What expenses can I claim on residential property?

Question from Simon updated on 14th September 2006:

We have a two bed room flat and are wondering what we can claim in tax etc…

Our expert responded:

You can only claim expenses on a residential property if you either own it as rental property and rent it to a third party (ie not yourselves) or you have a business and you are claiming a home office expense. If it’s a rental property, then all costs associated with the property will be claimable, such as interest, insurance, repairs and maintenance, property management fees, accounting fees, rates and so on.

Assuming you have a business, you need to work out what the portion of your home office is as a portion of the flat. If say one of the bedrooms is your office, then that, depending on the size, may account for say 25% of the total floor space. You can them claim 25% of your costs of running the home office including rent or interest on your mortgage, electricity, phone, rates (if you own the property), insurance and so forth. Costs for the business such as postage and stationery do not fall into this category as those will clearly be 100% business use and therefore 100% deductible.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.



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