Look beyond the obvious when calculating tax deductions
Tax deductions can be concealed behind walls, in ceilings, under floors and on roofs – the combined value of which can...
Those who own investment properties, or are looking to buy, have been encouraged to act quickly if they wish to maximise their tax, according to Australia’s largest independently-owned mortgage broker
Understanding what can and cannot be claimed as expenses over the short and long term can, ultimately, make a big difference to your investment strategy, explained Mortgage Choice spokesperson Belinda Williamson.
“Reassessing financial aspirations and identifying ways to make the most of any tax benefits can help investors achieve their property dreams sooner.
“In preparation for lodging a tax return, now is a good time for property investors to organise any receipts and statements that relate to their rental property or properties,” Ms Williamson said.
A number of expenses are able to be claimed by investors, she listed, including agents’ fees, advertising, body corporate fees, capital expenses, building maintenance, repairs, cleaning, insurances, home loan fees, interest payments, council and water rates, and the cost of travel to and from the property for inspections.
“One aspect that property investors often overlook when lodging their tax return is depreciation deductions. Depreciation applies to new and existing residential properties and in most cases owners of an investment property or properties are likely to be able to claim something,” she said.
Each investors’ ability to claim is different, and consulting a financial planner and accountant can assist in making the most of any tax deductions.
One way to make the most from a tax refund, Ms Williamson said, is to deposit the extra cash straight into an existing mortgage as a lump sum payment. This can save up to $2,359 in interest on an average payment of $500 and reduce the loan term by a month.
“Making extra repayments into your home loan can speed up the accumulation of equity and help you repay the loan sooner by reducing the length of the loan term and interest payable over the life of the loan.”