Can you believe it is that time of the year again…. Tax time… it feels like only yesterday we were adding the final touches to the Christmas tree and getting excited about the man in red coming to town…
Tax time can be overwhelming, and it is important for all investors, whether you are new to investing or a seasonal investor… to be organized and to ensure you maximise the most of your investment property..
We have 4 quick tips to assist you this tax time….
1 – Get a good accountant
Call around, and find an accountant who specialises in real estate and property investments. It’s a niche area and you want to be sure your accountant knows exactly how to help you get the most return out of your investment property, they will also be able to answer any questions you may have in regards to your investment property and future.
2 – Be organized
If you have a Property Manager, they will provide you with an annual statement, noting all the income and expenses for you for the financial year.
However, this won’t include any items you may have paid for, or your bank statements etc. It is recommended that you keep a folder together, and all property related information to be stored in there, for easy access, and to ensure everything is kept together for this time of the year.
3 – Know what you can claim
The simplest way to maximise your tax refund is to have an understanding of what is deductible and what is not deductible and more importantly to ensure that you are keeping a clear and concise record of these expenses.
For your investment properties make sure you have considered the following:
- Council and Water Rates
- Body Corporate Levies
- Property Management Fees and Commissions
- Property Management charges – lease renewal fee, inspection fee
- Bank fees
- Borrowing costs (eg. Mortgage insurance, application fees etc)*
- Repairs and Maintenance
- Interest on loans
- Depreciation and Special building write off*
- Travel expenses
- Renovations or improvements you have made to the property*
- Land Tax
- Legal costs
- Postage, stationary, phone calls for when dealing with your rental property
- Accountant fees
*Some of these items are not eligible for an outright tax deduction but may be depreciated over a period of time.
4 – Do your homework
While you may receive a tax deduction on the loan for your investment property, now is a good time to ensure that you are getting the best interest rate possible on your bank loan, so you pay less in the first place. It is also a good time to review your Property Managers fees and charges, your insurance premiums and also your accounting fees.