7 tax tips for the end of the financial year


Smart property investors use all the legal tax rules to minimize their cash flow leakage and maximise their deductions.

The government encourages property investors to provide accommodation for those who need it by offering them a range of tax benefits.

While most investors know about the typical tax deductions, such as interest on loans, repairs and management fees, there are lesser-known ways investors can reduce their taxable income this financial year.

But be careful…the tax man is watching you, so make sure you stay within the rules.

1. Get a depreciation schedule

Property investors, like other business owners, can deduct the amount that assets used to produce income that has declined in value over that financial year.

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This is called depreciation, but estimating the sum that can be claimed is complex, so it’s wise to instruct a quantity surveyor to prepare the most appropriate report for your property.

By the way…their fees are tax-deductible.

2. Pre-pay interest and expenses

If you have borrowings against your investment it is worth considering whether pre-paying next year’s bank interest (if fixed) or certain expenses to gain an immediate tax deduction in this financial year would be of benefit.

This strategy is particularly useful if your income is higher than normal this year.

3. Replace low-value items now

While depreciation for expensive items such as hot water systems is claimed over several years, it is possible to claim a 100 per cent deduction for items costing under $300 in the year the items are purchased.

4. Don’t forget to claim borrowing expenses

The costs to take out a loan for your investment property, including establishment fees, mortgage stamp duty and mortgage broker fees can also be claimed, although these deductions must be spread out over five years.

5. Keep your receipts

With the ATO examining property investors’ claims more carefully than ever, you need to be diligent with your paperwork.

This starts with keeping all receipts as the ATO considers these verifications that you’ve spent the money.

At Metropole Property Management, we recommend allowing our team to pay for your property’s outgoings.

This way we keep track of all the paperwork and send you a statement with all your income and expenses for you to pass on to your accountant at the beginning of each financial year.

6. Find a good accountant

The taxation rules for property investors have become are complicated and sometimes downright confusing.

And recent changes mean some deductions are no longer allowed.

For example, the landlord cannot claim travel deductions for inspecting or maintaining or collecting rent for their property.  And deductions no longer apply for items certain items that were previously depreciable.

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