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 six lesser-known tips to get the most from your investment property.
Preparing your annual tax return is a great opportunity to take stock of how your investment property is performing.
1. Claim depreciation to maximise returns
80 per cent of property investors are missing out on the depreciation deductions they’re entitled to.
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.
2. Declaring rental income and expenses
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:
The full cost of repairs can be claimed in full in the same financial year they are completed.
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.
4. Use a split report to increase deductions
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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.
5. Amend previous returns
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.
This information is provided by DPN Pty Ltd ABN: 94 630 700 186 Australian Credit Licence 514759. DPN Finance Pty Ltd is an authorised credit representative 504129 and related entity of DPN. Credit for Dream Big 100% Offset and Work Smart 100% Offset is provided by Adelaide Bank a division of Bendigo and Adelaide Bank Ltd, ABN 11 068 049 178 and Australian Credit Licence 237879. Casa Capace Operations Pty Ltd, NDIS provider number 4050038018 trading as Casa Capace.