How to maximise your property investment tax deductions

As an investor, it’s likely that you already claim some depreciation on your investment property. However, you might not realise there are deductions you could be making on smaller items within your property, which could mean valuable savings at tax time.

Take note of the less obvious deductions

There may be more things you can claim on tax than you realise. According to Quantity surveyors BMT Tax Depreciation, say the top five deductions most overlooked by investors aren’t the large items, but include:

1. Freestanding garden sheds

2. Solar garden lights

3. Intercom systems

4. Ceiling fans

5. Tennis court nets

Other tax deductions on investment property that are often missed are freestanding bathroom accessories, garage door closers, garbage bins, exhaust fans, synthetic lawns and swimming pool cleaning systems.

Don‘t forget all the little ‘bits and pieces’

Many investors remember to claim depreciation on big ticket items – like carpet and washing machines – but it pays to sweat the small stuff.

It’s estimated that claiming the cost of smaller household assets such as shower curtains, smoke alarms and lawnmowers in your rental place can actually increase the cash flow generated by the property by over 10%.

Depreciation schedule is key!

It’s totally worth the time and expense fi have a depreciation schedule drawn up by a professional quantity surveyor to make the most of depreciation claims while sticking to the rules. The Tax Office does offer online guides for depreciation claims but it’s a complex area and a rough estimate won’t meet their strict requirements.

Better still, the cost of having the schedule drawn up can normally be claimed on tax. And, you may even be able to go back and amend tax returns for previous years if it turns out you’ve underestimated prior year’s depreciation costs.

Your tax isn’t an area where you should mess around. It’s important to get this right, both so you have a robust investment and to keep all the right boxes ticked with the ATO. Work with a professional to start making the most of your investment property tax deductions.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.