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Andrew Morello: The tax system and investment properties

In this article:

An excerpt from Andrew Morello's eBook The Morello Matrix: your guide to property investment. Andrew, the winner of the first series of Celebrity Apprentice Australia, provides his comprehensive personal approach to buying real estate and building a property portfolio.

To get your free copy of the full Morello Matrix eBook visit www.ybr.com.au/morellomatrix

Income deductions

For your investment properties, these are some types of costs you can claim against the income from the rent:

  • advertising for tenants
  • repairs and maintenance
  • cleaning, gardening and pest control
  • bank charges, insurances
  • body corporate fees and charges
  • borrowing costs i.e. valuation, conveyancing
  • interest repayment cost on mortgage
  • council rates, land tax
  • depreciation of assets
  • legal expenses, property agent fees and commissions
  • stationery, postage and property-related travel
  • undertakings to inspect, maintain or collect the rent
  • water charges

Take the first step

If you make a capital gain on your principal place of residence, the gain is usually exempt from capital gains tax (CGT) if the property is held for more than a year.

Investment property has its net capital gain taxed at your marginal income tax rate, in the year the contract for sale is signed.

It is never a waste of money to obtain professional taxation advice from a registered tax agent before purchasing a property. Don’t wait until the purchase is in train.

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