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Jun 09 , 2023
The end of the financial year is always a busy time for property investors, however, with the right preparation and understanding, you can make the most of your available deductions. Here are five tax considerations for property investors as we head towards June 30.
Maintain detailed records
A simple yet often overlooked tax tip is to prioritise detailed record-keeping. Documenting property-related expenses including repair costs, loan interests and rental records will make yours and your accountant’s life a lot easier. Hold onto all receipts and consider creating digital backups for easy reference. If audited by the Australian Taxation Office (ATO), these records will help substantiate your claims, reducing the risk of denied deductions or potential penalties.
Use a good accountant
If you’re a serious property investor then you should be looking to treat investing like a business. That means employing people who have specialised knowledge in areas you might be lacking. A reputable accountant who understands property can not only simplify this process but also help maximise your tax return. Spend time researching or seeking recommendations to find an accountant experienced in real estate investment.
Undertake repairs before June 30
Any repair costs for your investment property can be claimed as a tax deduction in the current financial year. Therefore, consider scheduling any necessary repairs before 30 June. This early planning allows you to claim these costs immediately, rather than waiting another financial year.
Understand Capital Gains Tax (CGT)
If you’ve sold an investment property during the past financial year, you’re likely liable for CGT, which applies to the profit made on the sale of an asset. Accurately recording capital gains in your tax return is crucial to avoid penalties. If you held the investment property for over a year, remember that you might qualify for a 50% CGT discount. Again, this is something that you should talk to your accountant about.
Get familiar with deductions
A key to maximising your tax return is to understand the range of deductible expenses that are available to you. It’s your responsibility to bring these to the attention of your accountant so they can assess them. These can include things like negative gearing losses, home loan interest and fees, property maintenance and repairs, depreciation and property management fees. These should form part of your annual budgeting and financial planning.