Over the last five to ten years the number of property investment seminars being spruiked has continued to grow.
Whether it’s an investment magazine, newspaper or TV ad, invitations to these types of events are everywhere.
Therefore, it is not surprising that the Tax Office has become increasingly concerned about the rise in claims for the expenses associated with the attending these types of seminars. These costs are not just limited to seminar fees but may include travel costs and the costs of accommodation.
A property seminar will normally focus on a range of aspects associated with investing in and/or creating wealth from rental properties and will normally involve any of the following:
- Developing rental property business plans;
- Strategies on how to deal with financiers, real estate agents and developers;
- How to maximise opportunities for increasing rental property ownership; and
- How to maximise the returns on existing properties by focusing on the management of existing properties and maximising rental income
So what property seminar expenses are deductible?
The expenses associated with attending a property seminar will be deductible to the extent that the seminar deals with how to manage taxpayers existing rental property eg. advertising for tenants, selecting the right tenants, and/or how to maximise rental income from these properties eg. strategies on how to make the taxpayer’s property more attractive to tenants.
In this regard, the relevant seminar would need to include topics such as:
- Improving rental returns;
- Selecting better tenants;
- Protecting the property against bad tenants;
- Rewarding good long tenants;
- How to select the right managing agent;
- How to deal with a managing agent and what to expect
- Carrying out repairs to the property including how to choose and mange the right tradespeople; and
- Any other issues associated with generating, maintaining and improving rental income from the property
Expenses that would not be deductible include attending a property seminar that deals with the how to maximise opportunities for future property ownership eg. how to deal with developers and real estate agents in the course of buying a property.
Furthermore, where a taxpayer does not have an existing property investment it is unlikely the Tax Office would allow a deduction for the cost of attending a property seminar. This is because the taxpayer in these circumstances would normally be treated as attending the seminar with the view to earning an income from a future property investment ie. to set up a structure for making future investments rather than managing existing rental property investments.
If you would like some assistance as to how these guidelines would apply to your situation please contact Ellingsen Partners.