Depreciation
We have noticed many taxpayers don't claim depreciation on their rental properties because they opt to save few hundred dollars by not getting the depreciation schedule prepared by professionals. Depreciation generally is the second biggest expense for rental properties after interest. It is beneficial to get a depreciation schedule prepared by professionals and claim both, depreciation and schedule preparation cost in the tax return.
Interest
This is one area that we see mistakes by the taxpayers. As per tax laws interest relating to the rental property is claimable, any other interest must be excluded. If you have a loan mixed with rental property and residential or other types of investments, it must be accurately worked out.
Traveling
Traveling expenses for managing residential properties are not claimable unless you are an excluded entity. This change came into effect on 1 July 2017. All traveling expenses relating to commercial rental properties are claimable if you have relevant supports.
Capital work
This is another area where most of the taxpayers with rental properties get confused. Capital work is generally claimed over the life of the improvement, unless otherwise provided specifically by tax laws. To increase the negative gearing, taxpayers ignore the useful life of the improvement and claim in the year of expense, that is not correct.
Depreciation on second-hand plant and equipment
Depreciation on used / second-hand plant and equipment is not available after 9 May 2017. If you bought a second-hand property after this date, you can claim depreciation only on the building, not only the plant and equipment items. Similarly if you buy a second-hand plant and equipment for your property, you can not claim depreciation on it.
Professional fees
If you paid professional fees in relation with your rental properties, you can claim these fees in your tax returns if directly related with the rental properties.