8 Tips for an Easier Life as a Property Investor
Over the years, we have honed our portfolio management skills. You can also do the same by following our 'hot tips', which are as follows:
· Property expenses. Rather than paying these yourself, have your property manager pay these for you out of the rent they have collected. Then at the end of the financial year, ask your real estate agent for a yearly summary of rent collected and expenses paid for taxation purposes.
· Quantity surveyor's report. Always have a professional quantity surveyor's depreciation report created for a new investment property. This report then allows you to make tax deductions that can be substantiated should the ATO query these.
· Renovations. Any discarded items, such as old kitchens and structures are tax deductible. However, to claim for these you need to make sure a quality surveyor includes a 'scrapping schedule' in your depreciation report.
· Repairs and improvements. Before making any improvements to a property, always seek professional advice so that you know what the improvement is classified as for taxation purposes. A repair is classified as fixing an item so that it is restored to its original working condition. However, a capital improvement is defined as removing the item and replacing it with a new item that is better.
· Property management costs. You can claim a portion of home computer and office costs for property management, as well as travel costs for viewing property. But, this is proportional to the size of your portfolio and how your time is spent. If you visit a property and holiday at the same time, then you'll need to keep a diary and receipts.
· Purchase statement. When you buy an investment property make sure that you prepare a purchase statement in the first financial year of ownership. This should include purchase price, legal costs, stamp duty, borrowing costs and other capital costs. These are not tax deductable, but form a part of your cost base, which can reduce capital gains tax when it comes time to sell.
· Land tax. This is tax deductable, so include it in your receipts for the accountant.
· Professional advice. If in doubt, always seek professional advice. And remember, the cost of this advice is tax deductable.
Follow these tips to yourself save time and money, and improve your investment returns.
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.