Now that it’s July, many landlords are starting to look at how their investment property performed over the past financial year. Often, it’s not until tax time that they reflect that they haven’t necessarily made the most of the deductions available to them as rental property owners. As a landlord, thinking about maximising your tax benefits shouldn’t be something you do once a year – it should be front of mind year-round.
Property investors who take a proactive approach and maintain good relationships with their accountants, property managers and tenants are in the best position to make smart decisions that will have a positive impact on their tax circumstances. This doesn’t always mean looking to maximise expenses prior 30 June – while for some investors it makes sense to maximise deductions in the current financial year, others might benefit from delaying the spend.
To ensure that you’re maximising your tax benefits into the future, add the following actions to your landlord to-do list:
• Speak to your accountant
It goes without saying that the right strategy for you will depend on your overall financial situation. If you’ve bought or sold an investment property during the financial year or have one on the market, it’s important that you understand the tax implications of transactions happening before and after 30 June.
• Chat with your property manager
Your property manager will provide you with an EOFY summary of all income and expenses pertaining to your property. You should also speak to them on a regular basis about what you could be doing to improve the value of your property while maximising your tax savings. For example, if your rental has a large garden, perhaps you could consider paying for a regular gardening service – this will keep your yard looking good for current and future tenants while contributing to your rental expenses.
• Obtain a depreciation schedule
Around 80% of property investors don’t claim the depreciation of their rental at tax time. A depreciation schedule prepared by a qualified quantity surveyor allows you to claim the depreciation of fixed items within your property – such as carpets, blinds and fixed appliances – and the building itself, reducing your taxable income. If you don’t already have one, ask your accountant about the value of a depreciation schedule today.
• Keep solid records
Whether you keep digital or physical records, create a file that’s dedicated to all correspondence, income and bills related to your rental. Keeping this current throughout the year will mean that tax time is a breeze – you can simply hand it over to your accountant for him or her to work their magic.
At Greg Hocking, our experienced property management team works with our landlords to ensure they always get the most value from their rental properties. Contact your local office today for more information about our industry-leading approach.