Rental Property owners should avoid common tax mistakes
1
Apportioning expenses and income for co-owned properties - If you own a rental property with someone else, you must declare rental income and claim expenses according to your legal ownership of the property.
2
Make sure your property is genuinely available for rent- Your property must be genuinely available for rent to claim a tax deduction.
3
Getting initial repairs and capital improvements right- Ongoing repairs that relate directly to wear and tear or other damage that happened as a result of you renting out the property can be claimed in full in the same year you incurred the expense.
4
Claiming borrowing expenses- If your borrowing expenses are over $100, the deduction is spread over five years.
5
Claiming purchase costs- You can’t claim any deductions for the costs of buying your property.
6
Claiming interest on your loan- You can claim interest as a deduction if you take out a loan for your rental property.
7
Getting construction costs right - You can claim certain building costs, including extensions, alterations and structural improvements as capital works deductions.
8
Claiming the right portion of your expenses- If your rental property is rented out to family or friends below market rate, you can only claim a deduction for that period up to the amount of rent you received.
9
Keeping the right records- You must have evidence of your income and expenses so you can claim everything you are entitled to.
10
Getting your capital gains right when selling- When you sell your rental property, you may make either a capital gain or a capital loss. If you make a capital loss, you can carry the loss forward and deduct it from capital gains in later years.
