4 Tax Tips for Property Investors

Category: Invest
tax tips for property investors

There are only a couple of weeks left before the end of the financial year so it’s time to get tax ready. If you’re a property investor, here are four tips on getting more deductions out of your investment property before the 30 June deadline.

1. Pre-pay expenses

Consider pre-paying next year’s interest and/or insurance premiums and claim the deduction this year. This strategy is particularly effective if you are a property investor who: (i) owns a positively geared investment property, (ii) expects their income to be lower next year due to maternity leave, redundancy or other factor, or (iii) does not intend to rent the investment property in the next financial year as it will become owner occupied or other reason.

2. Make minor repairs

If your investment property is in need of repair why not schedule the work to be carried out this financial year. Just be sure the work to be carried out is considered maintenance on the property and not a renovation or improvement of a capital nature. For example, if you have a broken cupboard door in the kitchen and you replace all the kitchen cupboards rather than simply fixing the door. Or if you have a few cracked tiles on the roof and decided to replace the whole roof with a metal roof rather than replace the cracked tiles. You cannot claim a deduction if you replace something entirely or if the repair becomes an improvement. When in doubt, consult your property manager or accountant before incurring any costs.

3. Get your receipts in order

You can’t claim a deduction if you can’t prove you incurred the expense. Start compiling all your various receipts, invoices and statements now to save you time and stress later. This includes: bank charges, body corporate fees, council rates, property agent fees and commissions, travel to inspect the property, etc. Visit the ATO website for a list of deductions. If tracking down all your receipts proves to be a nightmare, become a savvier property investor and setup a filing system to track your expenses. It’ll make tax time next year easier.

4. Order a Depreciation Schedule

Property depreciation is a tax deduction on the wear and tear of an investment property over time. In order to be able to claim it, you must obtain a Depreciation Schedule – also known as a quantity surveying report – from a qualified quantity surveyor. As an added bonus, the cost of a Depreciation Schedule is also tax deductible so make sure you request a receipt.

property depreciation

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