Six things for rental owners to remember this tax time

The page has turned on a new financial year, which means for many rental owners, attention is about to turn to completing their tax return.

So what sort of things should be taken into account when it comes to tax returns and rental properties?

Here’s a quick guide to six things rental owners should remember this tax time…

A quick overview

The income from your rental property needs to be noted as part of your personal tax return, but often it can be partially or completely offset against costs incurred for having that property.

That means there’s quite a bit of information to compile before you sit down and complete your annual tax return.

So what sort of things are we talking? Well, here’s a quick list to assist.

Rental statements

As the 2020/21 financial year draws to a close, your property manager will issue you with a statement for the financial year.

This includes all rental income, along with the associated costs of managing that property, including letting fees and administration charges.

Both rental property income and outgoings will need to be noted on your tax return.  

Repairs and maintenance

Throughout the year, your rental property will likely have required some repairs and/or maintenance.

In most cases this will be outlined as part of your financial year rental statement, but you may also want to compile and include all invoices and receipts for work completed when you make your return or visit your accountant.

Your return will generally see these maintenance and repair items grouped into categories of costs.

Property loans

The interest you pay on a loan for an investment property is also considered a rental property cost. But it’s important to note that’s not the full amount of repayments you make each year, but rather the interest portion only.

Council rates

Like repairs and maintenance, council rates are considered a rental property cost, which can be used to offset your income.

This also includes water charges that you may have incurred at the rental property.

Depreciation

A further item you can claim as part of your annual return is depreciation on new items.

This might include new air conditioners, a stove, oven or other associated appliances that have had to be updated.

This depreciation is claimed over a number of years, with schedules available from your accountant or the Australian Taxation Office (ATO).

The cost of administering your property

These days most rental owners can no longer claim travel expenses relating to a rental property. 

However there are other costs that may be included in your tax return, such as a portion of your phone bill or internet usage that relates to administering the property.

Consult an expert

The rules around what can be claimed and what cannot for rental properties change from year to year.

Meanwhile, all individual circumstances are different. The bottom line is it pays to consult an expert when it comes to claiming both income and expenses relating to a rental property.

In the interim you can find out more information about the ATO’s residential rental property guidelines here.

How we can help

Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.

We manage every property as if it were our own and you can learn more about our property management services here.

Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.