Investmernt property expenses and tax deductions?

[Mrman]

I would like someone to explain to me what i have to do:

I will be settling my first IP next Friday. I borrowed the money from the CBA under the Mortgage Advantage Package (MAV). I have 3 accounts now, The loan i/o, the offset account (100%) MISA and my everyday streamline account + a credit card.

My question is when i want to do some repairs to the IP or pay a property manager, where do i take the money from so it can still be tax deductible?

I know i will use the streamline acount for everyday expenses and whatever I don't need I put into the MISA offset.

What if for example I buy new carpet for the IP, can i use my credit card and how would i distinguish that expense from an everyday expense to the accountant/Tax department?

Thanks
George

 

[alexlee]

My question is when i want to do some repairs to the IP or pay a property manager, where do i take the money from so it can still be tax deductible?

What if for example I buy new carpet for the IP, can i use my credit card and how would i distinguish that expense from an everyday expense to the accountant/Tax department?

Bottom line, it doesn't matter. You're just trying to deduct the expense itself, right? e.g. for that carpet, you just need an invoice. That will satisfy the tax department and accountant.

I think you're getting confused with BORROWING to pay expenses (also called capitalising expenses). If you're just paying expenses straight from cash it doesn't matter which account you pay it from. Just make sure you have an invoice / receipt.
Alex

 

[WillG]

Alex is correct. It makes no difference where the money comes from.

Although you will probably have to depreciate the carpet over x years (if its value if > $300) because it is a capital item rather than an expense
expenses such as rates, PM fees .. can be claimed in the year of purchase (see the ato.gov.au website for exat details of claimable expenses

Cheers