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08 8177 5799

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08 8223 3593

What's new?

Secondee Program.

We are pleased to welcome our two most recent secondees. Sara is from Dublin and Kelly is from San Francisco. They will be helping us throughout the busy audit season. Both have already settled in and are an integral part of the team. We look forward to working with them over the next couple of months and showing the sights of Adelaide and South Australia. Both have plans to visit other parts of the country while they are here. This is the 10th year that we have had secondees from other Nexia firms throughout the world and consider this a valuable opportunity for our staff who wish to take part in this program. The program has proved to be highly successful for both us and the secondees. We look forward to our continued participation in this program.

Navigating investment property tax deductions

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Owning property has long been popular with Australian investors. Residential property has shown strong capital growth over the longer term, as well as reasonable price resilience in times of economic downturn. There are also generous tax concessions available for owners of rental properties, which also serve to enhance the attractiveness of this investment class.

The level of tax deductions and offsets shouldn’t be the key reason to invest in a property, but if you have purchased one, ensuring that you use every available concession can make a significant difference to your bottom line.

Which expenses are deductible?

There are three categories of rental property expenses:

1. Expenses claimable as tax deductions in the same income year you incur the expense

These include body corporate fees, property management costs, insurance, rates, gardening and lawn mowing services, pest control, lease document expenses, interest on loans used to purchase the property, and land tax.

2. Expenses claimable over a number of income years

These include:

borrowing expenses such as loan establishment fees, title search fees and costs for preparing and filing mortgage documents, mortgage broker fees, stamp duty charged on the mortgage, valuer’s costs, and mortgage insurance
the decline in value of depreciating assets such as furniture, curtains and carpets
capital works deductions that are generally spread over a period of 25 to 40 years, for example, those applying to room, garage, patio or pergola additions, alterations such as removing or adding an internal wall, or structural improvements such as a sealed driveway, retaining wall or fence.

3. Expenses not claimable as tax deductions

These include acquisition and disposal costs of the property, expenses not actually incurred by you (such as water or electricity charges borne by your tenants), or expenses that are not related to the rental of a property, such as those connected to your own use of a holiday home that you rent out for part of the year.

Important tips

The process to work out an accurate level of depreciable items can be complicated. A Quantity Surveyor can help you to ensure that you are accessing all available offsets.
Your total capital works deductions cannot exceed the construction expenditure and no deduction is available until the construction is complete.
If you can claim capital works deductions, the construction expenditure on which those deductions are based cannot be taken into account in working out any other types of deductions.
Expenses that are normally deductible will need to be applied proportionately if your property is available for rent for only part of the year, if only part of your property earns rent, or if you rent out your property at below-market rates.

Source: www.ato.gov.au Rental Properties 2009-10 (accessed 23 July 2010)

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The contents of this Bulletin are general in nature. We therefore accept no responsibility to persons acting on the information herein without first consulting us.