Property investment
tax return tips.

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The topic of tax is almost as boring as watching grass grow…

But if you’re worried that you’re losing out on tax deductions for you or your investment property, and you want to keep hold of your hard earned money… then you may want to listen on… And maybe even have an exclusive meeting with one of our tax advisors…like Liam Brennan.

Whilst it’s your legal obligation to pay tax, you also don’t want to pay more than you need to. After all, you want to maximise the tax saving opportunities available to you.

So let’s start with 5 ways to reduce your investment property tax bill.

  1. Claim for property depreciation

The majority of properties that generate income qualify for some level of depreciation.

Property investors can claim what’s called a Division 43 capital works deduction, and Division 40 plant and equipment depreciation.

The capital works deduction applies to items that are fixed to a property’s structure, and includes renovations.

In your residential rental property, this may include:

  • Installing built-in kitchen cupboards
  • Clothes lines
  • Doors and fixtures (handles, locks etc.)
  • Driveways
  • Fences and retaining walls
  • Sinks, basins or baths

The plant and equipment deduction relates to what you can claim for items within the property, such as:

  • hot water systems, heaters or solar panels
  • Air-conditioning units
  • Blinds and curtains
  • Light shades
  • Swimming pool filtration and cleaning systems
  • And Security systems.

Now remember, the 2017 Federal Budget proposed a number of changes which will affect depreciation claims of residential property investors. So make sure you speak with one of our advisors about how these changes may affect you.

  1. Use a quantity surveyor

Quantity surveyors can help prepare a depreciation schedule to help maximise an investor’s claim for depreciation. The cost of preparing this report is also tax deductible.

  1. Negatively gear your property

Before you commit to negatively gearing your investment property, it’s worth talking with your accountant about the advantages and disadvantages depending on your aims.

If you’re new to the concept of negative gearing, we’re talking about generating tax losses which arise from deductible expenses being greater than the property’s rental income for the year. This net rental loss can then be applied to reduce your taxable income.

  1. Claim for advertising costs

As a property investor, you can also claim a deduction for the cost of finding tenants for your residential property. These costs can either be direct, or indirect.

Direct Costs refer to your independent advertising efforts such as advertising online, on local bulletin boards or in newspapers.

Your indirect costs include advertising carried out by an agent on your behalf.

  1. Claim for miscellaneous costs

You can also claim for costs related to maintaining a safe, clean and pleasant environment.

Examples include cleaning costs, gardening expenses, pest control costs and security patrol fees.

So that’s 5 tips to start with, but my biggest tip is… 

To come and meet with one of our experienced property tax advisors for your next tax return. We give pro-active advice and only take on a limited number of property investment tax clients each year… so call me today

Call Phillipa or the tax team on (02) 4926 2300

Contact Our Team Today