Now, we’ve all heard of lassie-faire landlords taking a trip to their interstate property and claiming it’s all a tax deduction. The truth is a little different, but good news, any property management fees you pay is likely to be tax-deductible against the rental income.
Property Managers generally charge three types of fees:
- Management fees – Day-to-day management of the property (rent collection, liaising with tenants, conducting inspections, etc)
- Letting fees – Finding a new tenant (advertising for the property, taking pictures/videos, negotiating with applicants, screening and processing applications)
- Miscellaneous fees – Lease renewal, maintenance/repair, civil and administrative tribunal fees, etc.
You can claim a deduction for these expenses only if you actually incur them and they are not paid by the tenant.
Luckily, at Beyond Property Management, we have a ‘no surprises’ fee policy and with no hidden or unexpected charges like this, you can easily work out all your tax-deductible expenses in advance.
Claim Other Expenses Too
There are various other expenses you may be entitled to claim an immediate deduction for (in the financial year you incur them), such as:
- advertising for tenants
- body corporate fees and charges
- council rates
- water charges
- land tax
- gardening and lawn mowing
- pest control
- insurance (building, contents, public liability)
- interest expenses
- pre-paid expenses
- income protection insurance
- repairs and maintenance
- some legal expenses
Regarding repairs and maintenance, the ATO states:
“If you conduct a project that includes both repairs and improvements to your property, you can only claim an income tax deduction for the cost of your repairs if you can separate the cost of the repairs from the cost of the improvements.”
All in all, if you want to claim your Property Management fees as a tax deduction, that’s great, but you’d be wise to add up the types of management fees you currently pay, add in hidden costs and unexpected tenancy shortfalls, and then compare to a one-simple-fee property management company like Beyond Property Management.