The end of the financial year is a great time for property investors to take the opportunity to minimise their tax obligations.
Here are five tax tips to consider this tax time:
Claim travel expenses: The cost of travelling to inspect a property, carry out maintenance, undertake repairs or collect the rent can be claimed as a tax deduction.
Apportion expenses: If your rental property is only available for rent for part of the year; only part of the property is available to rent; or the property is rented at non-commercial rates, you must apportion your expenses to determine the deductible amounts.
PAYG variation: A PAYG variation allows investors to vary income tax withholding to access their end-of-year tax refund throughout the year rather than as a lump sum. This can help investors meet their cash flow demands.
Interest: Investors can claim the interest on the loan used to purchase a rental property or depreciating asset for the rental property; make renovations or repairs to the property; or used to purchase land to build a rental property. Pre-paying interest (up to 12 months in advance) brings forward deductions to the current income year.
Prepaid expenses: Consider pre-paying any expenditure, such as repairs, rates and levies, to maximise the current financial year’s deductions. Remember, initial repairs to an established property are not deductible.