As the End of Financial Year (EOFY) approaches, property investors need to be proactive to ensure they are in the best possible position to negotiate tax time. The good thing is that careful planning can ensure you meet your tax obligations and maximise any allowable deductions. Here are some things that will help make tax time straightforward and stress-free.
Start early.
The key to a smooth EOFY is starting early. Ahead of June 30, begin gathering your documents and reviewing your finances. This gives you time to address any discrepancies or missing information.
To get started, collect all financial documents related to your properties. Ensure you have all receipts, invoices, and statements organised. Review each document for accuracy and completeness, cross-checking your records to verify that all income and expenses are accounted for. Address any inconsistencies or gaps in your records promptly to avoid issues.
Tools to help
In this digital age, managing your documents can be much easier with the right tools. Use apps to scan, store, and sort receipts, invoices and statements. This not only helps in maintaining thorough records, but also makes it easier to substantiate any deductions you are looking to claim. Maintain a digital record of all your property-related income and expenses throughout the year, regularly updating these records to stay current.
Review your deductions
Identifying and reviewing all potential deductions is crucial. Ensure you have receipts and documentation for all your claims, which can help reveal potential savings. Create a list of all possible deductions, including property management fees, maintenance costs and depreciation. Gather and organise all supporting documents for these deductions, keeping all receipts and invoices in a safe place.
Regularly review and update your list to include any new eligible expenses, ensuring you maximise your deductions. If you have any costs that are approaching, consider whether it would be advantageous to book them in this financial year or the next.
Consult a tax professional
Engaging an accountant who specialises in property investment can be the easiest way to stay on top of your tax obligations. They can provide tailored advice, offer valuable insights, help you navigate tax laws and ensure you’re maximising your deductions.
Obtain a depreciation schedule
A professional depreciation schedule can significantly reduce your taxable income by allowing you to claim depreciation on eligible assets and capital works deductions. If you haven’t already, get a depreciation schedule or update an existing one to reflect any changes or improvements made to your properties. Hire a quantity surveyor to prepare a depreciation schedule and ensure the schedule is updated regularly to include new assets or improvements.
Stay informed
Tax laws and guidelines can change, and staying informed helps you remain compliant and aware of new opportunities for deductions. Regularly checking the ATO website can provide updates on tax laws and regulations. At the same time, you should be in regular contact with your accountant and start planning your next property moves early on with an eye on tax implications at all times.