The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
LESS THAN 30 DAYS UNTIL OUR FLAGSHIP CONFERENCE 29-31 JULY, GOLD COAST
4 WEEKS UNTIL OUR FLAGSHIP CONFERENCE 29-31 JULY, GOLD COAST
SECURE YOUR SPOTDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
ResidentialStaff WriterSun 21 Jun 15

First-time Property Investors Warned To Be Wary This Tax Time

T

First-time residential property investors taking advantage of low interest rates should pay particular attention to their end of financial year reports or risk a nasty tax-time surprise.

Brisbane-based BDO Private Clients Partner and property specialist Hung Tran warned property investors that a number of tax measures tended to face particular scrutiny.

"While the negative gearing debate has dominated the recent property investment narrative, those preparing their FY15 statements should know there are a number of existing policies that could present a challenge," Mr Tran said.

ALSO SEE: ‘Stamp Duty Out Of Control': Homebuyers Plied With 800% Tax Increase

"Ignorance is never an excuse when it comes to claiming on a property investment, and there are several lesser-known tax treatments that could trip up first-time investors."

Renting to a related party

"If an investor is renting to a related party and wants to maximise deductions, it's integral to make sure the rent being paid reflects market value," Mr Tran said.

"For example, if renting an apartment to a son or daughter attending university, or renting a holiday home to your parents-in-law as their full-time residence, the value of this rent should be reviewed annually and reflect market value rent had the property been rented to an independent third party."

Multi-purpose loans

"While multi-purpose bank loans - as opposed to either pure investment loans or private loans - are most common for property investors, they need particularly close attention at tax time," Mr Tran said.

"Where a property investor has used some of the fund from a multi-purpose bank loan to fund their investment, but not all, the interest incurred is not wholly tax deductible.""There can also be complications with these types of loans when it comes to repayments made.""For those considering a property investment in the new financial year, it might be worth considering a more straightforward financing option."

Repair vs capital items

"Property investors that have purchased an older dwelling on which they have conducted work need to understand the difference in tax treatment between a repair and a capital improvement," Mr Tran said.

"Only repairs - not improvements - are tax deductible and this is often an area of intense scrutiny.""Generally, a repair brings an element of the property in line with original condition, while an improvement goes beyond its original state, however there are some stipulations that consider whether the property is rented or not."

Image from Flickr user purplemattfish

ResidentialAustraliaFinanceSector
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

Tapping the Bunnings ‘Halo Effect’

Taryn Paris
5 Min
Exclusive

‘Construction Not a Scale Game’: Hutchinson

Phil Bartsch
9 Min
Nation's build-to-rent project Charlie Parker in Sydney's Parramatta where more projects are being located and built outside the CBD.
Exclusive

Foreign Capital Still Dominates BtR but Things are Changing

Marisa Wikramanayake
7 Min
Exclusive

Fortis Reveals Plans for Coveted Bowen Terrace Site

Taryn Paris
4 Min
Exclusive

Accor Deputy Delivers Verdict on Brisbane Games Hotel Shortfall

Phil Bartsch
6 Min
View All >
The City of Melbourne has opted to keep Greenline in the 2025-26 Budget.
Policy

Melbourne Budget Puts Paid to Greenline Future Fears

Marisa Wikramanayake
Deicorp Five Dock Mixed-Use Precinct
Residential

Deicorp’s $1.8bn Inner-West Sydney Precinct Greenlit

Vanessa Croll
Residential

Consolidated Reveals Next Riverfront Play in $64m Deal

Leon Della Bosca AND Taryn Paris
Don O’Rorke has put his foot on “the last absolute riverfront site” and will reveal his plans before year’s end...
LATEST
The City of Melbourne has opted to keep Greenline in the 2025-26 Budget.
Policy

Melbourne Budget Puts Paid to Greenline Future Fears

Marisa Wikramanayake
4 Min
Deicorp Five Dock Mixed-Use Precinct
Residential

Deicorp’s $1.8bn Inner-West Sydney Precinct Greenlit

Vanessa Croll
3 Min
Residential

Consolidated Reveals Next Riverfront Play in $64m Deal

Leon Della Bosca AND Taryn Paris
3 Min
Old Canberra Brickworks Yarralumla
Development

Doma Ready to Begin 380-Home ACT Brickworks Scheme

Leon Della Bosca
4 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/first-time-property-investors-warned-wary-tax-time