1. Rental Property Income

First and foremost, you must declare all income generated by your rental property. This isn't just the weekly rent. Remember to include:

• Gross rental income received from your tenants.
• Bond money you retain from a tenant.
• Insurance payouts for lost rent or property damage.
• Reimbursements from tenants for expenses like water usage.
• Any other fees received in relation to the property.

Keeping a detailed record of all income is the first step towards a compliant and accurate tax return.

2. Rental Property Deductions

One of the primary benefits of owning an investment property is the ability to claim deductions for associated expenses. For an expense to be deductible, the property must have been genuinely available for rent during the period the cost was incurred.

Here is a checklist of common deductions a Tax Return Accountant will look for:

• Management Costs: Fees paid to your real estate agent, advertising for tenants, and body corporate fees.
• Council and Utilities: Council rates, water rates, and land tax.
• Interest on Your Loan: The interest component of your mortgage repayments is typically the largest deduction you can claim.
• Repairs and Maintenance: The costs of keeping the property in a tenantable condition, such as plumbing repairs, electrical work, and general upkeep.
• Insurance: Landlord insurance, building insurance, and contents insurance premiums are all deductible.
• Depreciation: You can claim a deduction for the decline in value of the building's structure (capital works) and the assets within it (plant and equipment like ovens, carpets, and air conditioners). A professionally prepared depreciation schedule is essential to maximise this claim.
• Professional Fees: The cost of hiring a Tax Agent like Tax Savers to manage your tax affairs is also deductible.

It’s crucial to distinguish between repairs (which are immediately deductible) and improvements (which are capital expenses and must be depreciated over time). Getting this wrong is a common and costly mistake.

3. Capital Gain Tax (CGT)

When you decide to sell your investment property, you'll need to navigate Capital Gain Tax. In simple terms, a capital gain is the profit you make from the sale. It is calculated by subtracting the property's "cost base" (which includes the purchase price, stamp duty, legal fees, and improvement costs) from the sale price.

This net capital gain is then included in your assessable income for that year. However, if you've owned the property for more than 12 months, you are generally eligible for a 50% CGT discount, which can significantly reduce your tax liability. Accurate record-keeping from the moment you purchase the property is vital for correctly calculating your CGT.

4. Professional Tax Services

While it might be tempting to lodge your own tax return, the complexities of Investment Property Tax mean you could be leaving money on the table or making costly errors.

Engaging a professional Tax Agent provides peace of mind and financial benefits by:

• Ensuring Compliance: We ensure your return meets all ATO regulations, avoiding audits and penalties.
• Maximising Deductions: Our expertise means we know every legitimate tax deduction you can claim.
• Correctly Handling CGT: We can help you structure the sale of your property to legally minimise your Capital Gain Tax obligations.
• Saving You Time: We handle the paperwork and complex calculations, so you can focus on your next investment.

5. Your Local Property Tax Accountant

As your dedicated Tax Accountant in Tarneit, Tax Savers provides tailored advice to property investors across Melbourne's west. We understand the local market and are committed to helping our clients achieve their financial goals through smart and compliant tax strategies.

Don’t risk your investment's profitability by navigating the complex world of property tax alone.

Contact Tax Savers today for a consultation and let our expert team handle your rental property tax return with the professionalism and diligence it deserves.