Couple doing financesNow that it’s coming round to tax time, property investors may not be as prepared as they’d like to be. Getting your tax affairs into order is a begrudging task, but we’re here to provide 5 top tips that can help you to play nice when it comes to handing over bags of cash to the government.

During this time of year, landlords often come under scrutiny from the ATO when lodging tax returns. It is therefore crucial that they complete and file their tax returns with 100% accuracy, to avoid any unnecessary hiccups or fines.

Just to be safe, you should consult your accountants to confirm what can and cannot be claimed as a tax-deductible expense. This will make sure that all of your claims are legitimate and that the tax return amount is ‘maximised’ – because we want to give as much to the machine as we can, right?

Getting help from a tax specialist can make your life a whole lot smoother at this time of year – but it might not always be convenient, affordable or physically possible to do this, so here are our top 5 tips.

1)    Negative gearing 

A net loss caused by negative gearing can be offset against any other income you generate. This will reduce the amount of tax that you end up paying. Landlords may be unaware that interest can be claimed, but only when a property is available for rent.

If a property is lived in for half a year and leased as a holiday rental for the other half, you can’t claim the full 12 months’ worth of interest.

2)    Insurance

Normally, landlord insurance premiums can be claimed as a tax deduction, but this is quite commonly overlooked. We urge you to check the insurance policy, ensuring that you have appropriate coverage on a lawful basis.

A regular home and contents insurance policy will not cover landlords for property investment risks – so make sure you’ve got it sorted with landlord insurance.

3)    Expenses

The government are going to take your hard-earned money. If you have expenses, now is the time to claim them. Get looking through your wallet or purse for receipts from when you took those clients out for lunch, or that new PC keyboard you needed last month.

You don’t want to miss out on claiming expenses that you are rightfully entitled to. A good example is when apartment owners claim body corporate fees on strata or community title properties. These kinds of landlords can claim rental income tax as a deduction, with maintenance costs being tax deductible.

It is also possible to claim running costs, council rates, land taxes and water/sewage charges. Don’t forget that they will take whatever they can from you, so make sure you retain what you’re entitled to.

4)    Offsetting costs

A good self-managing landlord will be able to claim the costs of working from home. This means you can claim back for home office items such as computers, internet bills etc. Keep in mind however, that a fair and reasonable part of this may be deductible.

5)    Property manager

It can be really useful to hire a property manager. They can be useful for landlords and the cost of hiring can be a deductible expense. Appointing a property manager may actually turn out to be a tax benefit while assisting with organisation and saving you valuable time to do other landlord stuff.

A good property manager will always be able to help out with administrative responsibilities involved in investment properties. They may be able to help reduce the tax burden at this time of the year – by compiling and filing relevant tax return paperwork for you.

The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.