6 Tips to Eliminate Common Tax Mistakes Made by Rental Property Owners

 

When it comes to taxes, even the simplest of errors could lead to significant financial losses. Filing taxes is not always an easy process and is something that needs to be done with great care. Taking the extra time and effort in filing your taxes will prevent any complexities in the future. Remember these 6 tips from a tax lawyer in Perth that must be avoided to help you save your time and money: 

Keep All the Records Safe: 

To claim everything you are entitled to, make sure you keep the proofs of all your income and expenses. Capital gains tax will be applicable if you are selling your property. Experienced tax lawyer in Perthsuggests to keep the records from throughout the period of the property ownership, and save them for five years from the date of property sale. 

Repairs and Capital Improvements: 

- Claiming initial repairs and improvements as a deduction is not possible in the same year you made such expenses. 

- Any repairs performed will be considered for deduction if it’s meant to fix damages caused due to renting of property. 

- Costs of repairing wear and tear of roofs or hot water system that are damaged due to renting of property shall be claimed in the same year. 

- Replacing entire roof or renovating bathroom are not immediately deductible. These costs shall be claimed at 2.5% every year for 40 years since the date of completion. 

Show that Your Property is Available for Rent: 

To claim a tax deduction, show that your property is available for rent. Advertise your property to someone who may want to rent it, and set the conditions or standards similar to other properties in the area. 

Claiming Purchase Costs: 

According to a tax litigation attorney in Perth, no deductions shall be claimed for costs associated with purchasing your property. This will include both stamp duty and conveyance fees. These costs will be taken into consideration when selling the property so as to determine whether you should pay the capital gains tax. 

Claiming Interest on Loan: 

Claiming interest as deduction is possible if you take a loan for your property. If this money is used for personal purposes such as vacation, the interest cannot be claimed. Interest shall be claimed only when the money is used for the property. 

Claiming Borrowing Expenses: 

If the borrowing expenses such as loan establishment fees, filing of mortgage documents, and title search fees exceed $100, the deduction is split evenly over five years. If this is less than $100, the full amount shall be claimed in the same year of incurring such expenses. 

These tips will help you avoid any tax mistakes down the road. Get in touch with a qualified taxation lawyer in Perth for more information. 

The author is a qualified taxation lawyer in Perth working in a leading law firm. This article provides some useful tips for rental property owners that will be helpful in avoiding common tax mistakes. For more, visit https://www.munrodoig.com.au/

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