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BRISBANE TAX ACCOUNTANTS / MORAYFIELD TAX ACCOUNTANTS
RENTAL PROPERTIES TAX RETURNS
FY 2024
ATO RENTAL PROPERTY BOOKLET 2023
Rental Property General Information
Address /
Date of Purchase and amount
Rental Income
Rental Expenses
Advertising
Body Corporate Fees
Borrowing Expenses - May be written-off over 5 years
Loan Set-Up Fees - May be written-off over 5 years
Cleaning
Rates
Depreciation on Plant (see ATO Rental Properties 2022 booklet)
Plant depreciation after 1 July 2017 excludes 2nd Hand Assets
Capital Works Depreciation
After 15 September 1987 - 2.5%
After 9 May 2023 - 4% for new "Build to Rent projects"
Gardening
Insurance
Interest
Many clients start with 'interest only loans' then move to principal and interest
You can not pay down your rental property and then redraw or borrow against your rental property for a completely different purpose and still claim a tax deduction for interest.
Many clients use an Off-Set Loan Account to avoid paying down their loan while still receiving the benefit of an interest reduction.
Loan interest must be apportioned based on the percentage that relates to each income producing purpose.
When Re-Financing Multi-Purpose Loans you must know the percentage that is applicable for each income producing activity.
Land Tax
Legal Fees
Pest Control
Property Agent's Commissions - This includes Management Fees, Letting Fees, Administration Fees, GST, etc.
Repairs v Depreciating a Capital or Plant Improvement
A repair is when you replace or improve part of an item. e.g., part of a floor, part of a roof, a hole in the wall, etc.
A Depreciable Capital or Plant Improvement is when you replace the whole of an item, the whole of a roof, the whole of a floor, a new dishwasher, a new air-conditioner.
A repair is a Capital or Plant improvement if it occurs at a point before the asset becomes income producing, e.g. renovating a derelict or run down or tired looking home so that it can be rented.
A Capital or Plant improvement becomes part of the Cost Base for Capital Gains calculations less any depreciation claimed as a tax deduction.
Depreciation for Capital Works, e.g. an entire replacement of a roof or the construction of a new back deck.
Stationery, Telephone and Postage
Travel to inspect the property - This includes motor vehicle kms, overnight accommodation, meals & incidentals, air fares
Water Rates
Sundry - Smoke Alarm Testing, Quantity Surveyor's Report, Electricity, etc.
ATO Residential Depreciation Schedule
ATO Rental Properties Booklet 2023 (scroll to end for depreciation rates schedule)
Most of this information can be found in your property real estate agent’s annual management report and your settlement letter.
National Bad Debtors Register
What can you do if a tenant damages your residential property and there is insufficient rental bond to cover your damages?
National Bad Debtors Register
You may apply to using QCAT Residential Tenancy Dispute Form 2 to have your tenant listed as a outstanding debtor with QCAT.
Once this is registered with QCAT it will register their debt on the National Bad Debtors Register which is used by credit agencies when a person applies for credit e.g. credit card, car, personal or home loan. This may remain in place for almost 12 years or when the amount is repaid to you.
CAPITAL GAINS TAX
CALCULATION:
SALE PRICE - COST BASE = CAPITAL GAIN
CAPITAL GAINS AFTER DISCOUNTS X INDIVIDUAL TAX RATES = CAPITAL GAINS TAX
REAL ESTATE
COST BASE
Acquisition costs:
Purchase Price less any depreciation claimed as a tax deduction.
Incidental costs:
Stamp Duty
Legal Fees
Pest & Building Inspections
Advertising for sale
Commissions on sale
Legal fees on sale
Ownership costs not already claimed as a tax deduction: e.g. non income producing property
Interest & refinancing, maintenance & repairs, insurance, rates and land tax.
Enhancement costs:
Capital Improvements less any depreciation claimed as a tax
deduction.
Amounts not included:
Any costs that have been claimed as a tax deduction e.g. depreciation on plant & buildings.
Most of this information can be found on the settlement statements.
