Top tips for tax
- Posted By Nikki Montaser
It's almost the end of another financial year, and that means tax time. In this article, we outline a few things to get organised.
Double-check and declare all income.
If you've had more than one lease throughout the financial year, or you've used your property for a short-term rental, you may have been receiving different rental incomes throughout the year. Make sure you keep detailed records of the income you receive from your investment properties. You could use bank statements, spreadsheets or accounting software to account for all income.
Keep all receipts and documents.
When you spend money on your investment property, you should keep records throughout the financial year. These records may include receipts for and documentation of the expenses. An easy way to keep your receipts organised is to take a photo or download the receipt and save these to a folder on your computer. At tax time, all you'll need to do is open this folder or send the files to your accountant if you have a professional complete your tax return.
Claim improvements and initial repairs as capital works.
Any improvements or repairs made when you purchase an investment property must be claimed as capital works expenses. This means you can't claim these expenses as deductions; instead, the improvements or repairs are depreciated over several years. Your accountant can help you with putting together a schedule of how to claim these expenses.
Pre-pay your interest to reduce your marginal tax rate.
If it's looking like your income is about to end up in a higher tax bracket, and you have a fixed-rate loan, you can pre-pay your interest for the next 12 months. You'll then be able to claim this as a deduction in this financial year to reduce your taxable income.
Work with a professional on your tax return.
A great accountant knows how to maximise your deductions while remaining compliant with the Australian Taxation Office (ATO). If you haven't already, look for an accountant who works with property investors to get the best possible return. Any fees you pay to your accountant are also a tax deduction.
How can we help?
Frontdoor can organise a tax depreciation schedule on your behalf through one of our trusted partners, such as BMT. On average, BMT finds almost $9,000 in first full financial year deductions. Your one-off schedule fee is 100% tax deductible and lasts the lifetime of the property.
To simplify tax time, most of our clients ask us to pay all of their property outgoings throughout the year. These outgoings can include council and water rates, strata levies, insurance, depreciation schedules, and repairs and maintenance. At tax time, your End of Year Financial Report is emailed to you with all of your ingoings and outgoings on one page - ready for your accountant.
We do the hard work for you!
This article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.