Minimising Property Investment Tax

When you purchase an investment property, you need to think about the potential for returns.

Is your property likely to increase in value? Are your rental rates competitive? And are you doing everything you can to minimise your property investment tax? Tax time is an important period for Perth property investors, and a time that could seriously impact the amount of profit you make on your Perth rental.There are many tax benefits available for property investors, so it’s important to know every deduction you’re entitled to when it comes time to lodge your tax return. Here are 4 tips to keep front of mind:

Know your tax deductions

As a property owner and landlord, you will be entitled to a range of tax deductions on different expenses relating to your rental property. Providing your Perth property is occupied by tenants or on the rental market, you will be able to claim tax deductions on expenses such as the interest on your home loan, property management fees, strata fees, repairs and more. If you own, or plan on owning, an investment property, you will need to keep a record (and receipts) of all deductible expenses so you can claim them in your yearly tax returns.

Organise a depreciation schedule 

A popular way for investors to minimise their property investment tax is to track depreciation on their property and the items within it. If your property was constructed or extended after the 18th July 1985, you may be able to claim capital works deductions on the building and any additions. Property investors are also able to claim depreciation for the general wear and tear of fittings and fixtures within their rental property, including items such as electrical assets, carpets and curtains. If you plan on claiming depreciation on your investment property, you should organise a Depreciation Schedule with a qualified quantity surveyor before submitting your tax returns.

Don’t forget about negative gearing

If the cost of owning your Perth property exceeds your rental income, your investment property would be classified as negatively geared. This “loss” can then be offset against your income tax, meaning you could make substantial tax savings on your other earnings (such as your salary). If this is the case, it is important to remember you are still making a loss at the end of the day. Providing the value of your investment property increases, however, your losses should be covered over time.

Get yourself a good accountant

No one is better equipped to inform you of your property investment tax entitlements than a qualified accountant. If you plan on maximising tax savings on your Perth property, a finance professional will be able to inform you of your entitlements and ensure you’re claiming everything you should when it comes to tax time. To assist property owners,? Rental Property Tax Accountants Pty Ltd has a report,? Tax Guide for Rental Property Owners,? which is available for you to download.

What next? 

Whilst tax time is an important time for any property investor, maximising the returns on your property isn’t just about minimising your investment property tax. If you want to increase profit on your Perth rental, you will need to manage your property effectively after investment. This is where the advice of a professional property management service could prove invaluable. The team of specialised property managers at Rentwest Solutions are able to assist Perth property investors in maximising the long-term value of their investments. As well as overseeing the day-to-day running of your Perth rental, our expert property managers will ensure your rental rates (and your property) remains competitive to guarantee maximum returns after tax time.

Want to know more about Rentwest Solutions’s property management solutions? Get in touch with the team today on 9314 9888 or email us at [email protected]

The information provided in this article is of a general nature only. Rentwest Solutions recommends consulting a qualified professional for advice best suited to individual needs.

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