Expenses on which you may be able to claim deductions include:
For purposes of taxation, body corporates are treated like public companies, but they are not classified as non-profit entities. Although the authorities, functions, duties and powers of body corporates are different under various acts, they generally include:
Deduction can be claimed on body corporate charges and fees incurred by you on your property that is available for rent or is rented. You may incur body corporate charges and fees for covering day-to-day maintenance and administration costs or these charges might be applied to a “special purpose fund”.
You can claim deductions on the payments made to administration funds of body corporate. However, if you’re required by the body corporate to pay in a special purpose fund for a certain capital expenditure, then these payments aren’t deductible.
Deduction can be claimed on the interest that is charged on the loan taken for purchasing a rental property. However, the purchased property should be available for rent or rented in the same income year for which you’re claiming a deduction. If you use the purchased property as a private property, you won’t be able to claim a deduction on the interest. Deduction can also be claimed on interest on loan that’s taken for purchasing depreciating assets, repairs or renovations.
Deduction can also be claimed on land tax liabilities depending on the time when the liability arises. In several states, the year in which you use the property for relevant purpose will determine when you’re liable. If land tax assessments are received in arrears, you cannot have the land tax deducted in the same income year in which the arrears are paid.
You can claim a deduction on some of the legal expenses you incur while producing rental income. These include:
These are the costs incurred to discharge a mortgage, excluding the payments of interest and principal. You can have these costs deducted in the same income year in which they’ve incurred. Penalty interest payments (amounts you may pay to the lender for accepting a loan’s early payment) may also be included in mortgage discharge expenses.
Deductions can be claimed on the commissions and fees paid to a real estate or property agent for inspecting, managing or collecting rent for you on your rental property. Deductions cannot be claimed on fees or commissions you pay to an agent for selling your rental property. Also, you cannot claim deductions on buyer’s agent fee that is paid to an agent to locate you a rental property available for purchase.
You may be able to claim deductions for expenses incurred by you to make repairs on your rental property. However, the repairs you make should directly relate to damage or wear and tear that occurred because you rented out your property.
Generally, repairs involve a renewal or replacement of a broken or worn out part. For example, if you replace damaged or worn curtains or carpets, it’s considered a repair. Maintenance involves keeping your property in a condition that’s suitable for tenants.
You cannot claim deductions on extensions, renovations and alterations; replacement of a whole structure and particular unit of your property and initial repairs like in remedying damage and defects that existed when the property was acquired by you.
If the purpose of your travel is inspection or maintenance of your property or collection of rent, you may claim deduction on the travelling costs. Full deduction can be claimed if the purpose of your trip relates solely to your rental property. However, if other purposes are involved, you might not be given a deduction or might only get a half deduction.
In case you take a flight for inspecting your property, spend the night in a hotel and return the next day, you’ll be allowed to claim a deduction on all the accommodation and air fare expenses if the only purpose of the trip was the inspection of the rental property.
A deduction can also be claimed on local government levies and rates. If you don’t pay the local government charges and rates for your rental property and become liable for paying interest charges, you can claim those interest charges as a deduction.
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