So you bought a rental property, and it’s an exciting time for everyone involved. However, you got lost in your excitement and covered in paperwork by the real estate agents, lawyers, conveyancers, mortgage brokers & Banks.
Now it is tax time and you have no idea, what you can claim. Many of my clients are in this exact situation, this is why I made a 5 step guide for a new rental property.
1. Purchase contracts
If the rental property is new most of the fundamental information about the property can be found on the purchase contract. Like how much the property was bought for, and any other costs associated with the purchase that will affect the total price of the property.
2. Bank Statements
A key deduction for anyone with a rental property is interest paid on a mortgage. The interest component of your mortgage is deductible and can make a big difference. For the first year bring in the first and last mortgage statement of the Financial year. If you have an existing property, we just need the year end with an interest total.
3. Depreciation Report
If you built your rental property or made any structural improvements to it. Such as alternations and extensions, then you are eligible to claim capital works deductions. Contracting a surveyor to help you get the best figures is recommended.
It can be very stressful especially when you are new to owning a rental property to know what is claimable and what isn’t. Expenses for rental properties include:
- Advertising for tenants
- Borrowing Expenses, and Legal Fees
- Cleaning, Gardening, and Pest Control
- Water, Council Rates, and Land Tax
- Insurance, and Legal Fees
- Travel to and from property
5. Agent Fees
Keeping track of all the expenses can be very difficult, so many of my clients contract a real estate agent to provide them with rental summaries. Asking for the year end summary will give you us a nice summary of rental income and expenses.