Investing in a property can be a great way to build wealth, but it’s important to remember that there are taxes to be paid on your investment.
However, there are ways to maximize your tax savings on your investment property.
Today I am going to give you four tips to help you save money on your taxes and increase your investment returns.
1. Buy in the correct structure.
The first tip is to buy the property in the correct structure. This means deciding whether to purchase it in your personal name, a family trust, or a company structure.
If you purchase the property in your personal name, you’ll get tax savings against all the costs of the property directly in your tax return.
This is generally simpler and will provide higher tax rebates. However, it’s important to consider the pros and cons of each structure and seek good legal and accounting advice before making a decision.
It can be very expensive to change the structure once you own the property, as it essentially involves selling the property to another buyer and incurring stamp duty, refinancing, and other costs.
2. Get a depreciation report.
This report will detail the value of the depreciable items in the property, such as fixtures and fittings.
If the property is brand new, you’ll be able to maximize your tax savings by getting a quantity surveyor to do a report off the list of fixtures and fittings in the spec sheets of the new property.
If it’s an existing property, you’ll need a quantity surveyor to inspect and value it. It’s also important to consider depreciation on replaceable items during renovations, as some may be claimable, and others may not. Again, seek the right advice on this.
3. Use an accountant that is experienced in investment properties.
Every dollar they can save you on tax is better off in your pocket, so an experienced accountant will be able to help you maximize your tax savings.
It’s important to choose an accountant who has experience with investment properties and is up to date with the latest tax laws and policies.
4. Keep receipts for all purchases and services.
The accountant can only claim what they can actually see in receipts, so it’s important to keep good records.
One way to make this easier is to use a property manager who has access to other services like handymen, electricians, plumbers, and builders, and can pay for those services out of your rental account.
This will help you keep good records and maximize your tax savings.
Tax laws are always being revised, so it’s important to stay up to date with the latest policies and procedures.
By implementing these tips and seeking the right advice, you’ll be able to maximize your tax savings and increase your investment returns.
Remember, tax savings are a great thing for property investors in Australia, so take advantage of every dollar that you can claim.
If you would like to discuss your property investment needs further or you would like me to refer you to one of my preferred accountants, you can book a time in my calendar by clicking here.
Regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
