The 12 tax tips for collating information on your rental property

With the financial year end soon approaching, it is a good time for property investors to make an inventory of papers they should collate as part of the tax preparation process. 

While some of the expenses to prepare are obvious, there are others that require some thought and discussion with your tax consultant. 

A brief discussion of the most salient items may be useful: 

1. Real estate agents’ statement of income and expenses for the property for the financial year. Where you have changed agent during the year; ensure you have a statement of income and expenses from the previous agent. Property agents’ fees are included in the annual summary.
2. Council rates – this item is easy to collate.
3. Body corporate expenses. This item is usually invoiced separately and is easy to provide.
4. Insurance on the property and it would include also landlords insurance, as well as public liability.
5. Water charges are now separately invoiced in most states, and it is easy to identify the costs.
6. Pest control
7. Cleaning and garden maintenance
8. Advertising for tenants – this item would normally be included in the estate agents’ statements.
9. Telephone calls to the real estate agent. Such an item is directly related to the income rental, and a landlord should make a reasonable estimate based on calls per month.
10. Repairs and maintenance are always an area of concern, as some of the expenditure may represent improvements. Where you are unsure it is best to provide copies of invoices to your accountant for discussion. Items as painting are generally treated as repairs, but replacement of, say, a dishwasher is a depreciable item.
11. Interest expense on the investment property. Where you are unsure of amounts to claim then provide all bank statements for investment loans to your accountant. For new investors your statements may include certain borrowing costs that have to be amortised. Typical of borrowing costs are lenders mortgage insurance, bank legal fees, stamp duty on registering mortgage, and bank valuation fees.
12. Quantity surveyors report the cost incurred for new investors is tax deductible, and a copy of the report should be submitted to your accountant.
13. Travel to inspect properties. Only legitimate expenses should be claimed for this item, and driving by an investment property is not deemed an inspection. If you travel interstate to inspect a property and attach a holiday to it then you would need to apportion the cost of travel and accommodation relevant to the inspection alone.

The above list is not exhaustive of items that may be claimable, but it represents the major items. 

Where in doubt consult your tax adviser.