It’s the end of the financial year and, if you’re a landlord, you might look at sorting tax for your investment property as just another tedious task to be completed. While many of us don’t particularly enjoy tax time and look to outsource everything we can to an accountant, taking a proactive approach to your rental’s financials can make a big difference to your tax return.
Whether you’re new to property investment or just keen to put a bit more structure around your EOFY approach to your rental property, the tips below will help you to ensure you’re getting the most from your investment.
1. Invest in your investment
Savvy landlords understand that having an investment property isn’t a set-and-forget proposition. To really maximise your returns – both rental income and capital growth – you should invest in your rental on an ongoing basis. Investing in your investment property goes beyond addressing repairs and maintenance issues; it’s about identifying improvements that will appeal to a broad range of potential tenants, allow you to charge a higher rent, and improve the overall value of your property. If you’re willing to invest but not sure how to maximise your “bang for buck”, speak to your property manager. They’ll be able to guide you as to where your money would be best spent, taking into account your property, the local market and the type of tenant you’re likely to appeal to.
2. Work with an accountant who knows property
Your accountant should work with you to maximise the benefits you receive from your investment property. If they’re simply inputting the figures you provide regarding income and expenses, it could be time to look for a new provider. And if they haven’t insisted you get a depreciation schedule (see step 3 below), it’s definitely time to make a change!
3. Get a depreciation schedule
This is an absolute no-brainer. As a property investor, you’re able to deduct the cost of the depreciation of your rental from your overall taxable income, reducing the amount of tax you’re likely to pay. Incredibly, around 80% of investors don’t claim the depreciation of their investment property at tax time – which is crazy when it’s so simple to arrange for a depreciation schedule. If you don’t have one for your rental property, speak to your accountant or property manager today about getting one sorted for the next financial year.
4. Review your rental property’s insurance
EOFY is a sensible time to review both your personal insurance and the insurance you hold for your investment property. The right insurance for your rental will depend on a number of factors, including whether your property is a standalone home or part of an owners corporation. If you’re part of an owners corporation, they’ll generally arrange for insurance to cover the building and common property – but you’ll need to take out your own insurance policy for items like floor coverings, appliances, window coverings, etc. Speak to your property manager to confirm your best approach regarding insurance.
At Greg Hocking, our property management team work proactively with our landlords to ensure they’re getting the best return on their investment. Contact your local office today for more information about how we can help you make the most of your rental at tax time.