Did you know that you can claim rental property insurance deductible from your income tax? According to Australia’s tax law expenses that are relevant to income derived from rent are tax deductible. In fact, you may be eligible for other tax deductions regarding your rental property without you knowing it.
There are certain rules when it comes to tax and tax deductibles. If you don’t have a clear understanding of these it is best to seek the advice of a tax agent or professional accountant to avoid getting into hot water. Firstly, you must understand what tax deductible means.
Essential Facts about Rental Property Tax Deductibles
Australian law provides that a landlord can claim tax deduction expenses incurred from a rental property. There are many of them and they can increase your tax refund and put more money in your pocket.
An important fact to understand is income tax deductions. When computing for your profit, make sure that expenses noted are for the rental business and nothing else. Some examples would be: property repairs, advertising, accounting costs, legal expenses, and rental property insurance.
Insurance on your rental property is considered an expense that is necessary to earn rental income from your property. Hence, it is considered a rental property insurance deductible.
Expenditures for repair and maintenance can also be deducted from your income tax. As much as 10% can be claimed as tax deduction on a fully furnished rental property.
Prepayment of rental property expenses such as insurance covering one year or less, with period ending on or before June 30th, can entitle you to an immediate deduction, unless the prepayment is less than $1,000 and spread out over 2 or more years.
It is important to know the tax deductibles you are entitled to as a landlord, such as rental property insurance. This benefit only emphasizes the wisdom of having landlord insurance cover that provides you with the adequate level of cover and protection from all risks on your rental properties. It is not only smart investment planning but also responsible tax planning, too.
You can reduce your tax payment by also taking account expenses incurred for visiting your property for inspection or collection of rent. You can also claim expenses for maintaining an office even, in your home.
Every Australian should be vigilant when it comes to taxes. Understanding tax laws related to your rental property will help you make your rental business lucrative and keep you out of trouble.