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How is your investment property performing? It’s important to check you’re claiming everything you're entitled to on your annual tax return. These tips for tax time will help you do just that.
Preparing your annual tax return is a great opportunity to take stock of how your investment property is performing and to make sure you’re claiming everything you’re entitled to.
We thought we would share five lesser-known tips to get the most from your investment property.
Any investment property that generates income may be eligible for thousands of dollars in depreciation deductions. In fact, most investors can claim an average of $5,000 - $10,000 in deductions in the first full financial year alone. Property depreciation is often missed as it is a non-cash deduction; that is, the investor does not need to spend money in order to claim it. In fact, research has shown that 80 per cent of property investors are missing out on the depreciation deductions they’re entitled to.
Are you missing out on claiming certain deductions? The ATO considers rental income as taxable income, however, you can claim expenses to reduce this amount, including:
There is a difference between a repair and a capital works improvement and this will affect your claim. The full cost of repairs can be claimed in full in the same financial year they are completed. An improvement or renovation, on the other hand, must be depreciated over time.
If you’ve made any improvements to your property in the last financial year, we recommend seeking the advice of a Quantity Surveyor to ensure this is in your claim correctly.
80 per cent of property investors are missing out on the depreciation deductions they’re entitled to.
Do you co-own a property? Then it’s usually more beneficial to order a split report in order to maximise the returns for each owner. To ensure that clients who co-own investment properties are maximising deductions, it is important that Accountants recommend their clients obtain a split report.
Many people don't realise this but investors can amend two previous tax returns to recoup any missed deductions.
Don't struggle with the complexity of taxation on your own, surround yourself with an expert team, including: an Accountant experienced with property investment, a property strategist and a Quantity Surveyor.
5 lesser-known ways to maximise tax deductions on your investment property:
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