October 31 is the deadline for submitting tax returns, so the ATO is offering a guide to entitlements and tax obligations on your property investment.
What you do during each stage of the life of your property can affect your tax for years to come. Whether buying, owning or selling, if you use the property to earn income at any time you will have entitlements and tax obligations, according to the Australian Taxation Office (ATO).
The following activities can affect your tax:
- renting out the property (either by renting out part or moving out and renting all of it);
- improving or repairing;
- subdividing the property;
- having a home office or business.
The ATO also suggests that, wherever you are in the property cycle, the best advice is to be prepared: keep proof of all expenditure from the beginning to ensure you don’t pay more tax than you need to over the years.
Make sure you separately identify the cost of the building and any depreciating assets so you can claim all the deductions you are entitled to and work out the capital gain correctly when you sell the property.
For more detailed information, the ATO has published a guide called Tax-smart Tips for your Investment Property, covering buying, owning and selling. It is available from the ATO's website.