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There are important considerations to be made for property investors pre-tax time, an expert has highlighted.
In a market update, Mayfair Finance’s Andrew Rowlands shared his pre-tax time checklist for property investors.
“If you’re like most property investors, trawling through receipt upon receipt to tally up your allowable deductions is probably not your idea of fun,” Mr Rowlands said.
“So, as tax time looms, we wanted to share our pre-tax time checklist to help make things just a bit easier for you.”
It’s important for property investors to take this time to organise their receipts and records, according to Mr Rowlands.
“It’s time to dust it off that shoebox of receipts and get your paperwork in order,” he said.
“If you discover the ink on some of the receipts has faded, keep in mind that you can use a bank statement as evidence of when the purchase occurred. It’s a good idea to sort the expenses into various categories, such as strata levies, rates and water charges, property management, and maintenance and repairs.
“Creating a spreadsheet or using an expense tracker mobile app may also be a better idea than the old shoe box filing method, as you can track your expenses throughout the year and when tax time comes, more easily sum up amounts for inclusion in your tax return.”
Equally important is that property investors consult their tax accountant, Mr Rowlands said.
“Just like you’d use a hairdresser to cut your hair, or a mechanic to fix your car, it’s important to seek expert advice from a professional tax adviser about your investment property and tax return, so that you can be sure it’s done correctly,” he said.
“They will be able to answer tricky questions about whether you have to pay goods and services tax in relation to your rental income, or set up Pay As You Go tax instalments (these may be necessary if you make a profit from renting the property).
“Using an accountant is also likely to save you time and money, as they’ll know exactly what deductions you can qualify for. After all, you don’t know what you don’t know! This is why we recommend speaking to a qualified accountant.
Further, Mr Rowlands recommended property investors to start determining their assessable rental income.
“For those who are new to property investing, your rental income is the total amount of rent and associated payments you receive, or become entitled to, when you rent out the property. The full amount of rent you earn must be noted in your tax return. Talk to your accountant if you have any issues working it out,” he said.
“Review your loans and finances. The end of the financial year is a great time to review how your investment property is performing and to review how well your loan is serving you.”