Rental Property Deduction & Investment Advice Gold Coast

A Guide to Rental Property Deductions Some rental expenses are immediately deductible in the year they are incurred, such as advertising for tenants, insurance on the property, or some minor repairs. Some other expenses like renovation costs must be claimed over a number of years. Rental expenses relating to private or capital costs generally cannot be claimed, such as the cost of buying or selling your rental property or expenses connected to your own use of a property which is rented out for part of the year. You may need to apportion your expenses claimed if:• Your property is only rented for part of the year, or; • The only part of the property is used to earn rent, and/or; • You rent the property at uncommercial rates.

Common mistakes made by taxpayers in relation to rental expenses include: • Incorrectly claiming property improvements as repairs; • Claiming construction costs as a decline in value; • Incorrectly apportioning borrowing costs between business and private; • Claiming expenses for a property that is not genuinely available for rent. Tax Office publications such as "Rental Properties" and "Guide to Capital Gains Tax" is available on the ATO website at www.ato.gov.au

What name should I buy the investment property in?

This is a common question from our clients. Unfortunately, there is no simple answer. There are numerous issues that you need to consider, such as:? How are you going to fund it? Is it a positive or negatively geared property?? What are your intentions for the property – hold or sell?? Who are the parties involved?? Where and what property are you intending to buy?? Is asset protection important? As you can appreciate, the above questions can lead to different outcomes. It is important that you crunch the numbers before choosing the investment structure. You need to consider if it is better holding the property in the name of a low-income earner or high income earning spouse. If it is going to be running at a loss for a short time or become positively geared or capital gains tax on its sale, then it should be held in a low-income spouse’s name or a discretionary trust. Discretionary trusts have tremendous flexibility, i.e. each year you can determine who receives distributions and has asset protection mechanisms. However, trust losses cannot be distributed and you cannot claim borrowing costs to invest in a discretionary trust. Unit or fixed trusts can give you negative gearing benefits but they do not offer real asset protection or discretion to distribute profits. Hybrid trusts are a combination of a fixed unit trust and a discretionary trust, they are structured to overcome limitations of fixed and discretionary trusts. However, the ATO is currently reviewing hybrid trusts very carefully. Self-managed super funds are fantastic vehicles to hold investment property. There is potential for rental income and capital gains to be tax-free once you retire and reach 60 years. It also offers good asset protection. The downside is that your money is locked away and borrowing against the property is very restrictive. Therefore it is better to consider this once you are above 40 years. Therefore in choosing a structure, you need to consider carefully before you make a decision. Remember the investment property only makes sense if it makes money for you. It should not be a tax-driven decision.

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Max accountants offers Tax Services Gold Coast, tax agent gold coast, tax advice australia & tax property investment advice. Contact Max Accountants for Tax Return Helensvale Australia. Visit: http://goldcoasttax.com/