Main Points Considered A New Zealand Citizen living in Australia, do they qualify for the First Home Owners Grant (FHOG) Also, can they qualify for the First Home Owners Stamp Duty Concessions What if they rent out the spare bedroom to help pay the mortgage? Scenario...
Rental Property Repairs – Claimable Now or Later?
In general you can only claim for wear or damage caused during the period the rental property was rented or available for rent – however the timing of the expense can be during or after the period – provided it relates to wear or damage through rental activities. video links
Claim Later – will be capitalised
Initial Repairs – buy a property in need of TLC – renovate before renting out
The ATO view repairs & maintenance in the first 12 months with suspicion, so if you try to claim large amounts for repairs & maintenance – expect a “please explain” letter. If the wear or damage was in existence at the time of purchase – all costs to fix will be capitalised (added to the cost of the property when you come to sell it). If however a tenant trashes the property in the first 12 months – no problem you can claim – however you may still get a “please explain” letter from the ATO- but you’ll be able to justify the costs were fresh wear or damage not previously in existence, so OK to claim now.
Repairs – which improve the function or the replacement of an entire structure
Example – if you replace the whole fence, kitchen or bathroom as opposed to repairing damaged palings or cupboard doors. The ATO will view this as a Structural improvement (making up the fabric of the house) and not a repair, as such you will need to depreciate it at 2.5% depreciation over 40yrs, however a new hot water service, ovens, carpets, etc. – are replacement assets, so are depreciated over their effective life, ranging from 5-15 years in most cases. Any residual values remaining will be added to the cost of the property for calculating any profit on sale.
Claim Now – in your tax return
Fresh wear, tear or damage can be claimed at any time during the rental activity
- If you are required to take the property off the rental market to fix – all holding costs can still be claimed (interest on loans, etc ) provided the repairs are done in a reasonable time frame.
- Or at the end of a tenanted period and prior to selling or moving it to live in yourself.
Great Tip
It’s not uncommon for a landlord to want to do a number of repairs after an extended period of renting before selling, or freshen up before moving in themselves to live. For example a beach front unit to retire in could be repainted and all the general wear or damage caused to the house from previous renting fixed – are all tax deductable now.
Australian Homeowner Moving Overseas and Selling Their Principal Place of Residence (PPR) – Avoiding a $295,200 CGT Bill
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Understanding Land Tax in Australia
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Tiny homes have excellent rental yields, income streaming and tax minimisation strategies. How do they compare to a Granny Flat?
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Easier for Victoricans to build Granny Flats from December 2023.
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Property Investors to ensure income and expenses are correct.
The ATO is particularly targeting property investors that are not using the help of a specialist property tax accountant like Umbrella Property Accountant, due to the high error rate being discovered from ATO Audits. The ATO Audits into self-preparers have uncovered...
Residential Rental Caps & Vacancy Taxes will help supply for tenants?
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Victorian Labour Government Land Tax Hikes to push up Rents
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Joint Venture(JV) Tax Considerations for Property Developers
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Labor Targets Housing with ‘Shared Equity Scheme
A federal Labor government would deliver a $329-million help-to-buy scheme, providing 10,000 Australians with a government guarantee of up to 40 per cent on new homes or 30 per cent on existing homes with a two per cent deposit.