The Australian Tax Office or ATO pays close attention to the expenses claimed by landlords, especially those operating in the Airbnb space. They are ramping up its enforcement activities and will undertake 4,500 audits of taxpayers it considers are “high risk” because they claim expenses incorrectly, overclaim or don’t declare income relating to rental properties.
One area that is quite often misunderstood by landlords is the area of repairs & maintenance. They think that if they buy a house and decide it needs an internal paint before they try and get a tenant, they should be able to claim that painting expense as repairs and maintenance.
This is a common mistake and one quickly picked up by the ATO.
But why is this not a repair?
This episode explores the differences between repairs and improvements and how you can still get a significant tax deduction for improvements or capital works with a specialised tax depreciation report.
What you’ll learn:
- (0:56) Introduction and General Advice Disclaimer
- (1:39) ATO Focus on Landlord Expenses and Audits
- (2:06) Misunderstandings about Repairs and Maintenance
- (2:25) Defining Repairs and Improvements in Property Maintenance
- (3:43) Capital Expenses and Property Improvements
- (4:14) Specialised Depreciation Reports for Capital Works
- (4:39) Pitfalls of Initial Repairs and Improvements
- (5:16) Timing of Repairs for Tax Deductions
- (6:11) Strategies to Avoid Tax Traps with Property Repairs
- (6:42) Importance of Detailed Records for Pre-tenancy Works
- Loads More…
Links and Resources:
Australian Taxation Office (ATO) – Rental Properties
Smart Property Investment – Australian Property Market News
Australian Securities and Investments Commission (ASIC) – Property Investment
#PropertyInvestment #LandlordTips #PropertyMaintenance #TaxDeductions #RealEstateInvesting