Those not affected by the flooding in Queensland, Victoria and New South Wales watched in horror as lives and livelihoods were lost last week, but it’s only now that the full effects are being felt by investors whose rental properties were damaged in the deluge.
Tax accountants Personal Tax Specialists has prepared a quick checklist to help rental property owners assess the tax implications the flooding will have, so they are aware before commencing the rebuilding process.
Here is a list of the big tax issues rental property owners must consider:
• Travel to inspect the damage to your rental property WILL be tax deductible
• Disaster relief payments received from charitable organisations are NOT taxable income, but if you make repairs to your property using these payments you WILL be entitled to claim tax deductions for these costs
• Insurance payouts for damage caused to your property or for loss of rental income ARE taxable income
• Demolition and clean up costs WILL be tax deductible, but are limited before these amounts are classed as capital costs
• Capital gains tax may be applicable to rental properties completely destroyed by the flood
• Repairs to your property WILL be tax deductible, however renovations or improvements will NOT be tax deductible immediately
• Interest on loans taken out to pay for repairs, renovations or improvements to your property WILL be tax deductible for the life of the loan
• Ongoing property holding costs WILL be tax deductible
• You may be eligible to apply to the Tax Office for a short term reduction in the PAYG tax withheld from your salary or wages if the ongoing costs associated with your rental property become too much.
Personal Tax Specialists co-founder Tracey Collins said it could be months before some rental properties were repaired and tenants started paying rent again.
“This may mean a long period without any rental income coming in, along with costly repair bills to pay for,” Ms Collins explained.
“But it is vital rental property owners speak with their tax accountant about their personal situation so they understand the full implications of the flood damage and how it will affect them,” she added.
The Personal Tax Specialists team is expert in the tax issues associated with rental property ownership and has offered to provide free advice to landlords affected by the floods.
Contact Personal Tax Specialists on 1300 335 675 or email firstname.lastname@example.org to organise a free phone appointment with a qualified tax accountant.
To read the full report about the tax issues affecting rental property owners after the floods visit www.personaltaxspecialists.com.au
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