4 tax deductions every homeowner should know about

The end of financial year (commonly known as EOFY) is fast approaching. This means there are things to look forward to - such as sales in department stores and on big ticket items like cars. It also means there’s something coming up that generally no-one looks forward to except accountants – your annual tax preparation and lodgement. While you should rely on your accountant for professional advice on tax deductions you can claim, it’s a good idea to be in the know yourself when it comes to tax return tips that could save you money.

For homeowners, whether you’re paying off your own home, have an investment property or are a renter, there are tax deductions it may be beneficial for you to know about. Here are the four that you may want to consider:

1. Work from home deductions

Whether you are a homeowner or are renting, if you work from home you may be able to claim deductions for occupancy expenses such as your rent, interest payments on your home loan, land tax and Council rates as well as running expenses including phone and internet bills, heating, lighting, new equipment, office supplies such as printer ink and depreciation of equipment purchased in previous years.

There are several variables that may impact your ability to make a claim deductions, such as:

• If you run your business from home and have a dedicated home office, you might be able to claim for both occupancy and running expenses.
• If you do not run a business from home but still have a home office, you might only able to claim running expenses.
• You may also only claim running expenses if you work from home but have no dedicated area in which to work.

2. Deductions on investment properties

If you own an investment property and it is rented out, you may be able to claim the interest charged over the year on your investment loan. You may also be able to claim interest paid on any loans that are directly related to depreciating assets for your rental property and for essential renovations and repairs to the property over the past financial year. Ensure you are aware of what you can and can’t claim though, as costs of many improvements to your property not considered essential might only be claimable in the year you sell the property.

3. Negatively geared investment properties

If you have made a net loss on your rental property over the past financial year (known as negatively geared) you may be able to offset the loss against your taxable income. A net loss occurs when the total expenses on the property (including interest on your investment home loan) exceed the gross income received from rent.

4. Claiming for investment property expenses

If you own a rental property as well as your principal place of residence then there may be other deductions you can claim such as property management fees, advertising fees, local council rates, land tax, bank charges on your investment loan, maintenance costs and any legal expenses incurred. Under the 2017 Federal Budget, released in May, you may no longer be able to deduct travel expenses to inspect your property, so double check this and any other recent changes with your accountant. 

Knowing what tax deductions you can claim can save you significant sums of money over time, but it is important that you seek professional taxation advice if you are not sure of what you can and can’t claim. It can be well worthwhile keeping your financial housekeeping tasks in order using a program such as MYOB or Xero so you can present your accountant at the end of the financial year with neatly detailed statements and all the evidence in the form of receipts to save them time, and therefore save you more money. You’ll also take all the stress out of EOFY and be able to enjoy the sales shopping instead of slaving over paperwork!

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