Investment property tax return can be very tricky and complicated, especially new laws will be enacted according to the recent federal budget. No matter you are in Australia or an overseas investor, you will have to lodge the tax return by 31 October every year if you are having an investment property and earning rental income or capital gain in Australia.
Generally, you need to report all rental income including the bond or compensation made by tenant due to their damage to your property. Of course, you also can claim all eligible tax deductions, such as mortgage interest, borrowing expenses, advertisement, insurance, cleaning, land tax, council rate, strata levy, water, real estate agent management fee, travel expenses, capital allowance, capital work, repair and maintenance etc. Among them, travel expenses and second-hand property capital allowance will be wiped out after 1 July 2017. Also, some of the above expenses can be deducted in one year while others need to be deducted by spreading out for a few years. Some of the expenses even cannot be deducted at all, such as initial purchase cost.
Another type of income from investment property can be the capital proceed from the selling. This might trigger capital gain tax which needs to be put on your tax return as well. Generally speaking, capital gain tax is the tax charged on the gains by deducting the capital proceeds with the cost base and other related transaction cost. There might be adjustment of the depreciation depending on the year of the purchase of the investment property. Some investment property might even be exempted to capital gain tax whereby the six years rule applies. Given the rapid growth of Australia property price, capital gain tax of selling an investment property can be stunning. One of the strategy is selling the investment property in the year when you receive less other income and hold the investment property more than 12 months which will gives you 50% discount on the taxable capital gain.
In Pitt Martin, we specialised in investment property tax return and advise. We can prepare your tax return through email and telephone meeting, so you don’t have to be physically coming into our office considering you are overseas or busy with your daily work. All we need is your personal details, TFN, rental statement, interest and property depreciation schedule if any. Please be mindful that investment property tax return can lead to thousands dollars difference if you do not do it in a proper way. So please speak to us if you are not sure.
Pitt Martin Accountants & Tax Advisers is located at Martin Place in Sydney CBD. We can be reached on +61 2 92213345 or connect@pittmartingroup.com.au.
Disclaimer: This article is not providing a formal advice and may not suit to all scenarios. Please make an appointment with us to discuss.
Experienced Tax Accountant and Business Advisor with a demonstrated history of working in the accounting industry. Skilled in Tax, Accounting, Business Advisory and SMSF. Strong entrepreneurship professional with qualification Master of Professional Accounting, CPA Public Practice, Registered Tax Agent, Registered ASIC Agent, NSW Law Society External Examiner, Trust Account Auditor and Diploma of Finanical Planning. Specialised in SME, tax planning and international tax, he helped client save ample money and create wealth.