Greetings from Scoutable and welcome to our June Wrap Up.
I hope you and your loved ones are well.
Is it really tax time already? For all our current and future investors, we have prepared a summary of potential deductions you can claim against the income from from your investment property.
Firstly, let’s have a look at how you are taxed as a property investor.
Income Tax – any money (rent or otherwise) your receive from your property is added to your taxable income
Land Tax – is payable based on the unimproved value of the land you own and is calculated on what your land would be worth if it was vacant (doesn’t include the value of the building). Land tax is payable on all investment properties you own (not on your principal place of residence), based on the unimproved value in excess of the land tax threshold. For example, in NSW, the threshold is $734,000 (if you own multiple properties the land value is accumulated). This means, the total land value of your investment properties needs to be above $734,000 before you are required to pay land tax.
Capital Gains Tax (CGT) – Capital gains tax is required to be paid on any profit made from the sale of your investment property. The applicable rate of CGT is the same as the income tax rate which you pay (unless of course the profit received increases your taxable income to a higher tax bracket). If however, you have owned the property for more than 12 months, and are an Australian resident, you have access to a 50 percent discount on the capital gain.
Deductions
Management costs – including agent fees, advertising costs, commissions
Strata fees, council rates, water rates
Insurance
Repair and maintenance
Depreciation
Land tax
Legal expenses
Loan interest - Investors can claim the interest charged on a loan for an investment property and any bank fees for servicing that loan. You can’t, however, claim your repayments on the principal sum
Capital deductions when you sell your investment property to help offset CGT include expenses you incurred when purchasing and selling the property. For example, selling costs (advertising, agent's commission, legal fees) and purchasing costs (stamp duty, legal fees, buyers agent's fee)
Please note, this is not tax advice. You should consult a tax professional for all your property investment tax enquiries.
Further information is available via the ATO website: -
https://www.ato.gov.au/General/Property/Residential-rental-properties/Rental-expenses-to-claim/
If you are thinking of buying or investing in Australian property, get in touch to learn about Scoutable's services and how we can assist with your property search.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
COVID19 IMPACT ON PROPERTY PRICES ACROSS AUSTRALIA'S REGIONS AND SUBURBS
GOVERNMENT'S $25,000 HOME BUILDER GRANT
ATLASSIAN PLANS TO BUILD WORLDS TALLEST HYBRID TIMBER TOWER
https://theurbandeveloper.com/articles/atlassian-unveils-timber-tower-hq-at-tech-central
PROPERTY OF THE MONTH
ALEXANDRIA / ERSKINEVILLE
The property of the month was purchased by Scoutable a few weeks ago, off market for an investor client. The property is located on the boarder of Alexandria and Erskineville, approximately 4km south-west of Sydney's CBD. It is within walking distance to multiple public transport options, including Erskineville and Redfern train stations and the soon to be opened (2024) Waterloo Metro station. The property also provides easy access to multiple universities, RPA hospital and retail facilities of Redfern, Erskineville and Newtown.
Situated on 120sqm of land, the dwelling was built in the early 1900s, over a single level providing two bedrooms, one bathroom, living, eat-in kitchen and courtyard with external laundry. North-east facing rear, the property provides excellent natural light. It is presented in rentable condition with potential to add value.
Scoutable purchased the property for an undisclosed price under $1.3m. The property is tenanted for $700 per week, representing a gross yield of approximately 3% and a net yield of approximately 2.5%.
The purchase represents an excellent investment due to the continued gentrification of the area, strong rental demand, proximity to CBD, public transport, public infrastructure and retail facilities.
If you'd like to know more about this property or any others, please get in touch.
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