6 investment tax tips for a bumper return
Do you own an investment property or perhaps you have a whole portfolio under your ownership belt? Well lucky you because one of the major perks of being a property investor in Australia - if your property is negatively geared - is the range of deductions you can make on your taxable income at tax time.
To ensure you get the best possible return, we’ve turned to Mozo’s resident property guru, Steve Jovcevski to provide his top investment tax tips:
Home Loan Comparison Table - last updated January 16, 2021
1. Get an accountant that specialises in property
According to Steve, some of the more common expenses that are claimable for investors include the interest you pay on your investment loan, water/council rates, home and contents insurance, landlords insurance and the cost of maintaining the property (e.g repairs and renovations).
Sounds like there’s a lot to claim at tax time right? But that could be just the tip of the iceberg because if you find yourself a reputable tax agent that specialises in property, Steve says “they’ll be able to ensure you claim everything you possibly can on your investment property.”
“For instance, many developers that are building a new property aren’t aware they can claim GST if they are selling the property, under the margin tax scheme.”
2. Keep receipts in order
Whatever you decide to claim, make sure you have the receipts to back up your deduction, in case you find yourself audited by the tax department.
“You may also need to keep other records, such as a logbook of the kms travelled to visit your investment property, which are also generally claimable.”
3. Submit your tax return every year
Steve says there are two reasons you should do your tax return each year:
- You’ll bring down your tax payable through the property related deductions you make
- On top of this you’ll avoid getting into trouble with the tax office and the slap of a “failure to lodge on time penalty”
4. Consider prepaying interest on your loan
If you think you might need more than your general tax expenses to drop down your taxable income, another option is to prepay the interest on your investment loan for the 12 months ahead.
“You can also prepay the premiums on your home and contents or landlord's insurance,” adds Steve.
5. Ask for a depreciation schedule
For those investors out there purchasing or building a new property, Steve recommends hiring a “a quantity surveyor to draw up a depreciation schedule for you, which will outline the different costs that are claimable over a 10 year period.”
6. Spend it!
Last piece of financial wisdom from Steve:
“If you find yourself with a bumper tax return, don’t leave it sitting in a savings account with an interest rate sitting under the 4% mark. Instead put that money to work, by getting around to those repairs/renos you’ve been planning for a while. Your tenants will love you and so will your next tax return!”
There’s plenty more to know about investing in property like a pro. So discover more handy tips and tricks in our investment hub.
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