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3 Mortgage Tax Deductions Every Homeowner Should Be Aware Of
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Planning to invest in real estate but worried about taxes? There are a good number of tax benefits that are available to property investors which don’t require expert knowledge of the taxation system or dishonest calculations.
Although the Australian taxation office takes a vague view of any strategies that are implemented to by investors to solely evade payment of taxes, these calculations if done correctly can help save you huge chunks of cash that can help in offsetting the cost of owning the property.
Maintenance and Repairs
Provided it’s not the initial repairs done when the property is purchased – damages that existed when the property was being bought, the cost of repairing something in the home to its original form due to tenant’s wear and tear, is tax deductible. Examples of tax deductible repairs include, fixing a leaking pipe, repainting damaged walls and fixing a dishwasher that has malfunctioned. One thing to note is that some repairs may fall under the “improvement” category which is not tax deductible. Examples of improvements may include replacing a kitchen bench top that is laminated with a granite one.
If you take up a home loan to purchase a property for rental purposes, you can claim tax deductible from the interest accrued on the monies. This includes money borrowed to purchase the property, deal with tenant issues and perform maintenance and repairs on the said property. However, you need to keep in mind that in case you borrow and part of the property bought is used for both private and rental purposes, only the rental side of the property will be apportioned the tax deductible.
Buying a rental property is one thing and getting tenants to live in it can be an uphill task considering the costs you have to incur to advertise or get in touch with property managers. There is some good news though, any cost incurred for advertising or preparing the lease with your tenant is tax deductible. Another tax deductible that is often overlooked by homeowners is the cost of travelling to inspect the property. For properties that are within reach, a homeowner may claim motor vehicle deductions when he goes for inspection trips. If the property is miles away, one can even claim airfares. However costs incurred to improve the property to make it more attractive to tenants is not deductible.
Tax deductions can be confusing. To ensure you are not missing out on anything, consider talking to a professional or alternatively consult the IRS website for more information.
Kimberley A is an expert property adviser and professional from North Sydney, Australia. The author loves to share her experience on the topics like home loans in Sydney, types of home loans, big lenders, how to get loans approved, etc. so that latest property and home loan updates can be made available for the buyers before making any deal.
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