NOW that the end of the financial year is approaching, it is time for property investors to turn their attention to what they are able to claim as tax deductions.
Below are some of the common expenses that are claimed, but for more information see ato.gov.au
Bank fees and charges can vary widely but usually include monthly account keeping fees, an annual fee if you have a professional package and overdrawn charges. These fees are a tax deductible expense if the account is used for the purpose of investment property.
This includes print advertising such as newspapers, signs or through the internet for new tenants.
Costs associated with using the services of a property manager and legal costs are claimable.
The legal costs associated with residential property are usually not major because most states have a tribunal that deals with these matters at a minimum cost and without the need for lawyers. However, commercial property disputes can be very different.
This includes lawn mowing, gardening, pest control and repair and maintenance expenses. It can also include cleaning costs such as cleaning products or for hiring a professional cleaner.
Costs incurred as a result of travelling to and from the investment property to inspect, maintain or collect rent can be tax-deductible.
However, to claim these expenses, the property has to be the main purpose of your trip.
For example, if you have an investment property on the Gold Coast and you travel there to inspect the property but stay a week, you cannot claim the full week’s expenses and 100 per cent of the travel costs.
You will be able to claim only a portion of the expenses as you spent only a portion of time dealing with the investment property.
The tenant should insure their personal belongings, but the landlord needs insurance for things such as public liability, the building and contents. Some landlords also opt for landlords’ insurance to cover items such as rental loss or default.
This will be the biggest expense for most property investors. Check your loan statements and other bank documents that are related to the payment of interest on your loan.
If you have a principal and interest loan, only the interest is tax-deductible, not the principal.
To claim these expenses, keep accurate and reliable records including dates, amounts and receipts. This can be annoying at times — but the potential savings at tax time are worth it.
Queensland property chiefs warn rise in land tax will hurt more than the rich
NEW Queensland Treasurer Jackie Trad has defended the Government’s planned “Robin Hood” property tax ahead of her first Budget update tomorrow.
Ms Trad dismissed claims from the Property Council that the planned 2.5 percent land tax on properties worth more than $10 million would hurt jobs growth and property values.
“This is a very modest increase… we think it’s fair that those that can pay a little bit more, do pay a little bit more,” Ms Trad said.
Overnight, The Sunday Mail quoted property chiefs as warning Premier Annastacia Palaszczuk’s last-gasp election tax grab would destroy jobs and wipe more than $41 billion from land values in Queensland.
A 2.5 percent extra slug on owners of land worth more than $10 million was part of a suite of tax measures in Labor’s final campaign announcement, two days before last month’s state election win.
The Premier compared herself to Robin Hood, targeting only the richest.
But the Property Council says ordinary Queenslanders will pay the price, with a risk to employment and businesses forced to pass on the cost to consumers.
The land tax measure will be included in the Mid Year Fiscal and Economic Review to be presented tomorrow by Ms Trad, who was handed the role of treasurer in last week’s Cabinet reshuffle.
It is expected to raise an additional $227 million for the state’s coffers.
“The inconvenient truth for the Government is the vast majority of properties that will have to wear this tax are commercial, retail, industrial and tourism properties,’’ Property Council Queensland executive director Chris Mountford said.
It would inevitably flow on to tenants.
“We heard all through the election campaign that business cost pressures are particularly acute because of price increases like electricity … making it tougher for businesses to employ people. Now Queensland businesses will need to add land tax to their list of concerns before they think about hiring staff.”
Economist Nick Behrens said the amount raised through land tax had risen faster than any other tax in Queensland in the past decade – up 10percentnt, compared to the 66 percent Australian average.
The new measures mean only South Australia and Western Australia will have a higher rate. That will make it harder to lure businesses to set up in the Sunshine State.
“We’re in a race to attract and retain investment. Now we’re putting lead in our saddlebags that will impede our ability to compete,” Mr Behrens said.
