End of financial year can be a tough and taxing time (literally!) especially for those with an investment portfolio. There are many considerations property investors should take into account, especially those new to the property market. To help you be clever about tax and property investments, here are our top three tips you can implement to ease the pressure come 30 June.
UNDERSTAND WHAT YOU CAN CLAIM
Be sure to understand what is deductible and what is not. Tax and investment property claims extend far further than just the property itself. There are many deductible items which slip the mind of even the most astute property investor. For instance, travel expenses to inspect your investment property are tax deductible, so don’t forget to claim your travel when sorting out your investment property tax deductions. Remember to consider other expenditures, like council and water rates, interest on loans and repairs or maintenance.
UNDERSTAND WHEN YOU SHOULD CLAIM
Timing is everything! We bet there are a few depreciable items in your property investment, so get a depreciation report to assess which items you can claim against your tax. Over time, appliances like ovens and equipment such as hot water systems will depreciate. Your outdoor landscaping, painting and carpets will also show signs of wear and tear. Be smart – if you paint your investment property in June, you will only be able to claim one month of depreciation. This will be small compared to the amount you would have spent. Plan ahead, and if you know you have expensive, depreciable purchases looming ahead, the best time to buy is always early in the financial year.
Ensure your documentation is in order by keeping on top of your receipts and creating a spreadsheet of your expenditure. Try to avoid handing your accountant an overfilled shoe box stuffed with receipts. This will only allow more room for error, and you will be spending more on accounting fees than desirable. Keep a concise record of your expenses, create checklists and have your documents sorted in a simple, organised manner. You don’t want to forget an expense because you may miss the opportunity to claim it as a deduction this financial year. Having this prepared will make your trip to the accountant all the merrier.
Hopefully, after successfully executing these strategies, you will have minimised your tax, and may even find yourself in a stronger financial position than you expected. So, why not consider expanding your property investment portfolio?