Tax Time Beckons: EOFY Advice For Landlords
The end of financial year is just around the corner and now is one of the most important times for property investors. Here are some considerations for landlords as tax time approaches:
Let an expert help
You probably wouldn’t try and fix your car yourself (unless you’re a trained mechanic) so consider getting a professional accountant to help make the most of your annual tax return. A good accountant will understand your financial position and be able to provide solid advice about your investments as well as deductions you can claim. Your accountant will also be able to suggest any recent changes in tax law or COVID-19 measures that may be of benefit to you.
Investing in property can attract significant tax benefits, but the Australian Taxation Office requires investors and landlords to keep records and receipts to make deductions. Keeping track of all rental expenses including interest, maintenance, repairs and depreciation from the start of an investment will help when tax time rolls around each year. If you hate keeping physical receipts, there are a number of apps and software packages that can assist with your records management.
Consider your income, especially this year after the COVID-19 pandemic. Property investors need to account for more than just the rent they received as income and should take into consideration other payments including bond funds or letting fees. Some landlords may have lost rental income in the past year because of the COVID pandemic . While these losses cannot be claimed as a tax deduction, you are still able to claim expenses, including interest on deferred loan payments. And remember, you must include rental income from overseas properties in your Australian tax return.
It’s a good idea to commission a quality surveyor to draw up a depreciation schedule. These usually cost a few hundred dollars but can be invaluable at the end of the financial year, saving time and money. The customised report can be used for residential or commercial rentals and sets out the depreciation sum that can be claimed over time. The fee to have a depreciation schedule compiled is also tax deductible.
Deductions may be able to be claimed for rental related expenses while a property is leased or available for rent. Immediate claims include interest on loans for investment properties, council rates, strata fees, advertising for tenants, water, cleaning, repairs, gardening and lawn mowing, pest control, insurance, property agent fees and income protection insurance.Other expenses can be claimed gradually over several years. These include loan establishment fees, lender’s mortgage insurance, title search fees, mortgage broker fees and stamp duty charged on the mortgage. The depreciation schedule would help you step out these gradual deductions over time. Remember, Investment properties that aren’t rented or available for rent, cannot be used to claim deductions if they do not generate rental income.
If you’re looking for property management services or a great tax accountant, chat with the experts at Mont.
For further tax time tips visit: ato.gov.au