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What tax deductions can you claim through your investment property?

By Andrew Bell

Making an investment in real estate in Surfers Paradise has benefits from all manner of angles. First of all, there's the simple fact that you now own a home in one of the most beautiful places in the world! But beyond those bragging rights, the financial benefits are numerous as well. Buying in a thriving area can lend itself to great capital gains, helping you build equity and generate down the line.

Meanwhile, rental income can create positive cashflow – but it doesn't have to. In fact, positioning you rental price a certain way can get you access to some excellent tax deductions – just some of many taxation benefits possible with an investment property. Let's take a closer look. 

Negative gearing for positive results

If your rental income minus the expenses of running a property amounts to less than the ongoing costs and mortgage interest (excluding principal repayments), you have negatively geared property. While this sounds like a detrimental financial situation for your Surfers Paradise property, it can actually be incredibly beneficial. 

According to the Australian Taxation Office, you could be able to claim tax deductions a wide range of rental costs against your income. If those expenses that you claim end up meaning you get a tax refund, you can even score a reduction in your withholding rate! 

By putting this together and making the right applications at the end of the financial year, you can find yourself in a very advantageous position as an investor. It allows you to minimise the ongoing costs of owning real estate in Surfers Paradise, while it appreciates in value. Once you sell it on, hopefully for more than the purchase price, you can find yourself with a tidy profit. 

Reparations for the repairs

One ordeal that almost every landlord has to go through at some point is fixing damage sustained by your Surfers Paradise property. It could be weather-induced, the product of a careless tenant or even an act of God – damage occurs, and it's your responsibility to fix it so tenants can enjoy a safe living environment.

However, the silver lining on this cloud is that you can claim these expenses as a tax deduction. You can't do this for any damage or defects that existed when you bought the Main Beach real estate, only once it becomes an income-generating property. 

Making capital works work for you

If you own rentals in Surfers Paradise, particularly detached homes then alterations are something you will likely consider down the line. Making capital improvements to the building itself or the surrounding land can add value to the dwelling, as well as boost its appeal for tenants. 

On top of this – you guessed it – the costs can be tax-deductible. The Housing Industry Association recently noted that as of 2014, home renovations accounted for 2 per cent of total gross domestic product – $29.66billion in total. Think of how much you could make in deductions through home improvement! 

Get to know your property

This is just the tip of the iceberg for deductions you can make with an investment property. Everything from advertising for tenants to mowing the lawns could be tax deductible! For more information on making the most out of your Surfers Paradise property, make sure to check out our landlord symposium in June. 

At this free event, held at the Southport Yacht Club, we will field and answer questions along with investors and landlords on how to reap the benefits of investment property. It's a chance to learn from the best and brightest – head on over to our website to RSVP and find out more! 

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