Eight tax tips for end of financial year property investment planning

The end of the financial year is almost here, so it’s time to do your tax return. Or perhaps undertake some strategies that save on the tax payable.

Apart from the usual receipts and items claimable by property investors, there are deeper tips and reminders suggested by tax advisors in advice to their private clients. 

1. Now might be the right time to consider refinancing your home. Do this before the end of the financial year, and the cost and saving could affect the tax payable. But be aware a clear accounting link between the initial mortgage to acquire the property, and the refinanced amount, must be maintained if you wish to offset the interest paid on the investment mortgage.
   
   Best be wary of refinancing and including home and investment properties under one mortgage, which may cause ATO red flags, so best check with your accountant before any refinancing.
2. Capital losses incurred in any financial year are available to be carried forward to future financial years for an indefinite period if there are insufficient gains to absorb it in the same year. Capital losses cannot be offset against other income such as business trading income if you've made a capital gain. With just a month to go, it might be too late to review your property portfolio to see whether it is worth realising a capital loss to offset the gain. You can't carry losses back.
3. The 50% discount on capital gains is available where an asset is held for longer than 12 months. Remember the relevant date for calculating capital gains is the contract date, not the eventual date of property settlement.
4. If you have a geared investment it is worth considering pre-paying next year's bank interest to gain an immediate tax deduction benefit in the 2013-2014 year.
5. Get a deduction now by pre-paying next year's income protection insurance premiums.
6. Bring forward expenditure to before 30 June, if you are planning on repairs on your property, though note care should be taken in determining whether a maintenance or repair is deductible or if it is considered a renovation or of a capital nature.
7. Check on the depreciation claim of the property and its fittings, any repairs or maintenance you have undertaken, any management fees or rental losses throughout the financial year, all taken into consideration in calculating your tax deduction. 
8. Use debt recycling strategies, pooling much of your cashflow through an financial institution offset account to reduce your total annual interest payable. 

Obtaining sound financial, taxation and investment advice is highly recommended in order to implement any of the above strategies.