Owning an investment property can be a rewarding experience, both financially and emotionally. There are many considerations other than the purchase cost of the property that need to be taken on board beforehand. Apart from the type of property (such as a unit or house), the location, your financial goals and the intended time period for keeping the property.
• positive vs. negative gearing
• raising of funds – will it be a cash transaction, or will you need to borrow?
• cash flow, does your rent cover your repayments?
• other pre-purchase costs
There are numerous other costs involved such as bank fees and interest, body corporate fees and conveyancing costs as well as stamp duty and other tax liabilities. However, many of these costs you may be able to claim as a tax deduction, along with ongoing maintenance of the property and the process of generating income from your investment property.
Not all fees and costs that are associated with an investment property are able to be claimed as a tax deduction. You are not able to claim a tax deduction for any expenses that are:
• related to the acquisition and disposal costs of the property, such as the purchase cost, conveyancing costs, stamp duty on the property transfer and advertising for the sale
• not incurred by you, the property owner, such as any water or electricity charges that are incurred by your tenants
• not related to the rental and income generation of the property, such as if you personally use your holiday home
Whilst you may not be able to claim an immediate deduction for the above, you may be able to add these costs to the property’s cost base to minimise your capital gains tax liability.
Here at The Quinn Group, our experienced team can assist you with legally minimising the amount of tax payable on your investment, along with all of your other investment property queries. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book anappointment.