At Outlook Tax & Accounting Solutions, we can provide property investors with specialist taxation advice to ensure that you maximise the benefits of investing in either residential or commercial property.  Our team of accountants can sit down and discuss with you the tax benefits of your property investment and guide you through many of the important considerations in buying, running or selling your property. 

Below are five things to consider when investing in property:

1. Are you claiming the right amount of depreciation on your assets?

Even while the price of a property is going up, there are many items in an investment property that are going down in value.  You may be able to claim a tax deduction for the decline in value of certain assets.  This may include:

• Building costs (even if the build was done by a previous owner);
• Renovation costs (including capital improvements);
• The cost of other capital assets, such as furniture
• Claiming depreciation can improve your cash flow because you can claim a deduction without actually outlaying any cash.

Identifying your depreciating assets with a Quantity Surveyor’s Report

A quantity surveyor can undertake an inspection of the assets and buildings on your property and produce a report identifying all the depreciating assets and the tax deduction you can claim.  Most investors find the additional deductions they can claim quickly repays the cost of commissioning the report.

Your Outlook accountant can refer you to a qualified Quantity Surveyor to organise a Tax Depreciation Schedule on your property.

2. Have you got the right investment loan?

The biggest expense for most landlords is the mortgage on their investment property.  This makes it critical that you have the right loan with the right structure.

Balancing your home loan and your investment loan

You can maximise the tax deductions on your investment by focussing on paying off your home loan before you pay off you investment loan.

Only the interest component of your loan repayments is tax deductible.  The underlying debt (principal) is non deductible.  By only paying the interest on your home loan, your loan payments are fully tax deductible.

You can use the money you would have spent repaying the principal of your investment loan.  This means you are still gaining the same amount of equity overall, but you are reducing your non-deductible debt in favour of deductible debt.

A mortgage broker can assist you if you are looking to refinance your loan(s), or simply want to arrange for a better deal.  Contact us to arrange for a FREE no obligation mortgage review.

3. Are you keeping control of your cashflow by claiming your tax refund during the year?

The Tax Office allows people to vary the amount of PAYG Tax being withheld from payments received (e.g. your salary) to ensure amounts best meet your end-of-year tax liability.

If a taxpayer is expecting a refund due to tax losses generated by their investment property, they can reduce their weekly/fortnightly withholding tax accordingly.

Rather than waiting 12 months or more to claim a tax refund, the taxpayer can reap the cashflow benefits of their investment property immediately.

Arrange an appointment to have your Outlook accountant explain how you can make a PAYG Withholding Variation to get immediate cash flow benefits from a negatively geared property.  We can even arrange to lodge the variation form for you for a fee of $165.00 (inc GST).