig out your receipts!
Depreciation on your investment property
The way the tax office sees it, your investment property is decreasing in value over time, because all of the elements – from the carpets to the kitchen cupboards – are slowly deteriorating with ongoing use.
To compensate for this, the ATO allows you to make some deductions. Depreciation for income-producing properties (ie rental homes) defined by the ATO is claimable under either Capital works allowances (division 43) and Plant and equipment (division 40).
Capital works allowances can include things like:
- Built-in kitchen cupboards
- Outdoor clothes lines
- Doors and door furniture (right down to the handles and locks)
- Driveways, fences and retaining walls
- Even the kitchen sink!
You can also deduct ‘depreciating assets’, which are stand-alone units that are generally not affixed to the building, and that decrease in value over time. These can include:
- Clothes dryers
- Washing machines dishwashers
- Curtains and blinds
- Airconditioning units
- Hot water systems
- Carpets, and more!
You need to consult with a quantity surveyor to get these deductions and the best part is, even the cost of obtaining professional advice for your depreciation schedule is tax deductible.
More often than not, the tax deductions available to you can amount to several thousand dollars, so it’s well worth getting your property depreciation report.
The off-cuts of your renovation
Have you renovated your investment property to, say, replace the carpets? If so, did you know you’re entitled to write off the remaining value of those old, musty carpets on your tax return?
This is an often-overlooked rule known as ‘scraping’ and if you’ve invested in a decent-sized renovation, the savings could be substantial. Speak to your depreciation specialist or quantity surveyor to find out how much you can deduct.
All of the usual tax deductable items can be claimed as well, including advertising for tenants, mortgage interest, landlords and property insurance, property management fees, and council rates.
But remember: it’s always advisable to obtain personalised tax advice when preparing your tax return, to ensure you are not only following the rules, but you’re also squeezing out every last dollar from your tax return!