Preparing For Tax Return For Investment Property
Apr 29, 2019
For those who don’t know, an investment property is the property that is bought with the intention of return on investment. The ROI can be achieved through rental income or through selling that property later in future. Now, if you are about to buy an investment property or if you already bought one then it’s better to learn about the tax consequences that you will be facing.
The tax in this case is equally proportionate to the ownership interest that is shown in the title. The income will be taxable to the owner of the property. The cost base of an investment property is buildup of different factors. Most importantly, the cost of the house, the rental income and the sale or holding of the investment property is counted to make up a base.
The one thing to know in this case is that the interest you pay on the loan you took to buy the property is deductible of tax especially if you used all that money to buy the property. Also, make sure not to file wrong property tax because that can then cause some serious penalties and fines to you.
Also, any expenses that are incurred for upkeep or running the property are tax deductible for example water bills, strata cost, insurances and any maintenance.
At the end of the financial year, we provide all our landlord with easy to use Income and Expenditure report, which can be provided to your accountant for hassle free tax return.
Long story short, buying an investment property is a one complex process so first, make sure to learn everything you can about it and then make the wiser move.
Sapphire Property manger is happy to assist you in every possible way, however prior to making decision on any financial matter it is best to speak to your tax accountant.