Over a dozen tax deductions made by property investors are virtually untouchable in Election 2022.
A breakdown of property investors shows 74 per cent earn less than $100,000 a year at a time when vacancy rates have hit crippling levels – ensuring absolute protection in a tight election.
PRD chief economist Dr Diaswati Mardiasmo said Brisbane vacancy rates hit its lowest level in 17 years in March of 0.7 per cent, showing how critical it was to encourage property investors to sink funds into new supply.
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“This is a historical low since 2005. The last time we came close was 2006, at 0.8 per cent. What this means is that almost all of the rental properties in Brisbane are occupied, and that we need more investors ASAP – otherwise we will plunge even deeper into a rental crisis,” she said.
BMT Tax Depreciation CEO Bradley Beer said their depreciation schedule data and that of the ATO showed property investors were mostly “Mums and Dads” with one investment property.
“They are typical Aussies using investment properties to boost their retirement nest eggs,” he said. “The average property investor is simply making an investment choice based on cash flow and the potential for long-term capital gain. They are not competing at either the top or the bottom of the market.”
Nicole Kelly of tax software firm TaxTank said property investors could make over a dozen claims on their taxes including interest payments for rental property mortgages.
Among claimable costs for property investors, she said, was land tax, borrowing expenses including lenders mortgage insurance over five years, mortgage exit fees, interest payments and annual fees, property advertising fees, real estate management fees, landlord insurance, council and water rates, software to manage properties and tax, end-of-tenancy cleaning fees, gardening and maintenance costs, building and asset depreciation.
As well Ms Kelly said home office running expenses such as internet and phone costs could be apportioned for hours spent managing property portfolios.
Mr Beer said the Mum and Dad investors helped provide the majority of affordable rental housing, with the average Australian investment property value sitting at $751,800.
“With a looming rental crisis in many regions and a shortage of affordable housing and rentals, government should concentrate on increasing supply of housing and be careful of making changes to negative gearing and other incentives available to property investors.”
TOP 5 TIPS FROM A QLD TAX SPECIALIST:
Here’s how Nicole Kelly from TaxTank suggests property investors tackle tax time:
1.Provide the ATO with all the tiny details of income and expenses.
2.Be vigilant about keeping your receipts and documents safely together.
3.Know your real-time tax position all year round to beat ATO at their own game, using software with live feeds.
4.Know all the deductions you can make.
5.Pre-pay expenses including interest on loans, insurance premiums, body corporate fees, council rates or even bring forward other costs that would normally come up after 30 June like income protection insurance premiums and self-education expenses to help your tax position.
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