Property Investors

Please browse through the below categories FAQ’s to see if your question is here or please submit a new question via the contact us page.

Magic Date for Capital Gains Tax – Generally, you can disregard any capital gain or capital loss you make on an asset you acquired before 20 September 1985 (pre-CGT)

Loan – part investment/part personal – It is advisable to obtain separate finance for personal and investment related purposes. Should a mixed finance agreement exist, interest deductibility will require apportionment to account for the property/investment ONLY. Very clear documentation is required to be kept during this arrangement at all times.

Claiming expenses prior to property being rented out – You cannot claim the cost of repairing defects, damage or deterioration that existed when you obtained the property, even if you carried out these repairs to make the property suitable for renting. This is because these expenses relate to the period before the property became an income producing property.

Repair v Capital Improvement – You can claim a deduction for the costs you pay to repair (work to make good or remedy defects in, damage to or deterioration of the property) and maintain (work to prevent deterioration or fix existing deterioration) your rental property, in the year you pay them. You can’t claim the total costs of repairs and maintenance in the year you paid them if they did not relate directly to wear and tear or other damage that occurred due to renting out your property. These are capital expenses you may be able to claim over a number of years as capital works deductions or deductions for decline in value. If you have to replace something identifiable as a separate item of capital equipment (such as a complete fence or building, a stove, kitchen cupboards or a refrigerator) you have not carried out a repair. This means you cannot claim the entire replacement cost you incurred in the year you incurred it. However, you may be able to claim the cost as a capital works deduction or a deduction for decline in value.

Leasing at non commercial rent – If you are leasing your investment property at non commercial rates (ie to family), an apportionment of your other expenses, such as interest, will also need to be done on the same basis.

Borrowing Costs – Stamp duty, loan establishment fees and title search fees are all borrowing expenses and are deductible over 5 years OR over the term of the loan (whichever is less).

Capital Works Deductions – You may be able to claim a deduction for the construction costs of your property over a 25-year or 40-year period – called a capital works deduction.