For property investors, the end of the financial year means organising paperwork, evaluating performance and reflecting on future strategies to make sure your investments are working hard for you.
Whether you’re a seasoned investor or just starting out, there are several things to consider at this time of year to ensure you stay on top of your financial obligations and maximise your returns.
Here are some of our 4 top tips for making the EOFY as smooth and financially rewarding as possible.
1. Gather your paperwork
The first thing to do is gather all your paperwork from the past financial year. This includes receipts for expenses related to your investment property, such as repairs and maintenance, insurance, property management fees and council rates. If you have a property manager, they should provide you with a summary of any expenses and a summary of rental income you’re your EOFY records. You should also keep records of any interest paid on loans related to the property.
Having all your paperwork organised and ready to go will make it easier to prepare your tax return and ensure you claim all the deductions you’re entitled to.
2. Consider your tax obligations
As a property investor, you’ll have several tax obligations to consider at the end of the financial year. This includes paying any outstanding tax liabilities, lodging your tax return, and paying the annual land tax on your investment property.
Remember that you are obliged to declare all incomes received from rental properties (including any you hold overseas), including short-term private rentals, platform-based rentals and partial or full home rentals - even if you are just renting your property to family or friends.
Of course, if you have sold a property during the financial year, you will also need to take into account any capital gains tax that you may be liable for.
It’s important to stay on top of your tax obligations and ensure you meet all your deadlines to avoid penalties and interest charges. A good accountant is invaluable here, as they will be able to advise you on your specific circumstances.
3. Take advantage of tax deductions
One of the benefits of investing in property is the ability to claim tax deductions on expenses related to your investment property. This includes expenses such as interest on loans, repairs and maintenance, property management fees, and council rates.
Some deductions can be claimed in full at the end of the financial year. These include interest on loans, rates, repairs and depreciation on assets that cost less than $300. Others, such as capital works, larger depreciation claims and the expenses related to borrowing for the property, will be claimed over several years.
It’s always advisable to discuss your property investment with a specialised tax accountant. Depending on your situation, you might like to have them draw up a depreciation schedule or talk you through the possibility of setting up a pay-as-you-go (PAYG) instalment plan with the tax office.
Whichever way you manage your investment, maximising tax deductions will help to reduce your taxable income and increase your cash flow, so it’s worth taking the time to understand exactly what you can claim and how to do it.
Check out the ATO’s website for further information on the rental expenses that you can claim.
4. Review your property portfolio
The end of the financial year is also a good time to review your property portfolio and consider any changes you want to make. This could include selling a property that’s not performing as well as you’d hoped, purchasing a new investment property, or refinancing your loans to take advantage of competitive interest rates.
You may also want to focus on renovations or repairs to your existing investment. Remember that anything done before 30 June can be claimed as a deduction in your tax return.
It’s important to remember that property investment is a long-term game, and it’s essential to have a clear strategy in place. This might involve diversifying your portfolio by investing in different types of properties or in different locations to spread your risk.
In short
The end of the financial year is an important time for property investors in Australia to review their finances and ensure they’re meeting their tax obligations.
By gathering all your paperwork, reviewing your property portfolio, and taking advantage of tax deductions, you can maximise your returns and set yourself up for long-term success.
If you’re not sure where to start, it’s a good idea to speak to a qualified tax accountant, who will provide guidance and advice tailored to your individual circumstances.
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Property investment in NSW FAQ’s
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