Greetings from Scoutable and welcome to our June Wrap Up.
I hope you are well. Our thoughts go out to everyone in our community who are in lockdown. We hope you are staying safe.
Last year in June, we discussed the available tax deductions for property investors. Here we are again at tax time (where has the year gone)! We think it is timely to go over the information again.
Firstly, let’s have a look at how you are taxed as a property investor.
Income Tax – any money (rent or otherwise) you 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 $755,000 (if you own multiple properties the land value is accumulated). This means, the total land value of your investment properties needs to be above $755,000 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, 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), can be deducted from any capital gain on the sale which would lower the CGT payable.
Please note, this is not tax advice. You should consult a tax professional for all your investment property 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 would like to discuss your property investment, or the property market further, please get in touch.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
CORONAVIRUS ESCAPEES FROM BIG CITIES ARE DRIVING A REGIONAL PROPERTY BOOM. CAN IT LAST?
https://www.abc.net.au/news/2021-06-28/can-regional-property-boom-continue-or-be-a-bust/100248228
IT'S OFFICAL: CHINESE HAVE ABANDONED AUSSIE PROPERTY
https://www.macrobusiness.com.au/2021/06/its-official-chinese-have-abandoned-aussie-property/
$46M IN LAND CHANGES HANDS AT 'INVITE-ONLY' PORTSEA AUCTION EVENT
https://www.realestate.com.au/news/46m-in-land-changes-hands-at-inviteonly-portsea-auction-event/
PROPERTY OF THE MONTH
37 Garden Street, Eastlakes
The June property of the month can be found in Sydney's gentrifying eastern suburb of Eastlakes. This quiet neighbourhood located between Rosebery and Kingsford has been on our radar for a while now with the CBD, Sydney Airport, UNSW, Price of Wales Hospital and Maroubra Beach all under 10 kilometres away.
The area's further appeal is linked to improving retail facilities (Eastlakes Shopping Centre under major renovations), CBD transport links and price affordability. The suburb is catching the eye of young families hoping for affordable opportunities and investors looking for above average potential for capital growth.
37 Garden Street is a great example of an entry level property in the suburb. The semi-attached dwelling is situated on 174sqm of land, providing two bedrooms, one bathroom, open plan kitchen / living / dining, rear garden and parking for two cars. The price guide is $1,275,000. The property would appeal to investors and owner-occupiers.
If you'd like to know more about this property or any others, please get in touch.
