The Top 10 Tax Deductions for Property Investors

Investing in property is a great way for Australians to earn additional income. And it’s not all about capital gains.

Technology has empowered smart real estate investors with a playground of opportunity, much of which is being left unmet at this point. Platforms like AirBnb, Stayz, and other short-term holiday rental sites have revolutionised the way both consumers and property owners think about property.

But with greater opportunity comes unexpected financial implications. If you are leveraging short-term rentals as a way to increase your monthly rental income it’s kind of like running a business. Not only from an operational perspective but also from a tax perspective. There are several things you need to consider.

Here are 10 tips for using your property investment to save money on taxes, whether you work from home or are active in the short-term rental market.

Important note: This article is not intended to be tax or financial advice. You should consult a professional before making any decisions.

#1 – Property-related expenses

Listing your property on the short-term rental market while you’re not using it allows you to claim tax deductions for related expenses such as amenities, property management services, and cleaning.

#2 – Interest on loans

Interest on loans is a deductible business expense for rental properties.

#3 – Renovations

There are a considerable number of Australian and foreign renters providing consistent short-term guests to owners. This flow of clients guarantees revenue to property investors. You can then use this income to make property improvements or renovations. All property renovations and related expenses are tax-deductible.

#4 – Wages and salaries

Managing a property portfolio requires both workers and contractors. The payment of wages and salaries to these workers are tax-deductible expenses.

#5 – Depreciation expenses

Property owners can recover improvement costs as tax deductions over several years. These expenses help you invest more money into the property and make the most of other tax benefits.

#6 – Maintenance expenses

You can recover costs from maintaining your property. General repairs, as well as management expenses, are all tax deductible.

#7 – Insurance expenses

This covers theft insurance, workers compensation, and general liabilities.

#8 – Working with professionals

It’s important for property owners to work with professionals and keep all receipts. You may hire professionals for contract executions or use an accountant for tax services. In the end, these are all business expenses that are tax deductible.

#9 – Operating expenses

You can claim a percentage of your mortgage or rent if you have a home office.

#10 – Utilities

Utilities such as water and electricity expenses are also tax deductible. Just make sure you keep your records!

Wrapping up

Owning property comes with a number of tax benefits if you know what to look for. Whether you live and work from home, or you rent your property out to guests, you can claim all sorts of things to reduce your yearly tax.

The tax benefits of owning property aren’t a new thing, but the growth of short-term rentals has amplified the opportunities for investors to take it up a level. Operate your property as a business and you will reap the rewards!