5 Tax Tips for Property Investors
Once again, it is nearly time for Australians to get their tax returns in order. Whether you are an experienced property investor or new to the market, keep note of these tips.
Know what you need to declare
When you lodge your tax return, you need to tell the Australian Taxation Office (ATO) how much rent and rental-related income you received. These include:
- Insurance payouts
- Rent payments
- Any amount a tenant pays you to cover the cost of repairs for which you then claimed a deduction
Claim your expenses
Property investors can claim deductions for several expenses while their property is rented or available for rent. These include:
- Management costs
- Land tax
- Body corporate fees and charges
- Maintenance
- Interest expenses
- Insurance
- Depreciation
- Rates and water charges
Know what expenses you can not claim
Make sure you don’t claim any deductions that aren’t deductible, such as expenses someone else has paid e.g. electricity bills paid by your tenant.
Work out your cost base
The cost base is made up of the expenses associated with the purchase and sale of the investment property. Working out the correct cost base is important, as it can impact the capital gains tax you may be required to pay.
Save your records
The ATO requires property investors hold on to records such as their purchase contract, all documents relating to capital gains tax, financial records and evidence of any expenditure on property improvements. Store them somewhere safe so you can avoid any frustration or loss of income if you decide to sell.
Always consult with your Accountant on how to best approach tax time. They can assist you with all these five steps so you will not have to stress. Your Property Manager will also be able to provide you with an end of financial year statement.
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