Claiming expenses correctly is the responsibility of every business owner, and investment property is no different. What exactly can you claim for? Below are three commonly overlooked expenses that property investors can claim for on their rental income.

trips to the property

Even if you are using an agent, many property investors like to visit periodically. It may be to see the scale of maintenance work required or simply tagging along to the agent’s routine inspection to get a better sense of certain wear and tear items. All these travels, back and forth, are claimable expenses.

Gifts for tenants

Great property investments have a happy tenant. Making sure you manage a positive relationship with your tenants goes a long way. That’s why some landlords take the time and effort to prepare a small gift for new tenants when they move in to their home for the first time. Or, for existing tenants, many landlords prepare a small gift when the holiday seasons draw near. These gifts can be (and should be) claimed as expenses by property investors.

Agent fees

More often than not, being a property investor is a busy job all on its own. You can be forgiven for trying to avoid the hassle of keeping every single receipt and invoice for expense claiming. Using a property manager, several minor expenses such as advertising, background checks, credit checks, fees for drawing up tenancy agreements, and court costs can all be wrapped up into one easily trackable agent fee. This agent fee is tax deductible, so essentially you’re wrapping all these small tasks into one simple one.

Commonly know expenses include:

• insurance

• rates

• accountant fees

• repair and maintenance

• fees for arranging a mortgage to finance the rental property

• fees for drawing up a tenancy agreement

• mortgage valuation

• court and other legal fees

• eviction fees

• mortgage repayment insurance

• depreciation

• legal fees involved in buying a rental property

You can also deduct interest on money you have borrowed to buy your rental property. You cannot deduct this if you have used some of the money:

• for something else; or

• to top up the mortgage for another purpose.

Expenses you cannot deduct from your rental income are:

• capital expenses

• purchase price of a rental property

• mortgage repayment principle

• additions or improvements to the property

• repairing or replacing damaged property, if the work increases property value

• real estate agent fees charged as part of buying or selling the property

• depreciation on the rental’s land or buildings

• your time cost when you do repairs and maintenance work

• legal fees involved with selling the rental property (unless you’re in the business of providing residential rental accommodation)

The difference between repairs and improvements can be complex. If you are unsure about whether work done on your property is repairs or improvements, talk to a tax agent.