Brisbane, Queensland Australia (PressExposure) April 13, 2011 -- Investment property owners are risking paying more tax than they need to by not being aware of the tax considerations they can claim, Principal and Chartered Accountant at Fletcher Tax Janna Fikh says.
In a new report released today by Queensland home builders Indigo Homes for new home-owners, Fikh says there are five key tax considerations that every new owner of an investment property should know when it comes to tax time.
1. The difference between capital and non-capital repairs
Many landlords spend thousands of dollars on repairs for their property without realizing it may not equate to a deduction when tax time comes, Fikh warns.
"Landlords are only able to deduct the expense of repairs to their property when they are classified as 'non-capital' repairs, which are general repairs and regular maintenance for the property," she says.
No deductions are available for repairs that are undertaken to improve or extend the normal economic life of an existing structure. The expenses from these repairs will be added to the cost of the property.
2. Landlord insurance
Fikh advises that every landlord should take out landlord protection insurance to cover their investment property.
Landlord protection insurance covers some particular risks associated with renting out a property that may not be covered by a typical home and contents policy.
"It ensures peace of mind and gives a landlord backing in case anything goes wrong with the property," Fikh says. "It is also tax deductible."
3. Survey the property
If a building or house is relatively new, Fikh recommends that a quality surveyor inspect the property.
"Many landlords don't know how to value a property themselves and could potentially lose out on a whole mountain of deductions they could otherwise legitimately claim," she says.
4. Know when the property is deemed available to rent
It's important that a landlord knows when their property is deemed available to rent by the tax office.
"Deductions are only available when the property is available for rent per tax office terms," Fikh says.
The tax office deems a property to be available for rent when there is an agreement set up with an agent, or when a landlord has started advertising the property.
If a landlord starts repairs before the property is deemed available for rent they will not be able to claim deductions for those repairs, which wastes a lot of money.
5. Claim a holiday
Many investment property owners don't realise that travelling to inspect their rental property is tax deductible.
While deductions are proportionate to the private part of their trip, a landlord can still claim their airfares, hotel bills, meals and other expenses.
The above applies regardless of whether a property is five hours away, interstate or overseas.
To help, they've created Your Personal Blueprint, the No Surprises Building Book and the Crystal Clear Pricing Policy.
For more information about Indigo Homes, please contact:
Chris La Franchi
(07) 3370 6000