Tax time preparation tips for property investors


Source: YIP magazine

It is that time of the year again to get your documents together in readiness for your accountant to lodge your annual income tax return. Here are our top tax time tips for your end of financial year preparation:

1) Understand what you can claim:

The simplest way to maximise your tax refund is to have an understanding of what is deductible and what is not deductible and more importantly to ensure that you are keeping a clear and concise record of these expenses.

For your investment properties make sure you have considered the following:

For your investment properties make sure you have considered the following:

  • Council and Water Rates
  • Strata Levies
  • Insurances
  • Agent statements
  • Bank fees
  • Borrowing costs (eg. Mortgage insurance, application fees etc)*
  • Repairs and Maintenance
  • Interest on loans
  • Depreciation and Special building write off*
  • Travel expenses
  • Renovations or improvements you have made to the property*
  • Land Tax

*Some of these items are not eligible for an outright tax deduction but may be depreciated over a period of time.

2) Getting the claims for your new investment property correct the first time:

If you have purchased a new investment property you will save yourself a lot of money by ensuring that you get your deductions right the first time.   In order to do this you should provide your accountant with the following documentation:

  • Purchase settlement statement
  • The loan offer document or loan disbursement schedule listing the fees you were charged to set up your loans
  • A copy of the depreciation schedule – remember the cost of preparing a depreciation schedule is also deductible (if you do not have a depreciation schedule ask your accountant who they recommend)

Even an older property may have depreciation benefits available when you initially purchase it as many of the items inside the building are valued at the market value on the date of purchase for depreciation purposes. If you have purchased a new investment property during the year, even if it has not finished being constructed, you should provide all of the above information to your accountant because you can claim interest and holding costs for investment properties while they are being constructed in most cases.

3) Do not ignore your work related deductions just because you are a property investor:

Many of our first year clients are surprised about how much time we spend going through questions about their occupation and potential deductions related to their employment.  For example, if you work at home after hours, chances are there are claims you could be making for home office usage, computer depreciation or the internet – so do not forget to talk to your accountant about work related deductions.

4) Be organised:

Do not take your receipts to your accountant in a shoe box!   If you do, claims will be missed and you will spend more money on accounting fees than you need to.   If your accountant provides you with a checklist, complete it and provide the documentation that they request in an orderly way.   If they do not provide a checklist put together a spreadsheet summary and have your documents sorted into categories so that if you need to access a particular document you know where to find it with ease.

5) Check your tax return:

Take the time to read through and check your tax return before signing it.

6) Ask Questions:

Do not be afraid to ask your accountant what they are doing and why.  It is your tax professional’s job not only to prepare your tax return but to assist you to understand the tax implications of your investments.   If you understand why your accountant needs particular documentation to complete your tax return this will save you a lot of time in preparing for the next financial year.

7) Get the right advice

If you are a property investor and the above points are brand new information chances are you have not been getting the right advice. At WSC Group, property is our specialty and all of our accountants are fully trained on property investment issues to ensure you get the most out of your tax return.  In many cases we are able to amend prior year returns to get you back any refund you may have missed out on  – but this can be limited to the last two years so the sooner we can identify  a missed claim the better!

David Shaw, 
CEO of WSC Group
Certified Practising Accountants and Business Advisors

The advice published on social media mediums by WSC Group is of a general nature and does not constitute specific financial advice.
For a detailed financial strategy you should consult with a qualified financial advisor before making any investment decision.

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