What you can Claim: - Advertising for Tenants - Bank Charges - Body Corporate Fees - Borrowing Expenses - Cleaning - Council Rates - Gardening and Lawn Mowing - Insurance - Interest on Loans - Land Tax - Legal Expenses - Pest Control - Property Management Fees Commissions - Quantity Surveyor's Fees - Repairs and Maintenance - Secretarial and Bookkeeping Fees - Security Patrol Fees - Servicing Costs (IE: servicing a hot water system etc) - Telephone calls and rental - Tax-related expenses - Travel and car expenses (rent collection, inspection of the property, maintenance of the property etc) (You can claim a deduction for these expenses only if you actually incur them.
What you cannot Claim: The ATO lists some of the following expenses for which you are not able to claim deductions: - The acquisition and disposal costs of the property (these costs include the purchase cost of the property, conveyancing costs, advertising expenses and stamp duty on the transfer of the property) - Expenses not actually incurred by you, such as water or electricity charges borne by your tenants - Expenses that are not related to the rental of a property, such as expenses connected to your own use of a holiday home that you rent out for part of the year.
You cannot claim interest when: - You incur it after you start using the rental property for private purposes - On the portion of the loan you use for private purposes (money you use to purchase a new car etc) - On a loan you used to buy a new home if you do not use the home to produce income.
There are enough legal tax savings to help you minimize the amount of tax payable, so stay legal and don't try and claim expenses or costs that are not related to your property investment or be creative on items that you would like to deduct.
The tax office has long arms and will eventually catch up with you and when they do beware the penalties are horrendous and there could also be a lengthy jail term for trying to defraud the government, so simply stated don't do it even when other investors say they did and got it through, it just is not worth the effort.
When ever you are considering taxation and what is or is not deductible find a great accountant, or financial advisers that is up to date on the taxation laws and regulations, avoid the temptation of trying to do it your self the tax legislation is far to complex.