AUSTRALIAN RESIDENTS
NO CGT ON YOUR MAIN RESIDENCE
There is no CGT on your main residence. A couple may only claim one main residence exemption.
CEASE TO RESIDE IN YOUR MAIN RESIDENCE
You may receive a capital gains tax exemption if you have ceased to reside in your main residence for up to 6 years after you have left.
You may restart another 6 years if you re-establish your main residence.
MAIN RESIDENCE BECOMES INCOME PRODUCING AND YOU BUY
ANOTHER MAIN RESIDENCE
Where you have ceased to reside in your main residence and then the property becomes income producing and you
have bought another main residence, the cost base will be the market value on the date that you ceased to reside in
your initial main residence, plus additional costs that you have incurred after that date including your selling
expenses, improvements and any other expenses that you have not been able to claim an income tax deduction for
e.g. rates, interest, repairs, insurance, etc.
RENTAL PROPERTY BECOMES MAIN RESIDENCE
If your income producing property or part thereof becomes your main residence then your CGT exemption will be apportioned based on time and area.
50% OR 33 1/3% CAPITAL GAINS DISCOUNT PERCENTAGE
If the asset is owned for > 12 months.
50% If the gain is made by an individual or an individual received a capital gains distribution through a trust.
33 1/3% If the gain is made by a superannuation fund or company.
Companies may receive 33 1/3% capital gains discounts and save some upfront income tax payable but companies
can usually only pay cash to employees or shareholders as wages or dividends which is 100% assessable therefore
negating much of the benefit of the CGT discount.
NON RESIDENT CAPITAL GAINS TAX AFTER 8 MAY 2012
DISCOUNT PERCENTAGE
If the asset is owned for > 12 months.
From 8 May 2012 foreign or temporary resident individuals must meet certain eligibility to apply the CGT discount.
For CGT events occurring after 8 May 2012, the application of a CGT discount percentage will depend on:
i) whether the CGT asset was held before or after 8 May 2012 and
ii) the residency status of the individual who has the capital gain.
This change will affect individuals who are:
i) a foreign or temporary resident;
ii) an Australian resident with a period of foreign residency after that date;
iii) had a discount capital gain from a CGT event that occurred after 8 May 2012.
Foreign or Temporary Residents
If you were a foreign or temporary resident on 8 May 2012, you may choose to get a market value for the CGT asset as at 8 May 2012 and use a market value calculation.
This will apportion the CGT discount to take into account the capital gain you have that was accrued before 8 May 2012.
Use the ATO calculator
Australian Residents
If you are an Australian resident you must calculate the CGT discount you can apply to the capital gain if you have:
i) a capital gain from a CGT event after 8 May 2012 and
ii) a period of foreign or temporary residency.
Use the ATO calculator
Foreign Residents and Main Residence Exemption
Foreign residents will no longer be entitled to claim the main residence exemption when the sell property in Australia.
If you are a foreign resident when a CGT event happens to your residential property in Australia you will no longer be able to claim a main residence exemption when you use the exemption as a reason to vary your foreign resident capital gains withholding rate or when you lodge your income tax return as a non resident.
This will apply from 1 July 2019 and for property was held prior to 9 May 2017.
USEFUL ORGANISATIONS
Residential Tenancies Authority - QLD
Property Owners Association of Queensland
Tenancy Check
Queensland Civil and Administrative Tribunal QCAT- Download Application for Minor Civil Dispute Form
We have clients from the following locations:
Brisbane, Gold Coast, Sydney, Newcastle, Sunshine Coast, Cairns, Canberra,
Melbourne, Adelaide, Perth, Darwin.
Other:
Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor,
Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle
Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra,
Nundah.
Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba,
North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie
Island, Elimbah, Kippa-Ring.
We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and
sole traders.
Liability limited by a scheme approved under
Professional Standards legislation
Disclaimer
The information provided in the above documents is not intended
to be, nor should it be construed as tax advice. Any specific
recommendation for a client can only be done after their
individual circumstances have been determined by David Douglas
Accountants.