Ms Trad said the extra land tax would apply only to the wealthiest 850 payers of land tax.
“It does not include farms, and it does not impact on the family home. The land tax ensures that those who are benefiting most from our growing economy and rising land values make a fair contribution to frontline services in Queensland.”
Ms Trad defended the Palaszczuk Government’s employment performance, saying 143,400 jobs were created in the first term of office.
Originally Published: brisbaneinvestor.com.au
Tax warning on share economy
Gabriel and Catherine Mihalas with a drone Gabriel uses for a second income stream. Picture: Simon Bullard
THE October 31 tax lodgement deadline has arrived and Australians making money from the share economy are being urged to make sure they are on top of their tax obligations.
Money earned on Airbnb, Uber, Airtasker and similar platforms requires tax to be paid, according to Jason Robinson, director at accounting firm RBK Advisory.
“More clients are casually mentioning extra revenue streams,” Mr Robinson said. “I asked one client how their weekend was and found out they were earning $400 every weekend helping strangers move house.”
The government is beginning to regulate side income sources.
“Uber drivers are now required to be GST registered and hold an ABN before they can begin making money,” Mr Robinson said.
Airbnb and Stayz have become popular with landlords taking advantage of holiday locations by organising fixed leases for colder off-season months and then going short term for a bigger yield over summer, said Sandrina Postorino, managing director of Landlords Choice.
“During these months they can command much higher variable rents,” she said. “This all needs to be accounted for in their tax return.
“Another trap is when investors decide to Airbnb their main residence instead of their investment property, which means it is no longer completely exempt from Capital Gains Tax.”
Side hustles, or hobbies turned into income streams by entrepreneurial types also have tax requirements, according to Clayton Howes, CEO of fintech lender MoneyMe.
“If you make even one dollar on your side hustle that comes with tax obligations,” Mr Howes said.
Another confusing one is network marketing- think Avon and other modern incarnations- often undertaken by stay at home parents, said Katrina Haskew, managing director of Leading Advice.
“Where it can get messy is when turnover is more than $20,000, but they have consumed so much of their own products in testing, trials, or giveaways, that it is an effective loss,” Ms Haskew said. “This is extremely challenging to account for, so it’s paramount that stringent records are kept and presented to accountants.”
ATO assistant commissioner Kath Anderson said many Australians lodge their returns at the last minute and can make mistakes overlook income when in a hurry.
Catherine and Gabriel Mihalas both enjoy side hustles in addition to their regular jobs. Catherine joined Nucerity, a network marketing group in the health and skincare field, as a way to earn money in the years following the birth of son Samuel.
“The key attraction was the hope of building a future residual income where I could stop worrying about money completely, by putting in the groundwork today,” Mrs Mihalas said. “My plan is to eventually retire from nursing with this as my main income.”
Mrs Mihalas did not originally focus on what her tax obligations might be, until the company suggested during her onboarding process that she discuss it with her accountant.
“I’m still at a stage where what I’m doing is considered a hobby; I haven’t yet passed the threshold where it will be considered a business,” Mrs Mihalas said. “But I believe that when I reach that stage, the benefits of the program will outweigh the tax obligations.”
Husband Gabriel set up a side business in aerial drone photography, to combine a hobby with his background in aviation.
“It seemed like a great way to earn extra cash while doing something that I loved,” Mr Mihalas said. “I was aware of the tax implications from day one … I knew which records to keep to stay on track.
“I’d like to think it will become a significant additional revenue stream for our family.”
Originally Published: http://brisbaneinvestor.com.au
Queensland Rejects Hitting Developers With Infrastructure Charge
The Council of Mayors (SEQ) has urged the Queensland Government to investigate an alternative funding model to deliver the infrastructure needed to service South East Queensland’s growing population.
In response to the Queensland Government’s Delivering an Infrastructure Plan for Queensland directions paper, the SEQ Mayors have pushed for further investigation of the ‘UK City Deals’ approach to fund public infrastructure.
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