Tax tips for property investors

Friday 05 Jul 2019

With tax time fast approaching, here are four commonly asked questions you should be asking yourself to ensure you are maximising yields from your investment property.

1. What deductions am I entitled to?

As a property investor, you’re entitled to a range of tax deductions. These include deductions on council rates, the interest from a mortgage, property management fees, land taxes, strata fees, maintenance costs, insurance, accounting fees and depreciation.

2. Should I wait until the next financial year to make a claim?

If you haven’t owned your property for long and it’s only become income producing for a short time in the last financial year, you will still be able to make a partial-year claim.

3. Do I need to amend my tax depreciation schedule if I have made updates to my property?

If you’ve made any updates to your property in the past financial year, such as a renovation, it’s a good idea to get in touch with your Quantity Surveyor to see if you will require an updated depreciation schedule.

It’s important to be aware that there is a difference between a repair and a capital works improvement, as this will affect your claim. The cost of any repairs can be claimed in full in the same financial year they are completed. An improvement, on the other hand, is when you improve the condition of an item or property beyond that of when it was purchased. Such improvements are capital in nature and must be depreciated over time. An updated tax depreciation schedule may be required after a renovation to capture all newly installed plant and equipment assets or capital works expenditure.

4. Should I discuss tax depreciation deductions with my accountant?

An accountant should be recommending that you claim depreciation for your investment property. They can organise a schedule on your behalf or refer you to a Quantity Surveyor, but they will not be able to estimate construction costs or provide you with a tax depreciation schedule. Only a qualified Quantity Surveyor can do that.

However, not all Quantity Surveyors specialise in tax depreciation. Only a tax depreciation specialist such as BMT can be relied on to maintain detailed knowledge of all current ATO Tax Rulings depreciation.