DEDUCTION SEDUCTION TIPS TO MAKE TAX TIME ATTRACTIVE FOR INVESTORS

There’s nothing overly sexy about tax time! Right? Wrong. Tax time can make for a very inviting win for investors.

You have 2 weeks ‘til the end of the financial year, so get cracking…

Step 1: Visit the Australian Taxation Office’s website (ato.gov.au). It contains user-friendly information to assist property investors with their tax returns.

However, it is important to remember that landlords often come under close scrutiny from the ATO … It is therefore a good idea for landlords to speak with their accountants to maximise their tax returns & confirm what they can & can’t claim.

Insurance premiums & maintenance work are key expenses that can be claimed. Some landlord insurance policies may even provide limited cover for ATO tax audits relating to investment properties.

Step 2: Find yourself a decent accountant who knows property matters. You would assume that they know the tax laws far better than you do, so they can claim more stuff. Their job is to hopefully minimise your tax.

Step 3: Doing maintenance work this month can be a popular strategy for investors, but people need to remember that repairs & maintenance are different tax-wise than improvements. It’s one thing to fix up a pergola – it’s quite a different thing to build a pergola!. The expenses of one can be attributed in one year, the other has to be depreciated over several years.

Step 4: A potential trap for investors in June is on the timing of capital gains & losses. For tax reasons, the date for buying or selling a property is when the contract is signed, not at settlement. Delaying a sale by just 1 day, from June 30 to July 1, can push back a capital gains tax bill by an entire year.

Many investors fail to claim what they are entitled to from the ATO simply because they are unaware of it.

In order to maximise the return on your investment property, it is important to minimise the amount of tax you pay by claiming every legitimate deduction.

Depreciation is a great tax-refund earner for property investors because you don’t actually pay money for it. Buildings & fixtures & fittings can be depreciated. However, the land component of a property investment cannot.

For a few hundred dollars a quantity surveyor will draw up a depreciation schedule for all the furniture, fixtures & fittings and any renovations to your property.

A quantity surveyor will also give advice on what items you can write off in less than five years & how to maximise your tax deductions for depreciation. You can also claim a deduction for their professional fees!

One of the challenges of affording an investment property is waiting to the end of the financial year before receiving a refund but those on tight budgets can apply to have their tax varied.

The ATO will allow your employer to adjust the tax they take out of your wages to take into account the cash flow shortfall from your investment property.

A great accountant + agent = all the difference. More? Call 1300 4 NOVAK