Avoid these 4 common mistakes made by rental property owners

As we know it is easy to make mistakes when it comes to managing your rental property finances. Here are a few more tips to help you avoid some of the common tax mistakes made
by rental property owners.

#1 Claiming borrowing expenses
If your borrowing expenses are over $100, the deduction is spread over five years. If your borrowing expenses are $100 or less, you can
claim the full amount in the same income year you incurred the expense.
Borrowing expenses include loan establishment fees, title search fees and the costs of preparing and filing mortgage documents.

#2 Claiming purchase costs
You can’t claim any deductions for the costs of buying your property. These include conveyancing fees, stamp duty trips to inspect the property. If you sell your property, these costs are then used when working out whether you need to pay capital gains tax.

#3 Claiming interest on your loan
You can claim the interest as a deduction if you take out a loan for your rental property. If you use some of the loan money for personal use such as buying a boat or going on a holiday, you can’t claim the interest on that part of the loan. You can only claim the part of the interest that relates to the rental property

#4 Claiming the right portion of your expenses
If your rental property is rented out to family or friends below market rate, you can only claim a deduction for that period up to the amount of rent you received. You can’t claim deductions when your family or friends stay free of charge, or for periods of personal use.

We hope these tips will assist you in assessing your tax obligations for your rental property, however, if you have any questions about this
information, or would like assistance with your rental property finances, we would love to hear from you.

Call us today:
Torquay (03) 5261 2262
Winchelsea (03) 5267 2673