That time of year is approaching again. While many eagerly anticipate the tax season due to their expected refunds, not everybody is so lucky. Plus, some people have far more complex tax returns than others. This time of year can be stressful for many Australians, especially those who live in strata communities. Whether you’re a homeowner or a tenant, living in a strata community can pose some unique tax implications. To help ease your worries, we’ve put together five tax time tips specifically for those living in strata environments.
Understand your deductions
Generally, if you earn income from property within a strata community rather than it being your primary residence, you may have the opportunity to claim deductions for various expenses. These deductions can encompass repairs and maintenance, council rates, and strata levies.
If you’re a tenant, you can claim some deductions for expenses that specifically relate to your rental property, including rent, utilities, and repairs, but it depends on your individual situation. Remember, you always need to keep records of any expenses and speak to a tax professional to see what you can claim.
Know your entitlements
If you’re a strata owner, you may be entitled to certain tax benefits, such as the capital gains tax (CGT) discount and negative gearing. The CGT discount applies if you’ve owned the property for more than 12 months, and it can also reduce the tax you have to pay on any capital gains you make when you sell the property.
Negative gearing is when the costs of owning an investment property, such as interest on your mortgage or strata loan, are higher than the rental income you receive. This can also lower the amount of tax you have to pay.
Understand the tax implications of short-term rentals
Short-term rentals like Airbnb have become increasingly popular in recent years. If you’re a strata owner or tenant thinking about renting your property on Airbnb short-term, it’s important to understand the tax implications.
Any income you receive from short-term rentals is taxable, so you’ll need to include it in your tax return. You might also be able to claim deductions for expenses related to the rental, such as cleaning and advertising costs.
Consider the tax implications of selling your property
If you’re thinking of selling your strata property, it’s important to know how this can affect your annual tax return. You might be liable for CGT on any capital gains you make, but there are also some exemptions and concessions available. For example, if you’ve lived there as your primary place of residence for a certain period of time, you might be eligible for the main residence exemption. You should always consider calling a tax professional to understand your options.
Get professional advice
Navigating tax time in a strata living environment can be complicated, so it’s always a good idea to seek professional advice. Experts in taxation can help you understand your entitlements and obligations while ensuring you’re claiming all the deductions you’re entitled to. They can also help when you plan for the future, whether you’re looking to buy, sell, or invest in property.
Looking for assistance with strata management?
More Than Strata is here to help you with all your strata living needs, including tax time tips. As experts in the field, we offer advice and support to strata owners so you can make informed decisions. Contact us today to find out more.
The information provided in this article is for general informational purposes only and should not be considered as professional advice. It is essential to consider your personal situation and circumstances before making any decisions or taking any actions based on the information presented in this article.