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As an owner/ part owner of a rental property, income tax legislation requires you to declare any rental income you may receive. Importantly, tax legislation also allows you to claim expenses relevant and incidental to the derivation of that income. Deductible expenses include the following:
Agent’s Fees – Include property management commission, inspection fees, and any other incidental fees an agent may
charge for managing your property.
Borrowing Expense – Expenses incurred in borrowing money solely for income producing purposes including valuation fees, broker’s commissions, application fees, survey fees and any other incidental expense charged by the lending institution.
Depreciation – If the property is leased furnished or equipped, depreciation on furniture, fittings, floor coverings, white goods, etc, are all deductible. Please consult your accountant for depreciation items available for your property.
Repairs – Any expenditure on repairs and maintenance to the leased property are deductible. However, these do not include alterations or improvements to the property. For example, replacing a sheet of iron on an old roof may be a deductible expense. On the other hand, replacing an old iron roof with a new tile roof is a capital expense and not deductible. Although expenditure on improvements and alterations are not deductible, it is advisable to keep all records
of this expenditure as they can be included in the cost base of the property when calculating the gains on the sale of that property.
Travel – Generally, all travel expenses on collecting rents or in connection with maintenance and repairs are deductible. An accurate record of the dates and distances travelled should be maintained.
This is generated as a guide only, always contact your financial professional when allowing for depreciation and tax deductions that may be available to you.