19 Dec 2016
Using Tax Deductions to Increase Your ROI
When investing in property, ROI is the name of the game. The very essence of investment is that you spend money now to make money later – and since the value of property is consistently on the rise, it’s a wise thing to invest in.
However, yielding a great ROI on property is challenging for a variety of reasons. Maintaining a property can be expensive, and finding tenants to occupy it can be complicated. It takes a bit of knowledge and skill to make as much as possible on your investment.
One thing that can maximise your ROI (if you know how to take advantage of it) is the tax deduction. If you’re a property investor, you may be missing out on a wide range of claims. This is even more likely if you do your own tax returns.
If you or your accountant is knowledgeable about what can be claimed on tax, you stand to significantly increase your ROI. It could be worth seeking professional consultation, as you may be able to claim thousands of dollars back on tax!
The Australian Tax Office (ATO) lists the following as potential immediate claims for landlords:
- Advertising for tenants
- Body corporate fees and charges
- Council rates
- Water charges
- Land tax
- Cleaning
- Gardening and lawn mowing
- Pest control
- Insurance (building, contents, public liability)
- Interest expenses
- Property agent’s fees and commission
- Repairs and maintenance
- Some legal expenses
- Travel undertaken to inspect the property, to collect the rent or for maintenance.
SOURCE: The Australian Tax Office
The ATO lists the following as borrowing expenses which may potentially be claimed:
- Stamp duty charged on the mortgage
- Loan establishment fees
- Title search fees charged by your lender
- Costs (including solicitors’ fees) for preparing and filing mortgage documents
- Mortgage broker fees
- Fees for a valuation required for loan approval
- Lender’s mortgage insurance, which is insurance taken out by the lender and billed to you.
SOURCE: The Australian Tax Office
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of investing in property, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.