Your Rental Property Settlement Statement and Tax Deductions
So you've just bought a Rental Property, now the fun starts. To maximise your rental deductions you need to get an idea of what tax deductions are available to you. As a rule of thumb do this one simple thing.. Everytime you put your hand in your pocket to pay for something in connection with your rental property, get a receipt. Simple as that. And preferably record the transaction on a simple App, like the Gotax Deduction Grabber. Download now...
Having the receipt and recording the transaction will help your accountant, Gotax, determine the tax deductibility of the payment at year end.
Now let's start with the very first rental tax deduction you're going to get. And it's on that settlement statement that your solicitor gave you when it all went through. Some of those costs will be tax deductible.
If your property is intended to be available for rent immediately after settlement, the settlement adjustments are generally wholly tax deductible. This is so even if the property is not physically rented out and remains vacant. Those adjustments could include: rates, water, and any other adjustment cost. Other non deductible costs should also be retained as vital documents which may impact the amount of capital gains tax you pay when you eventually sell, theses will include: legal fees, stamp duty and the purchase price.
In general, you can claim deductions for most of the expenses you incur while your property is rented or genuinely available for rent. These expenses include interest on loans, council rates, repairs and maintenance, and depreciating assets. However, you can only claim deductions for the expenses that relate to the income-producing use of the property. You can’t claim a deduction for expenses for your personal use of the property.
It’s important to carefully review your settlement statement and consult with a tax professional to determine which costs are tax deductible for you. They will be able to provide you with specific advice based on your individual circumstances.
The rules that apply to Rental properties also include part property rentals such as Air BnB arrangements.