Financial year end is a busy and often stressful time for property investors, particularly if you own multiple properties. It’s also the ideal time to take stock, assess your financial situation, and plan ahead for the next financial year. With the end of the financial year looming, we think it’s also a good time to remind you of these 4 simple tax tips.
Get Your Paperwork Sorted
Organise your paperwork early to ensure you have good records of all rental income and any expenses paid out for your investment property. Keep copies of all loan statements, rates, water, insurance, lease agreements and any other documentation relating to your investment property.
Consider using cloud-based storage like Dropbox or One Drive to cut down on paper and organise your folders by financial year, by property, and then break it down into utilities, insurance, loans, and correspondence.
Maximise Your Tax Deductions
To get the most of your tax refund, make sure you’re clear on what is tax deductible for your investment property. You’ll find a checklist of expenses you can claim for on the ATO website.
Any rates or insurance due in July should be paid in June before the end of financial year, and if you are considering doing any small repairs to your investment property, it makes sense to bring these forward to June to maximise this year’s tax refund.
Deal With Depreciation
Wear and tear that occurs over time to the structure of a building and fixed items is called depreciation. Examples of depreciating assets are carpet, furniture and appliances. To claim deductions for depreciation on your investment property, you can either engage the services of an accountant or seek information and assistance directly from the ATO website. We recommend you use a company like Real Property Matters to get a depreciation report for your investment property to ensure you are claiming the maximum depreciation and capital works deductions.
Lodge a PAYG Withholding Variation
Previously known as a Section 221YD variation, a PAYG Withholding Variation lets you access the tax benefits of an investment property every week rather than waiting for your tax refund in July – October, which can help free up cash flow throughout the year.
A variation is essentially a mini-tax return using your income from employment and your rental property to estimate your tax refund for the upcoming financial year. You’ll find more on this on the ATO website right here.
Planning for the next financial year
Getting organised early and planning ahead for the next financial year can make a difference to how you get through end of financial year. If you are considering adding an investment property to your portfolio in the next year, talk to a Mortgage Express broker about a finance deal to suit your lifestyle and pocket.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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