It’s tax time! That means we’re all heading for our calculators (or accountants) to try and find out what sort of reprieve we can receive from the tax man.
Owning an investment property can be a great way to build wealth. However, with the ever-increasing costs of living in Sydney, Melbourne & now Brisbane. It is important that investors get every last cent back on June 30th, 2021, and here are Locate Properties’ top 5 ways to maximize the return on your investment.
Here are 5 ways to reduce tax on your investment property.
1) Track all of your expenses
The property game is no different from any other taxing business, in order to win you must be able to account for all of your expenses. By using a property management software such as remind me, which has property specific reports built-in, including capital works reporting and depreciation tracking, you can be sure that you are claiming back every cent possible
2) Appoint a Property Specialised Accountant
Appointing a property-specific accountant is a huge help when it comes to property tax. With knowledge of property and its depreciation rules, they are able to ensure that you have all the right supporting documents for each property claim that you make.
3) Be clear in your reporting & track expenses including trips to the property
One of the biggest issues with property investors is the failure to track property-related expenses. This may be a trip to the property, getting a plumber in for an emergency call, or even a fitting from Bunnings. By having these expenses tracked with property-specific reports you can ensure that every cent is claimed back as a deduction
4) Claim Plant and Equipment Depreciation
Property improvements such as new air conditioning units, or new hot water systems can all be written off. You are able to claim plant & equipment depreciation on these items, ensuring that you have appointed a Property Specialist Accountant.
5) Pay off the principal mortgage as quickly as possible
The more of your capital you can get rid of, the less amount of tax you will need to pay each year. The reason behind this is property depreciation. The capital amount will be able to be written off each year with the property being in your portfolio for more than 12 months. If you pay down the principal quickly, you will reduce your tax payable on property assets.
**Disclaimer: This article contains property investment and property management information. While care has been taken to ensure the property content is accurate at the time of publication, property details can change frequently. Locate Property makes no representations or warranties as to the accuracy of the property data contained herein, which may include linked websites that are not property specific or property representatives such as developers or agents.