Hello everyone, it’s Glen from 21stCentury Group,constructions, property management and investments. I’m here today with Andrew Monckton, the owner of CM Partners – Chartered Accountants I’ve known Andrew since 1992, donkeys years! I would say. Right? And we are here to talk about what can a property investor can and can’t claim as deductions? Andrew. Thanks Glen. Yes, good morningeverybody. So if you’re looking at the type of Deductions that you’re going to be able to claim each year when you submit your tax return,once that property is complete andavailablefor rent then you’re looking atdeducting all those costs associatedwiththe ownership of the property. Big ones,obviously the interest on the loan, thatwas used to fund thethe acquisition of the property, holding costs, your rates,council rates, water rates, insurancesboth for the property itself andlandlords insurance, if you want to takethat on board as well.Property management, property managementfees, maintenance,inside and outside, letting fees that the agent will chargeto put a tenant in place. Sure. Costs of associated going to a tribunal,if you had to. Hope not. No,fingers crossed that doesn’t come up butyeah those type of costs.Sure. All tax deductible and thenthe big one or another one, that’s of significant valueis being able to claim depreciationexpense on the property as well. Great!Getting on to the depreciationside of it. Sure.What’s a depreciation report and why is it important?Okay, so a depreciation report isa report prepared by a Quantity Surveyor, depreciation firm that enables the owner of the propertyto claim depreciation onthe plant and equipment within theproperty itself.And the carpets, the curtains, dishwasher,other appliances, the air conditioning unit, the lot.So you get a depreciation claim eachyear on those items, but the depreciation schedule will thenalso break down, the depreciable value of the cost of constructionfor that property. And that representsanothertax deduction that you can claim as well.Sure.So it’s a fairly large amount. It can be a significant amount , yeah, on a brand new build. And you know since 1 July 2017, the depreciation on plant and equipment is now only available on new assets, not secondhand assets. So yes, for a new build for the small amount that’s chargedup frontfor a depreciation schedule, it is it Offer a fantastic return on that investment. Great. And now,most of our clients have a home loan on their own where they live. Right?Okay.Now how can rent and tax deductions reduce the interest of their own home loan?
And you know their own home loan is,the interest is not a tax deduction because they’re living in. Yeah. That’s right. So how does that work? So a couple of ways that could work, if your clients have, say an offset account, that works against the home loan, if they were to drop their annual tax refunds and their monthly net rental deposits into that offset account. And have them sit there against the home loan, then actually you’re now paying less interest on the home loan, because it’s a smaller balance. And that’s the loan that you want to be paying less interest on, because it’s not tax-deductible debt. So if you can do that or even deposit directly into the home loan and redraw to meet the repayment on the investment property loan, those are mechanisms that can reduce the amount of interest that you’re paying on your own home loan. Exactly right. Fantastic, well folks you’ve heard it now. Once again it’s Glen from 21st Century Group and I’m with Andrew Monckton the owner of CM Partners – Chartered accountants. See you soon. And bye for now. Thank you. Bye.
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