Provisional Tax Submission Guide, what you can and can't claim in property - NB!

With the Provisional tax season around the corner you need to get prepared. We have put together some very important information to help you get organised, read below to find out more.

Firstly you need to define the differences between primary residence property and buy-to-let residential property.

Primary Residence:

Primary residence is occupied by the owner of the property because it does not generate taxable income for the owner, hence the costs incurred in relation to the property cannot be deducted for income tax purposes.

Investment Property:

Investment property is property rented by a tenant with the owner receiving a monthly rental income in return. All the costs incurred in generating the rental income can be deducted when calculating taxable income. (A refundable deposit paid by a tenant is not taxable provided it is kept separately in a trust account and is not used by you. If it is forfeited by the tenant, then it is taxable, as well as capital and private expenses).

Expenses you can claim include:

• Rates and taxes
• Interest on the bond
• Advertisements
• Estate agent fees
• Insurance premiums (only homeowners, not household contents)
• Garden services
• Repairs and maintenance of the property
• Security and property levies.

Expenses you can't claim include:

• Capital expenses or property improvements on the disposal of the property for capital gains purposes. (included in the base cost of the property, to effectively reduce the capital gain or loss)
• VAT unless the dwelling supplies commercial accommodation (such as a hotel, Airbnb or lodge) only if it is a registered vendor.

Documents you must you keep as tax evidence

• Monthly rates and taxes statements
• Monthly home loan statements from the bank
• Levy statements
• Homeowners insurance schedule
• Any utility bills for services included in the rental
• Advertising and agency invoices
• Slips and invoices for any repairs and maintenance done
• Garden services or any other services necessary to make the home rentable

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