Your property investments are busy working hard to secure your financial future. With the property market constantly on the move, it can be difficult to know how to maximize your returns. One of the first steps is making sure you know what your tax returns could be!
How to prepare for tax time
It’s been a busy year for the Australian housing market! You are definitely not alone if you’ve struggled to keep up with the changes.
Now is the time to you pay close attention to those updates you might have been avoiding. They might come with important news for the state of your property! Interest rate changes and rent increases could mean your property is no longer negatively geared, which could translate into having to pay extra tax.
If your deductions are a little low this year there are a few things you can do to maximize your returns. Prepaying your interest is one of them.
Although pre-paying your interest can get you a deduction this financial year, it is important that you keep in mind this does mean you will not be able to claim the same deduction next year. When it comes to making the decision, assessing how high your taxable income is and whether you really need to reduce it is the best approach.
Moving forward, you could also look into bringing your maintenance costs down. Performing improvements on your investment property could effectively allow you to claim some deductions earlier.
What should you watch out for?
Every year the ATO has a new focus. This year is not the exception.
This year the ATO will be hot on your heels about… repairs!
So how will this impact tax and what can you do to reduce it?
Reducing your tax as a Property Investor
It’s safe to say we all have the same goal when it comes to taxes… reduce them as much as we can.
When looking into this area make sure you’re repairing the property back to its original state. That is, ensure they are actual repairs, instead of upgrades.
If the “repairs” you are conducting are actually improving the asset, then they won’t really be counted in as a repair. Although you can still go ahead with making these improvements, they will just be depreciated over time starting from next year. If your aim is to get the claims, just make sure you are within the parameters for repairs. Give the house a fresh coat of paint, replace the dead patches on the lawn, or maybe even aim to fix the roof. When it comes to our top tax tips for property investors, anything that isn’t an improvement or upgrade can help.
Planning for years to come
We love it when our clients are prepared, it’s no doubt the best way to set yourself up for success!
When it comes to taxes there are a few things you will want to know in order to be prepared.
- Your income: this will help you calculate what your future tax will be and put effective strategies in place
- The market: understanding what is going on in the market can help you understand if your property is positively geared or negatively geared. Doing so can help you assess the changes you might make in your income or other areas of the property to actually offset its effect.
Ultimately, working with your dedicated Rise High broker can provide the right support to ensure you can enjoy the countless benefits that come with being a property investor. Our team is always here to ensure you’re getting the most out of your property whilst implementing the right strategies to make your property work for you!
Needing some help with your tax return? Our individual tax return checklist might come in handy! Looking for expert investment property loan advice for your specific circumstances? Our team is always here to help!