Investment property tax deductions: making claims in 2021/2022

How do I claim maximum deductions on my residential investment asset? This is one of the most important factors to any property investor. Naturally, you want to get the most out of your investment over time, which includes any and all wins that come your way.

At Ray White West End, we are passionate about helping people achieve optimal outcomes, whether they own one residential premise or an entire portfolio. Continue reading to learn more about making claims for now and into the future.

Investment property tax deductions in 2020 

Renting out a property in Australia means you are eligible to claim certain tax deductions. The Australian Tax Office (ATO) states that you can make deductions only for those “that relate to the income-producing use of the property”. 

Some of the typical deductions you can make now in 2020 (in the income year you incur the expense) include: 

• Council rates
• Repairs and maintenance
• Interest on loans
• Depreciating assets under $300

Claiming deductions in 2021 and beyond

It’s important to realise that you can also claim deductions over several years. As a general rule, this usually applies to larger sums or expenses that have terms which exist over a longer period of time, such as loans. 

These types of deductions can include: 

• Capital works
• Borrowing expenses, ie. loans
• Decline in value of depreciating assets 

Conditions for claiming expenses 

There are conditions set by the ATO that apply to the expenses you claim based on your income-producing activities, ie. costs associated with leasing your premises. 

Some of the elements that should be assessed include: 

• Whether your investment asset is only available for rent for part of the year
• If you use investment asset for personal purposes for part of the year
• If you only use part of your investment asset to earn rent
• Whether you rent your investment asset at less than market rates
• If you partially use your investment loan for personal purposes

This assessment process can be complicated when you don’t have the right guidance. For peace of mind, we can direct you to our professional partners.

Investment property depreciation

Depreciating your investment property using tax depreciation principles is a highly effective approach for claiming maximum deductions at the end of each financial year. 

This comprises several key terminologies that go into your calculations and record-keeping: 

• Wear and tear — as a residential building ages and items within it wear out, the value of both property and contents will depreciate 
• Claimable — claimable by all residential investment property owners each financial year. Maximising depreciation deductions reduces an investor’s taxable income
• Decline in value — depreciation is a decline in value tax deduction for the building structure and plant and equipment assets of any income-producing property
• Maximised by a quantity surveyor — a specialist quantity surveyor helps to maximise the depreciation claimable for residential investment properties

Your investment property tax claims

Making an investment property tax claim typically involves the following: 

1. Get a quote
2. Provide details
3. Claim deductions

You may find it beneficial to know that at Ray White West End we partner with BMT Tax Depreciation Quantity Surveyors, who are tax depreciation specialists. Keep in mind, if you’re seeking more resources to aid you along your property investing path, you can check out our other resources in this series. 

We can arrange access for a quote on your property through the tenancy so that you are on your way to claiming the accurate maximum deductions in relation to your specific assets. Call our friendly and professional team at Ray White West End on (07) 3844 4244 today.