Mark Forytarz - Real Estate Professional

Off the plan sales specialist, director and real estate agent, Mark Forytarz, discusses his views on the real estate market.

Tax hurdles trip property investors

Posted on | June 10, 2009 |

INVESTORS own around two million homes in Australia, and every year thousands claim deductions they are not entitled to and fall foul of the Australian Taxation Office.

The result can be a kindly warning or a significant fine and large interest bill.

The tax office says it is investors’ responsibility to get their tax returns right and they can’t blame their accountant or plead ignorance if they get it wrong.

One of the most common mistakes investors make is claiming items that should be depreciated over several years.

According to the tax office, initial repairs to fix damage, defects or deterioration that existed when a property was bought are capital expenses that should be claimed as capital-works deductions over either 25 or 40 years.

Capital improvements such as remodelling a bathroom or adding a pergola should also be claimed as capital-works deductions.

Other mistakes include:

Interest

Taxpayers sometimes use loans for investing and private purposes — for example, to buy or renovate a rental property or to buy a motor boat.

The interest expense on the private portion of the loan (the boat) is not deductible.

Legal expenses

Conveyancing expenses incurred when buying and selling a property are not deductible. These form part of the cost for capital-gains tax purposes.

Travel expenses

If you take a holiday and visit your investment property while you are there, you cannot claim a deduction for the full trip.

The tax office says you may claim only those expenses that are directly related to the property inspection and a proportion of accommodation expenses.

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About Mark

Director at Castran Gilbert.
Associate diploma of business majoring in marketing.
Licensed Estate Agent.
Accomplished auctioneer.
Foremost authority in off-the-plan selling in Melbourne.

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