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8 Tips for Property Investors to Maximise Their Tax Returns

There are a number of benefits associated with owning an investment property and it really pays to know exactly what you’re entitled to claim. Here are eight useful tips to help you get the most out of your property investment at tax time.

1. Get the facts

To properly manage your investment, you need access to regular, detailed and accurate information, particularly during the leasing process. Your property manager should be able to supply you with concise reports on how your property is performing along with annual income and expenditure statements and monthly rental statements. Having all this information at your fingertips come tax time will allow you to accurately calculate the extent of your entitlements.

2. Prepay expenses

The best way for to increase your tax refund from your property investment is to pay all of your expenses before the end of the financial year. These include expenses such as borrowing costs, rates, property management costs, body corporate fees, insurance and the like. If your income is high, fast tracking repairs and other forms of required expenditure can also help to reduce your overall tax bill.

3. Know your personal tax position

It pays to be fully conversant with your personal tax position before claiming any expenses such as negative gearing (where rental income is less than expenses). This is because such negative amounts can often be offset to your advantage against other income, such as salary. Obtaining expert advice on your tax position is highly recommended, as it can save you a lot of money at tax time.

4. Obtain a quantity surveyor’s report

To be able to claim the maximum amount of depreciation (the value of wear and tear) on your investment property, it is a good idea to get a quantity surveyor’s report. The amount it costs to have this done could be insignificant compared with the money you may save.

5. Pay up superannuation

A good way to minimise tax if you are self-employed or employed by your own company is to pay into your superannuation before the end of the financial year. This may allow you to claim a tax deduction and reduce your assessable income for the year.

6. Cash is king

Rather than waiting until the last minute, lodging your tax return as early as possible after June 30 will mean you get your refund back sooner. This will boost your cash flow and free up money for further investment or expenses required for existing investments.

7. Engage a property taxation expert

Just as you obtained expert advice regarding your initial property investment, so you should seek advice from an expert in taxation — preferably an accountant who specialises in property investment. Because they are familiar with current taxation laws, they may be able to find savings you are not aware of.

8. Plan for the year ahead

Planning ahead is always a good investment strategy. Talk to a property advisor and begin planning the year ahead now, focusing on ways to build your portfolio and achieve a higher rental income from your existing property investments.