Investment property income you get from your property is considered by the Australian Taxation Office to be taxable income. It is taxed according to your marginal tax rate, and it should be declared on your income tax return.
With that said, it is essential to consider what are the critical tax considerations for your investment property in Australia. Here are some of them:
According to the ATO, investment property expenses can be considered as a tax deduction if they are connected to the investment property. Therefore, the management and the maintenance expenses you pay will offset any taxable income.
Some examples of what can be considered a deduction on investment properties are expenses on the advertisement in relation to advertising for new tenants, interest expenses on your investment property loan, landlord insurance, repairs & maintenance, depreciation, agent fees, mortgage insurance etc. Make it a habit to always keep your receipts for these expenses.
– Property Tax
You will also need to pay for separate property taxes such as council and water rates. These taxes are paid to the local government for activities such as public maintenance and rubbish collection. This tax is calculated based on the value of your property and its location.
– Land Tax
Land tax is calculated using the land value of your property and is paid to your state government.
Owning an investment property and receiving rental income is a great investment option, but it also requires you to consider the income considerations. Hopefully, the considerations mentioned above will help you get a better idea of what to expect and how to legally minimize your taxes.
Talking about your tax implications can be quite overwhelming and sometimes confusing for many. If you have any questions, Glance Consultants will be happy to assist you.