1. What Are Investment Property Tax Deductions?

Investment property tax deductions are expenses that property investors can claim to reduce their taxable income. These include interest on loans, property depreciation, repairs and maintenance, and other property-related expenses.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Interest — Mortgage interest payments
• Depreciation — Capital works and plant equipment depreciation
• Repairs — Maintenance and repair costs
• Other Expenses — Insurance, council rates, property management fees, etc.

Explanation: The equation sums all eligible expenses that can be claimed as tax deductions for an investment property.

3. Importance of Tax Deductions

Details: Properly calculating tax deductions can significantly reduce taxable income, potentially lowering tax brackets and increasing cash flow from investment properties.

4. Using the Calculator

Tips: Enter all applicable expenses in dollars. Keep accurate records of all expenses throughout the financial year. Only include expenses that are legally deductible.

5. Frequently Asked Questions (FAQ)

Q1: What expenses are typically deductible?
A: Common deductions include loan interest, property management fees, council rates, insurance, repairs, and depreciation.

Q2: Can I claim capital improvements?
A: Capital improvements are not immediately deductible but may be claimed over time through depreciation.

Q3: How does depreciation work?
A: Depreciation is claimed over the effective life of the asset, either through capital works (2.5% per year) or plant and equipment depreciation.

Q4: Are travel expenses deductible?
A: Travel expenses to inspect or maintain rental properties may be deductible, but rules vary by jurisdiction.

Q5: Should I get a depreciation schedule?
A: A professional depreciation schedule can maximize your deductions, especially for newer properties.