Market/Finance News Blog: Tax deductions for home owners

By the resi financial blog team, 20 January 2015

Market/Finance News Blog: Tax deductions for home owners

This year's government tax review could be an avenue to decrease the tax burden on homeowners and buyers, according to the Business Coalition for Tax Reform (BCTR). The Real Estate Institute of Australia (REIA) has joined forces with the other business and community representatives that make up the BCTR​, to engage in a dialogue with the government around how to improve the tax system in Australia.

"The current tax system is stagnating and is not reflective of current social trends for a more mobile population with taxes such as stamp duty restricting both labour and population mobility," said Amanda Lynch, CEO of REIA.

"REIA also wants to ensure that we present a strong case to broader business community on the importance of negative gearing in allowing mum and dad investors the opportunity to help safeguard their retirement."

The BCTR has called for higher engagement from community stakeholders in the decisions the government will make this year.

"In order to address these issues adequately, the Government needs to ensure that the community, particularly those who are disadvantaged, are engaged in the tax reform process,"  said Dr Cassandra Goldie, CEO of the Australian Council of Social Service in a joint release with the BCTR.

Current tax liabilities and deductions for homeowners

As it's just over halfway through the tax year, it may be a good time to consider your tax liabilities and deductions ahead of filing your return. Planning now can save a lot of head-scratching and paperwork further down the track.

Renting out a room

If you rent out a room in your home to supplement your salary, that rental income needs to be declared. It's important to remember that many of the related expenses will be claimable. For example, repairs to the home can be used to offset some of your tax liability, according to the Australian Taxation Office (ATO).

However, capital improvements will become part of the cost base of the home and will be used to assess capital gains tax when you sell. Normally a homeowner is not liable for capital gains tax, but if the home is being used to generate an income, this changes things.

Working from home

Chances are you complete at least some of your work from home. What many people don't realise is that this allows them to claim deductions for the cost of working or running a business form home.

There are different deductions you can make if you work from home without a dedicated work area or if you have a designated office space. For these kinds of situations, you can typically claim for things like utilities, phone costs, depreciation on office equipment, according to the ATO. However running a business from home has different implications and should be looked into more thoroughly.

Amongst other things, resi is able to help you with recommendations on your personal finances and aspects of your taxes. If you'd like to know more about making the most of your home loan or personal income, contact a resi loan specialist today.

Categories: Business Owners, Financial Services, Home Loans