You need to know the rules

Date: 4 September 2013

Owning an investment property is a dream of many, but without the correct checks and balances it can quickly become a nightmare at tax time.


First National Real Estate Coffs Coast senior property manager Lisa Hanlan said investment property owners should ensure they keep proper accounting records and plan ahead for next year’s tax return now.

“The recent targeting of property investors by the ATO caught many investors unawares and came too late for them to address any concerns the office may have had about last financial year’s return,” Lisa said.

“The ATO wrote to more than 110,000 rental property owners towards the end of the 2012/13 financial year, offering advice on what their entitlements and obligations were, but if they had failed to keep the appropriate records and accounts, there was little they could do at that point.”

Lisa said that is why it is important her advice is received now, at the beginning of the financial year, so investment property owners fully understand what they need to capitalise on their investment and maximise their returns.

According to tax depreciation expert Bradley Beer of BMT Tax Depreciation, 80% of property investors fail to take full advantage of the tax benefits of owning an investment property.

“Many investors don’t realise that regardless of whether they have spent any money on their property, the wear and tear on their asset and its fixtures can be offset against any income they earn from the property,” Mr Beer said.

“Property depreciation is a non-cash deduction available to income-producing properties and can be claimed on both positively geared and negatively geared properties.”

Tax benefits associated with negative gearing can sometimes be equivalent to 60% of the total purchase price of a property.
“Even decorative garden sculptures, common areas in an apartment building, tree houses or recreational facilities may be legitimately claimed,” Mr Beer said.

Other costs that the ATO allows to be deducted include interest costs, maintenance expenses and holding costs such as building insurance and rates.

Lisa said establishing a depreciation schedule from the outset ensures all expenses and items are deducted to their full capacity.

“Investors always look for the greatest return on their investment, and the best place to start is by securing the services and advice of a professional,” Lisa said.

“The constantly changing ATO rules make it essential for investors to use competent depreciation companies, like BMT, to undertake an onsite inspection of their property. Desktop estimates will no longer suffice.”

First National Real Estate Coffs Coast

Source: Coffs Coast Advocate 04 Sep, 2013
Back to articles Filed under: Media / NSW News Tags: bmt tax depreciation, depreciation, depreciation schedule, first national real estate coffs coast, first national real estate coffs harbour, investment property, lisa hanlan
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