Maximise Your Tax Deductions

The Australian Taxation Office (ATO) provides a comprehensive Tax Time toolkit for investors, detailing deductible expenses related to property investments.

Key deductible expenses include:

• Loan Interest: Interest paid on borrowed funds used to generate assessable income.
  
  

• Borrowing Expenses: Costs such as loan establishment fees, lender’s mortgage insurance, title search fees, and mortgage broker fees.
  
  

• Repairs and Maintenance: Expenses for necessary repairs like replacing a worn-out fence or re-oiling a deck. Note that improvements and renovations are treated differently by the ATO.
  
  

• Body Corporate Fees and Charges: Administration fees are usually deductible immediately, while capital works levies must be depreciated over several years once completed.
  
  

• Property Management Costs: Fees paid to property managers for overseeing your investment.

Document Your Rental Income and Expenses

Accurate record-keeping is essential. Ensure you have detailed records of all rental income and expenses. Utilising digital platforms can streamline this process, making it easier to manage and retrieve records when needed.

Consider Pre-Paying Expenses

If you anticipate being in a higher tax bracket this year compared to the next, pre-paying certain expenses like insurance or loan interest before June 30 could be beneficial. This strategy allows you to claim deductions in the current financial year.

In cases where tenants have defaulted on rent payments, you may be able to write off these amounts as bad debts, potentially reducing your taxable income. Consult with your accountant to explore this option.

Plan for Capital Gains Tax (CGT)

If you've sold an investment property this financial year, it's crucial to plan for any Capital Gains Tax liabilities. Properties held for over 12 months may be eligible for a 50% CGT discount.

Don't Overlook Depreciation Deductions

Depreciation on assets like dishwashers or other fixtures in your rental property can be claimed as deductions. Engaging a quantity surveyor to prepare a depreciation schedule can help identify all available deductions, potentially leading to significant tax savings. Review Property Performance and Set Future Goals

Evaluate your property's performance over the past year by examining rental income, occupancy rates, and maintenance costs. This analysis can help identify high-performing investments and areas needing improvement. Consider your future objectives, whether it's acquiring another investment property or renovating to increase rental returns.

Conduct an Investment Loan Health Check

With recent changes in interest rates, it's an opportune time to review your investment loan. At Mortgage Matrix, we can assess whether your current loan structure aligns with your investment strategy and explore refinancing options if beneficial.

Ready to Optimise Your Investment Strategy?

At Mortgage Matrix, we're committed to helping you navigate the complexities of property investment. Contact us today to schedule your investment loan health check and ensure you're maximising your financial potential this EOFY.