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Tax benefits for Australian homeowners

By Andrew Bell

The Australian housing market is an ongoing and complicated combination of continuous construction and property development, first-time buyers, property investors, house-flippers and more. On top of that, understanding Australian property taxes can be a confusing and lengthy process.

If you’re an Aussie homeowner, here’s a list of questions you should be asking yourself in order to determine if you are getting the most out of your money and investments when it comes to potential tax deductions.

Do I ever work from home?

Within just the past few days, our local and global workforces have had to quickly adapt to working remotely as much as possible. And when it comes to working from home (WFH), a common assumption is that the WFH tax benefits only apply if you work from your home on a full-time basis. The good news is that whether you work from your home one day per week or, in the wake of our world’s current events, full time for the foreseeable future, you are eligible for certain tax deductions.

According to the Australian Taxation Office (ATO), you may be able to claim the following deductions if you work from your home and regardless of whether or not you have a dedicated working area set up, such as a home office:

  • The cost to use a room’s utilities, i.e., gas or electricity bills
  • Work-related phone expenses
  • A decline in value for your office equipment (computer, desk, chair, etc.)

Do I own a rental property?

It’s no secret that rental properties are a hot commodity across Australia, and have been for quite some time. Data released in 2019 by the Australian Bureau of Statistics (ABS) revealed that nearly one-third (32%) of Australian households were rented out in 2017 and 2018. If you are a homeowner and fall within the 32% that are renting out their properties to tenants, then you may be in luck when it comes to potential tax deductions.

In fact, if you incur any of the following expenses as a homeowner and landlord, and have proof of payment, you can immediately claim these expenses as tax-deductible:

  • Advertising costs for tenants
  • Body corporate fees
  • Council rates
  • Water charges
  • Land tax
  • Cleaning expenses
  • Gardening and lawn upkeep
  • Repairs and maintenance
  • Pest control
  • Building, contents, and public liability insurance fees

Am I paying loan interest on a rental property?

It’s also no secret that to own a rental property in Australia, you must have the financial means – either personally or through a mortgage – to purchase it in the first place. If you, like many, are currently paying off a loan for your rental property, the interest paid can also create additional tax benefits for you as a homeowner.

Since 2018, the ATO’s regulations allow for an Australian homeowner to deduct part or all of the interest paid for a rental property loan within a financial year. That being said, it is important to note that if you do start to use the home for private living purposes, then you are no longer eligible to claim interest paid on the loan.

There are further tax deductions you may be applicable for as an Australian homeowner, such as deductions if you run a business from your home or if you’ve recently renovated a rental property.

Whether you’re a homeowner trying to understand your property options and tax implications for each, or are looking to buy for the first time but are unsure of what the next steps are, the mortgage brokers at Ray White Surfers Paradise are ready to answer your questions and help you with these processes.

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