22 Jun 12
A recent article on The Property Observer website written by Ken Raiss, raised some interesting tax tips for the end of financial year for property investors,. I would like to pass some of these tips onto my readers.
Keep summaries of all your rental income and expenses. Best practice would be to have a professional property manager managing your investment, where they pay all expenses and collect all income, providing you with monthly and annual statements.
If you are contemplating a renovation a quantity surveyor can produce a scrapping schedule, which puts a value against all items to be thrown away. The new items are then depreciated with a new depreciation schedule. Only registered quantity surveyors are generally authorised to prepare depreciation schedules.
All your costs to inspect your investment property are tax deductible, including travel. Ensure you apportion any personal component.
The use of a trust can be a benefit to property investors by improving asset protection, estate planning and increasing flexibility. If using a trust ensure it has been correctly set up and operated to ensure you do not lose your interest deductibility.
If you have a geared investment it is worth considering pre-paying next year's interest to gain an immediate tax deduction. You can also get a deduction now by pre-paying next year's income protection insurance premiums.
Capital gains generated during the year can be minimised by offsetting it against capital losses or trading losses incurred during the same year. The 50% discount on capital gains is available where an asset is held for longer than 12 months. As this is a considerable saving consider the timing of any sale. The relevant date for calculating capital gains is the contract date, not the settlement date.
Where you have negatively geared rental investments, the negative part offsets against your other income, e.g. salary, reducing your tax payable and resulting in a large refund when your tax return is lodged. This refund can be used to reduce your loan, pay your interest expense or help finance another investment property. .
For further advice please pop into one of Lagunas four offices and have a chat to our highly experienced sales professionals.
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