ATO cracks down as 90% of rental income tax statements are wrong
With the Australian Taxation Office (ATO) reiterating its focus on rental property income and tax deductions this tax ti...
Forgetting to use this investment tool to its full potential could be the difference between your portfolio's success or failure.
Blogger: Paul Bennion, managing director, DEPPRO
The size of the Australian property sector has been highlighted by the latest figures published by the ABS for the June quarter 2015.
These figures show that there were 9,528,300 dwellings or nearly 10 million in Australia, which was an increase of 38,400 dwellings compared to the previous quarter.
In addition, the ABS figures reveal that the total value of housing stock in Australia was valued at $5.76 trillion during the June 2015 quarter, which was an increase of $271,939 million compared to the previous quarter.
The mean house price also rose during this three-month period by $26,200 to $604,700.
What these figures underline is that the Australian property market is dynamic and continually expanding.
This creates opportunities for astute investors to create wealth – a fact underlined by investors who are now reaping the benefits of buying properties in Sydney and Melbourne during their pre-boom period.
There are opportunities for astute investors to create wealth in other parts of Australia, such as Queensland where DEPPRO is already recording an upswing by investors in areas such as the Gold Coast.
To take advantage of these emerging opportunities in the Australian property market, investors need to put in place a financial plan that enables them to purchase multiple properties.
A key part of this financial plan should include fully maximising the taxation benefits associated with property investment to boost their cash flow.
Property investing still allows people to claim generous tax benefits associated with negative gearing as well as depreciation.
The tax benefits associated with tax depreciation can be very significant, with many investors achieving tax benefits obtained through depreciation equivalent to 60 per cent of the total purchase price of the property. In some cases these tax benefits can total $300,000 based on a purchase price of $500,000.
Many investors in Australia totally underestimate the number of items that can be depreciated for tax purposes, and this comprehensive list can even include garden gnomes, cubby houses, and even common areas such as car parking and recreational facilities if they own an apartment.
To qualify for these legitimate tax deductions, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.
Property investors should therefore check that the company undertaking their tax depreciation schedule is a member of the The Australian Institute of Quantity Surveyors (AIQS).