With tax season well and truly underway, it’s time for property investors to give some thought to their tax returns. Majority of property investors enter the market to gain profits and claim deductions so it’s essential that the accounting and tax side is taken care of correctly. Here are some of the top tax tips for property investors. Please contact us to kick-start your tax return and get the most out of your investment property.
1. Depreciation schedule
If you haven’t recently had a depreciation schedule, or if you have never had one done, now is the time to get it done. If your property was built after 18 July 1985, we encourage you to organise a depreciation schedule from a quantity surveyor. This could save you thousands each year. For more information on depreciation schedules please check out our previous blog.
2. Travel to inspect your property
You can claim travelling to inspect your property as a tax deduction so why not travel to see it for yourself? You can claim as many trips as you like as long as you are genuinely going to inspect the property and don’t make it a getaway. This is a great way to check in on the property for yourself and also claim a deduction.
3. Get your deductions right the first time
If this is your first tax return as a property investor, it’s worth getting it right. The ATO has stated that majority of incorrect tax deductions for property investors come from first time landlords. Do it right the first time with a trusted accountant and you won’t have to worry about anything.
4. Prepay interest
If next year you are expecting a lower income for one reason or another, you should consider prepaying your interest for up to 12 months in advance before year end on your rental property and reduce your higher income this year. This will effectively mean you will be paying less tax.
5. Know the less common deductions and claim them
Last financial year, less commonly claimed deductions were legal fees, pest control and cleaning expenses. Make sure you are aware of the full range of deductions you can claim and ensure you claim them. For a full list of investment property tax deductions please click here.
6. Get all your receipts ready
You probably hear this from accountants all the time but good record keeping and receipt keeping is key to tax returns. There are some deductions you won’t be able to claim unless you have a receipt to prove it. Gather all your receipts and have them prepared for when you visit your accountant to make the process smoother.
7. PAY Withholding Variation
If you are negatively gearing a property, you could consider a PAY Withholding Variation Application. This is sometimes referred to as a mini-tax return and means you have less tax taken out of each pay you receive.
8. Full disclosure
If you have foreign investment properties, make sure you disclose any income you receive. The ATO will be cracking down on taxpayers with properties overseas and the penalties for tax evasion are severe.
9. Don’t ignore other work-related deductions
Just because you are a property investor does not mean you should be only focusing on investment property deductions. Make sure you have a conversation with your accountant on the range of work related expenses you could be claiming.
10. Work with a great accountant
Working with a great accountant is the best way to ensure you are getting the most out of your investment property. The best accountants will know what you can and can’t claim and will work with you to get the most out of your situation.
Fortis Accounting Partners have years of experience working with property investors and can help you reap the benefits of your property investment come tax time. Please don’t hesitate to get in touch with the team on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
