5 Simple Tips to Help Make Tax Time Easier for Property Investors
Hands up – who enjoys tax time?
If you raised your hand, you’re probably an accountant or numbers wizard.
For us mere mortals, tax time may get pretty confusing – even more so if you’re a property investor. That’s why you should always speak to your accountant for professional advice to suit your unique situation.
Anyway, there are some things you could try to make tax time a little easier. Let’s have a quick look at five property tax tips to help you get organised for tax time.
1. Keep good – AKA organised – records
No more stashing receipts in your drawer or shoebox. It’s time to organise yourself properly, or engage someone to do it for you, so tax time is a bit easier.
If you have a property manager taking care of your investment property, then they may do most of the record-keeping for you. But, if it’s a new property or you’ve taken the DIY approach, you should keep – and organise – all documents and receipts that could be relevant.
2. Know your potential deductions
Being aware of what you may or may not be able to claim could help you figure out what information is relevant at tax time. Your accountant should be able to advise you on the specifics but having a general idea could help make things easier throughout the year.
As a property investor, you may be able to claim expenses such as:
Lease/property management costs
Land taxes
Repairs and maintenance
Improvements and renovations
Capital works
Cleaning
Gardening
Water
Electricity and gas charges
Pest control
Security monitoring costs
Advertising costs
3. Find out if you may pre-pay your expenses
Sometimes running the numbers at the start pays off in the long run.
Some types of loans may allow you to pay your interest upfront – so you could possibly claim this expense as a deduction for that financial year. Also, it might be possible to pre-pay expenses such as insurance or maintenance.
Chat to your accountant about pre-paying options as they’ll be able to advise whether this is a useful strategy for your income and tax situation.
4. Check if you’re able to claim depreciation
Don’t be one of those property investors who forgets about claiming depreciation. It may be worth seeing if you could claim depreciation for a new property or apartment, or a renovation you’ve put hours of elbow grease – and many dollars – into. Yes, you’ll need a depreciation schedule, but you could get a quantity surveyor to do that for you.
5. Ask about your interest expenses
What is often the largest expense investors have on their home loan? Interest.
As mentioned before, you may be able to pre-pay some of your expenses. So, it’s a good idea to remember interest expenses, along with associated fees and charges, are – usually – tax-deductible expenses. As always, have a chat with your accountant for guidance to make tax time easier.
Knowing your numbers is pretty important when it comes to buying an investment property. Contact Pania if you need some mortgage advice to help further your property goals.