Renters can give investors a run for their tax money and here is how

RENTING a property does not suck as much as it is made out. Here is how to make a property-related tax deduction and now is the time to act.

TAX deductions are a tasty prospect at this time of the year and they’re not just limited to landlords with their fancy schmancy investment properties.

Renters, too, can make the most of tax time, and in some cases their tax deductions are a lot cleaner than those for investors.

With just over two weeks left in the financial year, now is the time for renters to think like property investors and ask what the taxman can do for them.

The most common property claims that renters can make are based on work-related deductions, particularly home office expenses, although in most cases that doesn’t include the rent paid.

WANT TO RENT: realestate.com.au

It is not just investors who make tax-deductions. People who rent can also make claims to the ATO. Picture: iStock

The Australian Taxation Office says employees cannot claim a deduction for rent they pay even if they have a home office. It’s the same rule for property owners, who can’t claim mortgage interest.

However, if you are running a home-based business, these occupancy-related tax deductions are back on the table — plus you save money by not having to rent a separate business premises. Just remember to only claim for the proportion of the property you use for the business.

Claiming occupancy costs is better for renters than owners, because the owners can get slugged with capital gains tax when they sell the property. This happened to me several years ago when I sold a property that we part-leased to international students. Paying CGT on part of the sale of your own home is a bummer.

Renters won’t pay any capital gains tax because they don’t own the property.

Even if you can’t claim for occupancy costs such as rent, if you do some work from home you can claim a tax deduction for a proportion of running expenses such as heating, cooling, lighting, internet access and cleaning.

Relax it is tax deductible ... Even a call to a harried boss can be claimed back. Picture: Supplied

The ATO says telephone rental can be claimed — in proportion to its work-related use — if you can show you are either on call or have to phone your employer or clients regularly while away from your workplace.

Just like property investors can claim for depreciation of things such as curtains and carpets, people with a home office can claim for the decline in value of home office equipment such as computers, printers and telephones. It’s an instant deduction if it costs under $300.

Repairs to home office furniture and fittings can also be claimed.

It’s a long list, and it’s worth speaking with an accountant or tax agent if you have any questions. If you want to do it yourself, become friendly with the ato.gov.au website which has a mountain of information about what you can and cannot claim.

The clock is ticking, because any home office items bought after June 30 won’t be able to be claimed as a tax deduction until next July.

Renters are not the poor cousins of investors, especially when it comes to tax time.

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