5 tax tips to max cashback on your property investment
With tax season knocking at the door and the economy sailing into rougher waters, here are strategic ways property inves...
Investors are being told to pay particular attention to the do’s and don’ts this tax time, with those who fail to properly lodge their returns warned they could potentially be thousands of dollars worse off, an industry expert has revealed.
In a conversation with Smart Property Investment, H&R Block’s director of tax communication, Mark Chapman, explained to investors the key do’s and don’ts this tax time.
According to the accountant, the key tip is to ensure that property owners keep good records.
“The golden rule is if you can’t substantiate it, you can’t claim it, so it’s essential to keep invoices, receipts and bank statements for all property expenditure, as well as proof that your property was available for rent, such as rental listings. Also, be aware that both your income and expenses may look very different to normal because of the impact of COVID-19,” he said.
He highlighted that a tax agent is a “must have” for property investors – they can point you towards those deductions you didn’t know you could claim, can accurately work out what’s deductible and what’s not, while their fee is tax deductible.
Key deductions investors miss
Mr Chapman noted that property investors often overlook key expenses, which ends up costing them come tax time.
As well as the obvious deductions like mortgage interest and repairs, you may not know that you can claim for the following:
Going beyond prepaid expenses, Mr Chapman told Smart Property Investment that investors are entitled to depreciation on the asset.
“It can also be worthwhile getting a quantity surveyor to quantify the depreciation claims that you are entitled to. Depreciation is generally one of the larger deductions. It is difficult to correctly work out, and many home owners miss out on potential deductions by incorrectly claiming,” he said.
What about the don’ts?
While highlighting the perks investors get this tax time, Mr Chapman also warned investors against attempting to con the taxman.
His tips of things to avoid include:
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.