Being tax-smart when investing in property means more than making the right property choices. If you use your property to earn income at any time, you will have tax obligations and entitlements. You have a range of tax obligations when you own, buy or sell a property.

Getting record keeping right makes tax time easy Whether you use a tax agent to prepare your tax return or do it yourself, you need to keep proper records over the period you own the property. Keep the right records for each stage  of your journey to ensure you’re able  to claim everything you’re entitled to.

Buying a property

  • Set up an easy-to-use record-keeping system as your first priority. This can be as simple as a spreadsheet or you can use professional software.
  • Keep records of every transaction over the period you own the property. This includes contracts of purchase and sale and conveyancing and loan documentation.
  • Also keep records of the costs of buying the property such as legal fees, stamp duty on the transfer and initial repairs. You can’t claim an immediate tax deduction for these, but they will reduce the tax you pay when you sell the property.

Owning a property

  • Include all your rental income in your tax return.
  • You can claim immediate tax deductions for things such as:
    • loan interest
    • rates and taxes, including council and water rates and land tax
    • property management fees
    • insurance
    • body corporate fees
    • cleaning and gardening
    • repairs and maintenance relating to when your tenants were living  in the property.
  • You can claim tax deductions over several years for things such as:
    • capital works, otherwise known as building costs
    • borrowing costs.
  • When lodging your tax return make sure you:
    • include all your rental income
    • only claim deductions for periods that your property is rented out or genuinely available for rent
    • don’t claim deductions for periods that you use the property yourself.
  • Scan copies of your receipts to make it easier to store and access them.

Selling a property

If you sell an investment property or your main residence that you have rented out, remember:

  • you may have to pay capital gains tax, even if you transfer the property into someone else’s name
  • capital gains tax is the difference between your cost base (costs of ownership) and your capital proceeds (what you receive when you sell the property or the market value when you transfer the property)
  • if you have claimed a capital works deduction in any income year your cost base should be reduced by these amounts
  • if you own the property for more than 12 months, you will be entitled to a 50% discount on tax on the capital gain.

Please contact our office is you have further questions concerning your tax obligations.

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.