Tax time is creeping up on us! So I thought I’d provide a simple list of some things that you can claim on. And that will help you save some money.
If you’ve been reading this blog, you’d know by now that some things cannot be claimed as an immediate deduction. However, there are some that can be.
So make sure you don’t miss out on claiming them!
So, what are these expenses that can be written off immediately?
Well here’s a list that will save you immediately. Make sure your accountant is able to claim these for you!
- Acquisition and Disposal Costs incurred to gain a tenant.
- Charges and fees such as body corporate charges and fees, council rates, lease document expenses, legal expenses, mortgage discharge expenses, tax related expenses, insurance, and interest on loans.
- Fees related to hired services such as property agents’ fees and commissions, quantity surveyor’s fees, pest control, cleaning, gardening and lawn mowing, and secretarial and bookkeeping fees.
- Expenses that cover utility bills such as water charges, electricity and gas, and telephone calls.
- Installation and activation charges for items in the property such as in-house audio and video service charges and servicing costs.
- Other miscellaneous expenses such as travel and car expenses, and stationery and postage.
Remember, these expenses can only be claimed if they were directly incurred by you and not the tenant.
So if you are renting out your property, now is the best time to go over your receipts and check which expenses fall under the list and before you know it, you’ll have more deductions than you bargained for!
If you need a depreciation schedule for your investment property – get a quote here or work out how much you can save using our free calculator.
Simple Tricks For Beating The End of Financial Year Rush
Every one exchanges and settles a property on different days throughout the year. However, the end of the financial year only occurs once. As does the end of year rush!
Your report should calculate exactly how much money you can claim for building allowance depreciation, based upon the number of days you have owned the property in that financial year.
For instance, if you settled on June 30, you should only be claiming 1 / 365 of any value attached to, say, the oven or the carpet. (See this post on small items under $300 and low-value pooling for exceptions to this rule). Some reports from other companies do not do this calculation for you. If this is the case, this will cost you money in terms of additional accounting fees.
One important point I’d like to take note of regarding the timing of getting your depreciation report, is that you should get it sooner rather than later. Don’t wait for the end of financial year deadline when everyone else is scrambling to get a report.
If you have settled on a property late in the year (say around November or December), order a depreciation report right away so you can avoid the June rush. Often, offices pile up with work around the end of financial year. Due to this there is always the possibility you won’t get your report on time if you leave it until the very last minute. In some circumstances, you are also able to request monthly deductions, rather than wait until the end of the financial year. Having the depreciation numbers included in your tax variation will assist you.
Work out how much you save using our free property depreciation calculator or make it happen and get a free quote for a depreciation schedule now.
This blog is an extract from CLAIM IT! – grab your copy now!
To help property investors maximise their tax returns and get their fair share of the tens of billions in tax refunds handed back each year we’ve put together the following tips:
Maximising Your Tax Return:
The easiest way to maximise your tax refund is to maximise your deductions.
As a property investor, know all of the expenses you can claim as a deduction and make those payments before the end of the financial year. Claim for everything you’re entitled to, no matter how small it is. Every dollar will contribute to your investment’s return – and your wealth.
As a guide, landlords can usually claim the following as tax deductions:
- Interest on an investment loan
- Holding costs, including council/water rates and body corporate bills
- Tenancy costs, including property management fees and the cost of advertising for a tenant
- Insurance premiums, such as landlord insurance
- Legal costs for troublesome tenants
- Travelling costs for property inspections
- Repairs and maintenance caused by tenant wear and tear
Some tax deductions allowed for investment properties are often overlooked and some, such as the cost of renovations, are included when they shouldn’t be. To get it right, consult a professional.
Don’t forget about depreciation
Up to 80 per cent of property investors are missing out on thousands of dollars in tax savings. Mostly because they fail to take maximum advantage of depreciation.
Depreciation is a reduction in the value of an asset over time due to wear and tear. As income-producing assets can be claimed as a tax deduction.
There are two types of depreciation allowances for investment properties – plant and equipment, which covers removable items such as dishwashers, and capital works on the building, covering the property’s structure. If the property was built after July 1985 depreciation can be claimed on both elements.
(NOTE: Deductions for these plant and equipment items may only apply if you bought the property prior to May 9, 2017 – Read about the Budget changes here).
Depreciation is one of the key ways to maximise your tax refund. It can be done without spending a cent because it’s a non-cash deduction.
Get a professional quantity surveyor to prepare a depreciation schedule for you to maximise your deductions, with the fee also being tax deductible.
If you expect to have a lower income next year then consider prepaying expenses on your investment property, such as interest or other holding costs – for up to a year in advance – before June 30. This will give you greater deductions to reduce the tax payable on your higher income this year.
Consider delaying income
Minimise this year’s tax liability by delaying income until after July 1. For property investors this will largely be applicable to property you’re selling – if you know you’ll be up for capital gains tax, consider delaying the sale until next year.
Seek the help of professionals
Getting advice from a great accountant or tax specialist will pay off, saving you both time and stress, while also maximising your tax return.
The fee will be tax deductible and if they do a good job you’ll get your money’s worth by getting the best possible refund.
Often a good accountant will find deductions you never even knew existed, and they’ll also make sure everything you claim is legal, so you’ll avoid a visit from the taxman down the track.
Keep good records
Do you always find yourself scrambling to sort through the piles of papers at the end of the financial year, desperately trying to find receipts for your tax deductions, let alone trying to make sense of them?
While it can be tedious, you’ll find it’s much easier to be organised throughout the year. File away your tax documents so you know where they are come June 30.
This will enable you to maximise your deductions. As you’ll have each and every receipt and will be able to claim every single penny you’re entitled to. You’ll also be more accurate in what you claim and will have good records to substantiate your claims.
Do everything by the book
Investment properties can sometimes be targeted by the ATO. So make sure whatever you do to maximise your tax return is legal.
An accountant can make sure you claim only the deductions you’re entitled to claim, in the right way.
Remember, if you get audited it could cost you significant sums of money, so it’s not worth fudging the figures.