It’s important to be aware of your tax obligations if you have rental properties, otherwise you could find yourself with a hefty bill, says First National Real Estate chief executive, Ray Ellis.
‘Owning rental properties comes with its own set of obligations, which you’ll need to make sure you meet so everything is above board. Tax issues are one of the biggest areas of concern for landlords, and with the Australian Taxation Office (ATO) announcing it’s clamping down on malpractice, there’s never been a better time to get your affairs in order’ said Mr Ellis.
There’s no shortage of incentives to buy investment real estate at the moment. Figures from SQM Research show that the national vacancy rate currently stands at 2.4 per cent – a result that’s largely been consistent over recent months.
Not only this, rental returns have also been particularly strong across many parts of the country. During the week to June 12, SQM revealed that the cost of renting real estate in Melbourne had increased 3.8 per cent for units and 1.7 per cent for houses.
According to Mr Ellis, one of the areas of tax law you need to be aware of as a landlord is what expenses you can deduct from your final accounts. These expenses are only valid throughout the period when your property was either rented or available for rent.
‘Some of the expenses you can claim for include advertising for tenants, cleaning, phone charges, gardening services and insurance. You should speak to an accountant if you’re unsure about whether you can legitimately claim for an expense’ said Mr Ellis.
‘It’s not enough to simply tell the ATO you’re claiming for a particular expense, as there needs to be paperwork to back this up’.
Providing your records are up to date, you will be able to ensure any capital gains tax you pay is accurate, reducing the likelihood of receiving a hefty tax bill at a later date.