Property investment can be very rewarding, and although it involves a lot of hard work, there are always tax breaks at the end of every financial year to retain your interest in the business side of things. Here are some hot tips for property investors to maximise deductions in 2019.
If you have had an annual income and a fixed-rate loan that is on the cusp of the next tax bracket, pre-paying your interest for the next year will allow you to claim it this year.
For any investor who entered into a rental property contract before May 9, 2017, you can claim a range of deductions based on depreciation/decline in value of any assets in the property before that date. After this date, you can only claim depreciation if the property was built, substantially renovated, or have brand new assets.
Claim Capital Works For Initial Repairs
A mistake often made by investors is to claim capital improvements or initial repairs as immediate deductions. However, a far better approach is to claim capital works deductions over a long term period.
PAYG Withholding Variation Application
If you have struggled with cash flow recently and are negatively gearing your property, you can apply for PAYG withholding variation. This is regularly used by people who claim larger than average deductions and allows you to get the breaks every week/month when you receive your salary instead of a lump sum at tax time.
Claim Borrowing Expenses
In 2019, you can claim deductions on the following expenses:
- stamp duty charged on a mortgage
- loan establishment fees
- title search fees
- lender’s mortgage insurance
- legal fees and other costs associated with preparing and filing mortgage docs
- mortgage broking fees
- valuation fees required for loan approvals
Diligently Keep Your Receipts
Be highly-diligent when claiming your deductions, by safeguarding and keeping all important receipts. Without the receipts, there is no dections.
If you are attempting to sell your property for capital gain purposes, consider dating contracts after July 1 so you can defer the tax for another year. This gives you an extra year to save the money required to pay it.
All of these are great tips, but there is an even better one, and that is to have a great accountant. Great accountants will keep up with any changes made by the ATO, and everything is tax deductible.