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Tax planning for Moreton property investors



tax planning for moreton property investors

Investing in property – tax planning

This is an important article for anyone that is wanting tho ensure that they do not pay too much tax.  There are plenty of deductions that every property investor can claim, so make sure that you claim them planning for moreton property investors

Owning an investment property can be a financially rewarding experience despite the big cash outlay. With a little tax knowledge and some professional advice, you may be able to claim a majority of the expenses associated with the purchase, ongoing maintenance and the process of generating income from your investment property, as tax deductions.

Here is a list of the claimable expenses that you should be including in your tax return to maximise your savings.

Advertising for tenants
This is a claimable expense providing it’s strictly advertising for tenants if your property is available for rent. These costs include advertising with local real estate agencies and posting advertisements in newspapers or local publications. Advertising for the sale of a property is a capital expense and can only be taken into consideration as part of the cost base of the property on disposal.

Bank charges
The bank charges on your loan account (usually in the form of monthly fees) are tax deductible as well as any bank charges on a separate bank account that you have specifically for your property.

Body corporate fees
These are generally paid quarterly and cover the running costs of the building. It covers repairs, insurance, gardening, communal lighting, pest control, etc.

Borrowing expenses
These are costs associated with the borrowing of money required to purchase the property and although are not deductible upfront, they are deductible over the shorter of either the period of the loan or five years. These include mortgage insurance, title search fees, registration of mortgage, costs for preparing and filing mortgage documents, mortgage broker fees, valuation fees, stamp duty on mortgage and loan establishment fees.

Capital works
You can claim a tax deduction for construction expenditure, or capital works. The deduction is spread over 25 or 40 years depending on the type of construction and the year in which the construction was completed. The construction costs of a newly built property are deductible over 40 years. To maximise your tax deductions you can obtain a quantity surveyor’s report, which will list the year of construction, the construction costs, and the deductible amount each year.

Council rates
Council rates are imposed on landowners to help fund the cost of community infrastructure and services to the local municipality. Councils generally offer a one-off annual payment or a payment plan of quarterly instalments and all payments are tax deductible.

Decline in value of depreciating assets (also known as “Depreciation”)
To maximise your tax deductions you can obtain a quantity surveyor’s report which shows, in detail, the value of the deduction to which you are entitled based on the assets you own in the investment property. Alternatively, you will need to supply your accountant with information to support the purchase date and purchase price of each asset. Depreciating assets produce a partial tax deduction as these assets decline in value over time, usually over more than one year. Depreciating assets commonly found in residential rental properties include: air conditioning units, removable floor coverings, window curtains and blinds, dishwashers, furniture, heaters, hot water systems, refrigerators and freezers, stoves, cook tops and range hoods, swimming pool filtration and cleaning systems, television sets and washing machines.

Gardening and lawn mowing
This is deductible and includes dump fees, mower expense, tree lopping, replacement garden tools, fertilizers, sprays and replacement plants.

Insurance can be purchased to protect your investment properties. Insurance cover is tax deductible and can protect you against circumstances including loss of rent, rent default, theft by a tenant, building damage and public liability claims.  mortgage insurance is not immediately claimable but is amortized/depreciated over time as part of borrowing expenses.

Interest expenses
Interest charges on a loan are tax deductible. Principal or capital repayments are not tax deductible. Only the interest component directly related to your property is tax deductible. If you are paying principal and interest on your loan then you will need to calculate the interest component for the year. Locate the bank loan statements for each investment property to ascertain the interest paid for the income year.

Land tax
Land tax is tax deductible. Land tax is a tax levied on the owners of land and it is based on the value of land. Once you’ve completed a land tax registration form, you will be sent an assessment notice showing the land tax payable on the land you own. You will be liable for land tax if you own, or part-own: vacant land, a holiday home, an investment property; or a company title, retail, commercial or industrial unit.

Legal expenses
Legal expenses are generally incurred during the sale or purchase of an investment property. The legal costs for buying and selling a property are not tax deductible and are included in the capital gains tax calculation. Tax deductible legal expenses include the costs of evicting a non-paying tenant and the costs of terminating a lease.

Pest control
If you pay for your investment property to be sprayed or fumigated, you will generally be entitled to a tax deduction.

Property agent fees or commissions
A property agent charges fees for maintaining a property on your behalf. The charges for the year-end financial statement, reference-check fees, leasing fees and monthly rental statement fees are all tax deductible. You will receive the net rental income after the property agent deducts their monthly fee.

Repairs and maintenance
A repair is generally tax deductible. Renovations, improvements, replacements and extensions are treated differently to repairs and maintenance. Renovations, improvements, replacements and extensions are generally deductible over more than one year.

“Repairing” is restoring the item to the condition it was in before it deteriorated without changing its essential character. If you “replace” an item with similar parts/materials then it is also a repair even though you repaired the entire item. If the item is “repaired” with improved parts/materials, which will improve the function of the item or extend its life then it would be considered as an improvement and need to be included as a new asset.

Keep a record of all your stationery and postage expenses for the year. Don’t dispose of your records. This is an often overlooked tax deduction by investment property owners.

Tax-related expenses
The cost of obtaining tax advice from a registered tax agent is tax deductible. Tax preparation fees and accounting charges are also tax deductible.

Telephone expenses
Telephone calls directly related to the running of your investment property are tax deductible.

Travel undertaken to inspect the property or to collect the rent
Investment-related travel and car expenses include airfares, car hire, taxis and accommodation. These expenses are tax deductible if you incur these costs while collecting the rent, inspecting the property, or travelling for some other reason related to your investment property.

Water charges
Water rates are tax deductible if you, not your tenant, pay the water bill.
Whilst the above expenses are the most common deductibles on investment properties they may be other deductions that you are entitled to specifically relating to your investment property.

 We thank Nila Sweeney for this informative article, which first appeared on on 26 February 2013.

Tax News

Queensland property chiefs warn rise in land tax will hurt more than the rich



Moreton Tax News
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


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:

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Tax News

Tax warning on share economy



tax news

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:

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Tax News

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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