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Claiming tax deductions on investment properties

If you own a rental property or are considering purchasing an investment property, it is important to be aware of the tax deductions you can claim. Claiming all of the legitimate deductions on your investment property can save you a lot of money. On the other hand accidently claiming illegitimate deductions can cost you a lot of time and energy, potentially even leading to an investigation by the ATO.

There are some immediate deductions that you can make on a rental property, for example, advertising fees, agent costs, repairs and administrative expenses. Legal fees that are directly related to renting a property, for example those associated with debt recovery, may be claimed. However, you may not claim legal costs incurred at other times, for example the solicitor’s fees when you purchased an investment property.

There are also long term costs associated with investment properties that you can claim as deductions. These include borrowing costs, depreciation on equipment and deductions on structural improvements.

Many costs associated with the loan you have taken out on an investment property are legitimate deductions, but interest on the loan is not. Examples of legitimate costs include mortgage registration, stamp duty on mortgage and loan application fees. These deductions are applicable to loans of five years and under (for longer loans the deductible period is limited to five years).

As the value of the equipment with a limited life, for example carpet, depreciates you may claim this as a tax deduction. The ATO website has a list of the depreciation rates on different moveable household items. The entire cost of items under $300 may be included in your depreciation claim.

If you have spent money on an extension, structural improvement or renovation for your rental property then this cost can be claimed as a long-term deduction (usually 2.5% p.a. over 40 years). This does not cover work done immediately after purchase, and you can only claim this for periods that the property has actually been rented out.

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Understanding various kinds of super fees

February 16, 2018

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.