As the end of the financial year approaches and tax season looms, residential rental property investors have a prime opportunity to maximise tax savings. Here are some essential end-of-financial-year tax tips for rental property investors from the Real Property WA team.

Consult a Professional

An accountant is crucial for any rental property investor. They can provide guidance on the structuring your investment, understanding tax implications, and maximising benefits through strategies like negative gearing (which are particularly beneficial in WA).

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The timing of your financial activities can significantly impact your tax liabilities. Expenses are deductible in the financial year they’re incurred, and income from renting or selling a property is counted in the year received. For instance, selling a rental property before June 30th means any capital gains tax (CGT) owed will be based on this year’s income, while selling after June 30th defers the tax impact to the next financial year.

Spending money on your rental property before June 30th, such as on repairs which are fully tax-deductible in the year they occur, can help reduce your taxable income for the current financial year. Additionally, prepaying next year’s interest on your investment loan, if conditions allow, can reduce this year’s taxable income.

Organise Your Records

Effective record-keeping is essential for claiming tax benefits. Organise all receipts and documents for rental property expenses, including income, interest, maintenance, repairs, and depreciation. The ATO requires evidence for any deductions, so document any damage and repairs. Real Property WA can provide an end-of-financial-year statement detailing property income and expenses, simplifying the process for you.

A depreciation schedule detailing eligible items should be included in your annual tax return. Engaging in a depreciation surveyor who will create a tailored depreciation schedule ensures your records are compliant and optimise your tax benefits. A custom schedule can be invaluable, saving you time and money and the cost of preparing is also tax-deductible.

Claim Deductions and Utilise Depreciation

Maximise your deductions by claiming expenses like council rates, advertising, repairs, and more. Long-term expenses can be spread over several years and remember to leverage depreciation on fixtures like carpets and appliances to further reduce taxable income. While major renovations can’t be claimed immediately, their depreciation can still benefit you over time.

Real Peace of Mind

For more tax tips for rental property investors, get in touch with the Real People at Real Property WA or head to ATO’s Tax Time Toolkit for Investors. Staying informed and seeking expert advice can make all the difference this tax time.

Disclaimer: The information provided here is intended for general informational purposes only and should not be relied upon as financial or tax advice. It is imperative to consult with a qualified financial advisor or tax professional regarding specific tax matters and investments.

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