Seven Ways For Landlords To Be Tax-Smart

Alice Lau

It’s that time of the year again! You should be preparing to lodge your tax return. This means gathering your paperwork and checking the residential rental properties area of the ATO website to see what you can claim for the past fiscal year. Looking back at your last tax return is a good way to ensure that you do not miss out on any claims.

Our property management team will soon be providing all of our clients with their Income & Expenditure report to lodge with their tax returns. This report will cover all claimable work we have conducted for you as our client. Landlords can also claim other expenses associated with a rental property such as professional services, legal and accounting advice, plus council rates and depreciation.

A thorough tax return can be the difference between your property producing a negative or a positive cash flow for the fiscal year. Here are seven suggestions for all of our landlords to action:

#1: Speak to an Accountant

 Professional advice is advisable when you’re a property investor. If you don’t have a depreciation schedule – it’s said that 80% of landlords don’t – then see what your accountant can do for this financial year. 

#2: Contact your Property Manager

This is an excellent opportunity to discuss the rental market, property values, and your Income & Expenditure report. 

#3: Consider Small Improvement now

If you have any repair/improvement work requests from your tenant, now is the best time to fulfill the request! You will be able to claim the expense almost immediately if completed before June 30.

#4: Prepare Paperwork

Gather and organise all the receipts related to your rental property. This discipline will provide you with additional insight into the financial performance of your investment.

#5: Understand the Basic Rules

Tax regulation changes every year. Be sure to keep up to date with the rules to know what you can claim. These include items such as:

  • Interest on your loan
  • Professional fees – legal, accounting and property management
  • Maintenance costs/strata fees
  • Depreciation – You can make claims only if you have a depreciation schedule created by a quantity surveyor

#6: Review Insurances

This is a good time to review your spendings on policies for content, building, and landlord insurance. You can claim insurance costs for the last 12 months, and it never hurts to see if there’s a better deal out there. While you’re at it, make sure to double-check that you’ve got the appropriate coverage. 

#7: Sell Later

If you’re thinking of selling your property, it’s a good idea to delay the transaction until July. That way, you avoid being charged capital gains tax in this fiscal year and it can settle with the taxman in 2021/22 instead.

Calibre Real Estate

You’re welcome to discuss any issues or concerns that you may have with us and, again, we recommend professional accounting advice. 

This information is generic and should not replace professional advice. You should always seek professional advice concerning your particular circumstances before acting.

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