Tax benefits you might not know you had as an investor
When you're creating wealth through a Queensland investment property, chances are you will want to maximise it as much as you can to reap the benefits.
From staying on top of bills and maintenance to managing your tenants, there are many ways you can get the most out of your home.
However, as an investor, did you know you have a number of tax benefits there for your advantage? This can help you reduce your costs from managing a rental property and give you more money in your back pocket to save for retirement or just to enjoy.
What can I claim as an investor?
As the owner of a Queensland rental property, this home is your business and your source of income. As it's your way of generating income, there are many costs that arise from your investment that are tax deductible.
For instance, over the period that your property is occupied by tenants or available for rent you can claim expenses for body corporate fees, insurance, land tax, council rates and many more.
Even the fees that stem from property management can be claimed as a tax deductible expense, meaning you can enjoy more of the income that comes from your property.
As a landlord, you'll likely see many costs arise from advertising your property for rent. Fortunately, this counts as a tax deductible expense. Other ongoing costs, such as garden maintenance, lawnmowing and repairs and property maintenance are also included as deductible.
Utility expenses not incurred by you, such as water electricity, are not deductible as this is an expense paid by your tenants. You also can't claim the costs of acquisition and disposal of your property, which includes conveyancing and advertising if you sell or buy a home.
Furthermore, investors are able to access a 50 per cent discount on capital gains tax if the property has been owned for over 12 months. This is definitely a helpful tool to utilise if your home has substantially risen in value over the years, giving you a really attractive sale price.
Buying a rental property that is brand new allows you to access benefits that owners of established dwellings don't have. One such benefit is the decline in value of depreciation assets for fixtures and fittings. These are items that only have a limited effective life, such as whiteware appliances, televisions and cooktops.
If you're the owner of an off-the-plan investment, be sure to obtain a schedule of all fixtures and fittings in your contract of sale. This will give you an idea of which parts of your home you can claim as a depreciating asset.