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What deductions can I claim?

I am thinking about buying an investment property because I can’t afford to buy where I want to live and the tax deductions mean I can buy a better house. Hopefully one day, as my income grows, I will be able to move into it. What are the deductions I can claim?

The tax office has information on the common mistakes many landlords make in claiming deductions. The first mistake is where someone claims deductions for a property that is not genuinely available for rent. That borders on the criminal.

Then there is the situation where you buy a house at a beachside suburb and you hardly let it out or you only do it in a very piecemeal way because you want to use it. In a sense, if you only make the place available for 26 weeks you should only claim half the annual expenses. However, if the property is with an agent for 52 weeks for letting but you only get 26 weeks, then it is fair to claim the lot.

Another mistake is claiming the cost of building changes, which is more than just maintenance or making good. Remodelling a bathroom or building a pergola is called capital works and you can deduct these amounts off any capital gain when you sell the property, which reduces your tax bill then, but you can’t claim it yearly.

Landlords get in trouble when they use a loan that has both private and rental-related connections. Instead of claiming for the proportion that is related to the rental property, they claim all of the interest.

My advice is to go to the tax office website – – to triple check you are on the right track and, if in doubt, discuss matters with a trusted accountant.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Tuesday, March 15, 2011

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