With the end of the financial year fast approaching, here are a few tips for property investors to ensure you’re ready for tax time.
Make sure your records are in order
If your property is managed by an agent, your property manager will generally keep track of expenses and send you a summary at the end of the financial year.
However, if you manage the rental property yourself, make sure you keep proper records of any repairs/ expenses you have incurred over the last year. For example, the plumbing invoice to repair the leaking toilet, the Allhomes expense to advertise your property for rent – these are expenses you can possibly claim and want to have recorded.
Don’t leave it to the last minute
If you are expecting a tax refund, it’s a good idea to prepare and lodge your returns as soon as you can, so funds can go back into your account as quickly as possible. You might even want to book in a time with your accountant now. That way, you’ll be sure to get in to see them and you will also have a deadline to work towards.
Some investors like to keep track of their expenses and interest on investment loans as they are incurred throughout the year, whilst others do it all at once at the end of the year. Regardless of your approach, collating information for your accountant won’t be quite as onerous if you have everything in one place. If you have to hunt down a year’s worth of receipts, it’s very easy to put it into the ‘too hard’ basket and the next thing you know it will be Christmas. (Although, if this has been your approach to date, maybe this is more of a tip to make things easier for yourself next year!)
Enlist the help of a professional
Some accountants are more knowledgeable about taxation for residential property investment than others, so make sure you have a good one on your side. A good accountant can identify deductions you’ve not considered and suggest strategies to help you effectively manage the taxation side of your investment. Let us know if you’re looking for a good accountant – we can definitely point you in the right direction.
Know what you can claim
If you decide to personally prepare your tax returns, make sure you completely understand what the ATO will allow you to claim. The following is by no means an exhaustive list, but will give you an idea of what investment related expenses are generally claimable:
- bank charges
- body corporate fees and charges
- borrowing expenses
- decline in value of depreciating assets
- insurance
- interest expenses
- land tax
- legal expenses
- property agent fees and commissions
- repairs and maintenance
You can find out more here: ATO: Rental Property Expenses
(Please note this does not constitute in any way taxation advice. This was published on 24 May 2016 and may have changed since. Please always refer directly to the ATO and/or your accountant for taxation advice specific to your situation).
