End of financial year countdown: Make the most of the next 24 days
The end of financial year will be upon us in 24 days, and there’s much you should be doing to make the most of it.
Over the next few weeks, Property Observer will attempt to avoid nagging you about timely tax returns, but will provide some tips and advice on how to make the most of this final month.
While you have until 31 October to lodge, your expenses and transactions will only count up until the official end of the financial year – 30 June. The ATO’s 2010-2011 stats saw the average claimed amount per landlord sitting at $23,000 – not something to be sniffed at.
Today’s tip is about working out which expenses you can claim.
In June last year, the ATO wrote to 110,000 property investors over incorrect rental deductions.
Guess what? They did the same thing in 2011, writing to 100,000 property investors about the exact same issue.
You don’t want to be in the ATO’s bad books, so be wary of what you claim ahead of assuming you can.
For instance – that seminar you went to that set you back a few hundred dollars or your ticket to the Home Show, is it deductible? If you don’t know, then you can read our article here about the amount of your “property education” that you can actually claim. It’s not as straight forward as you might think.
With the long weekend coming up, it’s time to sort out your shoebox of receipts and start figuring out what needs to go to the accountant.
For rental properties, here are seven quick rules:
- Claim straightaway for interests on loans
- Claim straightaway for depreciating assets
- Claim straightaway for costs to repair and maintain your rental property
- Claim straightaway for tenancy costs
- Claim deductions over a number of years for assets that are part of the property
- Claim deductions over a number of years for assets on construction costs
- Claim deductions over a number of years on stamp duty and other fees
Source: ATO
Read more about these expenses and what you can claim.
Ken Raiss suggests that there are nine things you must know about maximising your tax return. At the top of the list is documentation.
If you’re an industry professional, you can also be useful at tax time. It’s worth reminding your clients about tax depreciation schedules, notes BMT’s managing director Bradley Beer.
“Real estate agents are a critical component in the property-buying process and have a fantastic opportunity, before and after a sale, to enhance their relationships with clients by broadly informing them about how tax depreciation works and the benefits it provides,” said Beer.
“The result would be a win-win situation for both parties as the buyer maximises his cash flow and the agent strengthens his relationship with the buyer through the process.”
Estimates for deductions are often free ahead of getting an actual schedule undertaken.
USEFUL READING FOR TAX TIME
12 tips for property investors to reduce their tax bill: Ken Raiss
The top 19 rental expenses that landlords claim from the ATO: Jonathan Chancellor
Rental properties – keeping deductions working for you: Daniel Deutsch