It’s Nearly Tax Time

Being the month of May, you have until 30 June 2017 to ensure all your property income and expenses are all nicely filed away to do your annual ATO return.  We have all heard it said that the majority of property investors in Australia do not claim all they are entitled to, so here are a few thoughts.

If you have forgotten to claim something a year or so ago after your return has been completed the Australian Taxation Office allows two previous tax returns to be adjusted so investors would be wise to examine whether they have missed anything and, if so, speak to their relevant adviser to have their tax return amended.

Have you been really thorough with your expenses? They are so easy to overlook.  Items such as smoke alarms, security systems and even garbage bins, just to name a few, are often overlooked but hold valuable tax savings for property investors. Fixtures and fittings with a depreciable value less than $300 can be immediately claimed in the first financial year. A garbage bin valued at $250 and smoke alarms valued at $145 are just two examples of items which are eligible and can generate immediate tax savings for applicable investors.

Capital allowances are often forgotten claims. If your investment property was constructed after 1987 you can claim 2.5% of the value of the building at the time (determined by quantity surveyor). A simple example of this if you bought a property in 2015 and it was built in 2005 and you are buying as an investment property a quantity surveyor would determine the construction costs as at 2005 and you could claim an allowance until 2045 if you kept the property until that time..

You are also eligible to claim deductions for plant and equipment assets within the property such as carpets, hot water systems, blinds and stoves. Items that are scrapped and replaced during renovations can be eligible for deductions. Ideally, a property should be assessed before renovation to determine the value for scrapped assets such as tiles or appliances like dishwashers and refrigerators, then after a renovation to account for new additions.

There is no way I would do my own plumbing or electrical work (I could probably electrocute myself) I have my doctor, my solicitor, my travel agent and my accountant. You are always seeking to maximise profit on your property portfolio, but as in other areas this doesn’t mean doing your own taxes is the best path to take. Not only is using a professional tax deductible, you’re also more likely to get a bigger return than you would doing your taxes alone.