Now is a great time to reassess your current taxable position. Here are a few helpful hints that could save you hundreds or even thousands of dollars by claiming back more tax at tax time, than you may have already paid. All via simple and legitimate tax deductions which you may have overlooked or may not be aware of.

Depreciation

Check you are claiming all areas of depreciation you are eligible to claim. Buildings can be depreciated at between 2.5% pa and 4% pa (dependent on certain criteria). Whilst fixtures and fittings have a varying rate of depreciation, which in some instances can be deductible up to 100% in the year of acquisition.  If you don’t have a current depreciation schedule for your property you could contact a quantity surveyor to compile one for you.

FACT: millions of dollars every year go unclaimed from investors by not claiming depreciation on their investment property. 

Refurbishment/Redecorations

Dependent upon how long you have owned your investment property and to what extent the refurbishment may be attributed to tenant damage and use. it may be possible to claim part of the refurbishment as direct repairs and maintenance – therefore 100% deduction in the year of spending.

Interest Payments

It is permissible under current tax laws that you can pay twelve months’ interest in advance on your property investment loan and actively claim the deduction in the current year.  Certain conditions apply, such as the property can only be owned in private names (not companies or trust structures).  If utilising this method of payment, be careful that the loan facility has been set up with the condition that the lending institution terms and conditions actually permit pre-payment arrangements.

WARNING: if the loan hasn’t been set up correctly and you are subject to a tax audit, the claim for prepayment could be disallowed. 

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The ATO website has more information on expenses you can claim on your rental property.

Capital Gains

If you are realising a specific capital gain in this current financial year it may be wise to evaluate any ‘penny dreadful stocks’ or inferior property investments.  As it may indeed be appropriate to realise the loss on that particular investment and counteract the gain you are receiving.

Remember, capital gains tax is payable in the year the contract is written and the amount is simply added to your taxable income in the year you sell. So you can alter the amount of tax paid, by simply timing the sale in a year of less income or the same year as a loss.

In all of these points, it is essential that you seek the advice and guidance of your tax adviser or accountant to ensure you minimise your taxable situation in this financial year.

For more real estate, investment or property tips, trick and information visit our other articles HERE

Economy and Finance