Tax benefits to be enjoyed through property investment

If you are looking to write off some expenses with your property investment, it would be a good idea to become knowledgeable on the do’s and don’ts of tax benefits after securing property for sale. In order to stay on the good side of the law, you need to have clarity on what you can and can’t do when it comes to claiming back on tax.

Investing in property is always a good idea, and doing so with the intention of renting can bring in a nice extra income. If you are considering earning an extra income from renting out the property you have purchased, then you need to be aware that this income will be considered a taxable income. The income you receive from renting, whatever the circumstance, should be added to any taxable income that you are receiving.

There are many variables when looking at the options that one could potentially earn money from renting property, and if you are considering any of the options listed below then please note that any of the income earned will be deemed as taxable income.

• holiday homes
• bed-and-breakfast establishments
• guesthouses
• sub-renting part of your house e.g. a room or a garden flat
• dwelling houses
• similar residential dwellings

Maintenance and renovations on your property are also something that needs to be considered. It is good to understand the difference between repairs and maintenance and home improvement/renovations. Whereas repairs and maintenance expenses will be able to be claimed back, home improvement and renovations is seen as a capital expense and will not be considered for tax claims.

Expenses that can be deducted from your taxable income are listed below:

• rates and taxes
• bond interest
• advertisements
• collection fees of estate agents managing the property
• insurance (only homeowners not household contents)
• garden services
• repairs in respect of the area let and
• security and property levies