Tax Time is here and whether you plan to use an agent to complete your return or do it yourself, it’s vital that you claim deductions for everything that you’re entitled to. Here’s a hit list of some of the things you need to be aware of with your tax deductions this year:

What are some of the key deduction’s investors miss? 

As well as the obvious deductions like mortgage interest and repairs, you may not know that you can claim for the following:

• Prepaid expenses. If you paid an item of expenditure last financial year that wholly or partly relates to this year, you can a claim a deduction for the full amount in the 2021/22 return. This is particularly useful with expenses that straddle the tax year, such as insurance policies or subscriptions.
• If you use your home phone, computer or internet services, or your mobile phone as part of the management of your investment property you can claim an appropriate proportion as a tax deduction.

It can also be worthwhile getting a Quantity Surveyor to quantify the depreciation claims that you are entitled to. Depreciation is generally one of the larger deductions, it is difficult to correctly work out and many homeowners miss out on potential deductions by incorrectly claiming.

Can investors claim more than they think?

Yes. 

For example, in many cases COVID-19 has affected the amount of rent that landlords receive whilst expenses continue at broadly the same level as before. If tenants have not been meeting their payment obligations under the lease agreement due to COVID-19, or you have mutually agreed to reduce their rent because of the crisis, and you continue to incur normal expenses on your property, then you will still be able to claim these expenses in your tax return.

In addition, if your bank has deferred loan repayments because of COVID-19, the expense is still regarded as incurred by the landlord and therefore a deduction can still be claimed for the interest element.

What are some of the things property investors can claim during tax time?

Of the various items of expenditure that you might incur in running a rental property, probably the most significant is the amount you pay on your mortgage. The interest element of your mortgage repayment is deductible for tax purposes.

In addition to interest relating to the property acquisition, you can also claim a deduction for interest on loans taken out to: carry out renovations; purchase depreciating assets (for example, furniture); make repairs or carry out maintenance; or purchase land on which a property is to be built.

There are lots of other things you can claim, some more obscure than others. If any of these apply to you, make sure you include them in your tax return: 

• Advertising for tenants, including costs passed on by letting agents.
• Cleaning at the end of a tenancy (including removal of rubbish).
• Estate and letting agents (including management fees).
• Gardening and lawn mowing (including felling or pruning trees).
• Secretary and bookkeeping fees associated with the collection of rent and payment of property expenses.
• Bank charges on the account used to receive rent and pay expenses.
• Council rates and land tax.
• Insurance (building, contents or public liability).
• Credit checks.
• Pest control.
• Bank or solicitor fees for keeping title documents safe.
• Taxation advice relating to the property 
• Legal expenses to eject a tenant for non-payment of rent.
• Hiring a debt collector to collect rent arrears.
• Getting new keys cut.
• Servicing items such as hot water heaters, smoke alarms, air-conditioning systems and garage door mechanisms.
• Water supply charges (to the extent that they aren’t paid by the tenant).
• Quantity surveyor.
• Security patrols.
• Security system monitoring and maintenance.

If the building is under 25 years old you will be entitled to claim a deduction of 2.5% per year of the original cost of construction of the building for up to 40 years from the original date of construction. If you do not know the building cost you can contract a quantity surveyor to determine the building costs and prepare the depreciation schedules for the property and determine what can be claimed.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.