Tax Deduction Rules Rental Property

• 

  [Deactivated] on 08/05/2019 - 19:14

  +21

  Pony up and see an accountant. They will find deductions you don't even know exist.

  Your use of the property is quite complex.

  • 

    Can berra on 08/05/2019 - 19:20

    -4

    How much does it typically cost for an accountant and in your experience, is it worth the money vs. Googling and doing it myself? In past years I've always submitted my own tax return and My Gov was fairly straight forward. Ideally if there is clear rules its not hard to apply them and make a spreadsheet appropriating costs. To be fair this is the first year I've had a kinda complicated return.

    • 

      [Deactivated] on 08/05/2019 - 19:23

      +8

      Trust me. It is a lot more difficult than you are trying to convince yourself. Accountant will charge about $400* which is tax deductible next year.

      Please for the love of God see an accountant. Thank me later.

      *could vary. The better your record keeping is the easier / quicker it is for the accountant to process and submit.

    • 

      blitz on 08/05/2019 - 23:35

      +3

      is it worth the money vs. Googling and doing it myself?

      But you're not Googling and doing it yourself, you're coming onto a forum to ask very basic questions about a complex arrangement.

• 

  2jzzzz on 08/05/2019 - 19:19

  -1

  Didn't live in it for 12 months so can't avoid capital gains. I think yours would all be based on percentage of time as PPOR and investment. See accountant.

  • 

    horice on 08/05/2019 - 19:30

    +3

    I hope you didn't take advantage of a first home owners grant

    • 

      [Deactivated] on 08/05/2019 - 19:34

      +2

      This. Interested to hear answer.

      For the ACT… (FHOG=$7K)

      at least one applicant must:

      move into the home beginning within 12 months of settlement or completion of construction; and
      live in the home as a principal place of residence for a continuous period of at least one year.

      • 

        Can berra on 08/05/2019 - 20:13

        +3

        No, didn't use FHOG as at the time it only applied if you bought a new property, and this had a distorting effect on the market meaning new apartments were often smaller and overvalued (IMO)

• 

  loke on 08/05/2019 - 20:02

  +1

  1 No, per your link :

  From 1 July 2017, there are new rules for deductions
  for decline in value of certain second-hand depreciating
  assets in your residential rental property. If you use these
  assets to produce rental income from your residential rental
  property, you cannot claim a deduction for their decline in
  value unless you are using the property in carrying on a
  business (including a rental property business), or you are
  an excluded entity.
  This change generally applies to the depreciating assets
  that you:
  n entered into a contract to acquire, or otherwise acquired,
  from 7.30 pm on 9 May 2017, or
  n used, or had installed ready for use, for any private
  purpose in 2016–17 or earlier, for which you were not
  entitled to a deduction for a decline in value in 2016–17
  (for example, depreciating assets in a property that
  was your home in 2016–17 that you turned into your
  residential rental property in 2017–18).
  There are no changes to the rules about deductions
  for decline in value of new depreciating assets in your
  residential rental property.
  There are no changes to the rules about deductions for
  decline in value of depreciating assets in your residential
  rental property that you installed or used for a taxable
  purpose other than the purpose of deriving rental income.
  For more information, see Limit on deductions for
  decline in value of second-hand depreciating assets
  on page 21.

  2 Timber / Screw / Glue forming furniture : see 'part of a set' :

  https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Capital-allowances---$300-immediate-deduction-tests/

  3 Clarify re Stamp Duty (if a borrowing cost you would apportion), per your link :

  Borrowing expenses
  These are expenses directly incurred in taking out a loan for
  the property. They include:
  n loan establishment fees
  n title search fees charged by your lender
  n costs for preparing and filing mortgage documents
  n mortgage broker fees
  n stamp duty charged on the mortgage
  n fees for a valuation required for loan approval
  n lender’s mortgage insurance billed to the borrower.

  The following are not borrowing expenses:
  n insurance policy premiums on a policy that provides for
  your loan on the property to be paid out in the event that
  you die or become disabled or unemployed
  n interest expenses
  n stamp duty charged on the transfer of the property
  n stamp duty incurred to acquire a leasehold interest in
  property (such as an ACT 99-year Crown lease).

  • 

    Can berra on 08/05/2019 - 20:18

    Hi Loke,

    Thanks for the reply, really appreciate it!

    • 

      loke on 08/05/2019 - 21:05

      I've got some reading material if you want to go through things with a fine-tooth comb not yet for the upcoming FY though, pm'ed

• 

  CyberMurning on 08/05/2019 - 21:04

  +3

  Yeah. Waste a time for everyone. Just go see your accountant

• 

  peterpeterpumpkin on 08/05/2019 - 21:30

  +2

  Hi,

  I normally hate when people say "what did your accountant say" for trivial questions that need 1 sentence answers, but as someone that has an investment property I can guarantee you that you will be much, much, much happier if you use an accountant of some sort in your first year of deductions (and to sweeten the deal, it's a deduction in the next financial year).

  From reading your post, you'll need to know:
  the difference between capital works vs depreciating assets vs repairs and sundry expenses,
  the surprise strata repairs that might be capital works rather than an immediate strata deduction,
  the exact days you use to calculate deductions and income (taking into consideration leap years) and when to round numbers,
  stamp duty charged on the transfer of the property (not a deduction) vs "mortgage stamp duty" (which you probably didn't pay if you were owner-occupied) and the costs are state specific anyway

  If you don't trust accountants in limiting costs you will still be better off going via a tax agent like H&R Block than attempting anything yourself. There are fixed price accountants that can handle correspondence on-line (e.g. https://www.taxfocus.com.au/accounting-fees/) if you don't trust "accountant-supervised tax agents".

  In later years even if you're certain you've made neither profit nor a carried loss and think you've become an accountant yourself you'd probably still be better off using even a $29.95 tax agent like EZYTAXBACK since they'll double check your calculations and act as your agent to the ATO should you be audited.

• 

  thatonethere on 08/05/2019 - 21:45

  +1

  Make sure you get a tax depreciation schedule - if you google it you can usually find a qualified company which can create it. It will list all the fittings. You can depreciate most of the new apartment for several years and that will generate some tax deductions.

• 

  smhto on 09/05/2019 - 09:56

  +1

  Just reiterating the importance of having an accountant.
  I've been in property for yonks, commercial and residential and believe me they are worth their salt
  Also, I haven't gone through all the posts, but have you obtained a depreciation report, if not get one

• 

  ihbh on 09/05/2019 - 20:29

  rented the place full time on Airbnb

  How does this compare to a normal rental - assuming you've checked comparables?