Act now to maximise your tax refund: Mortgage Choice

Act now to maximise your tax refund: Mortgage Choice
Act now to maximise your tax refund: Mortgage Choice

It may be nearing the end of financial year, but there are still steps you can take to maximise your tax refund, explains Mortgage Choice’s Jessica Darnbrough.

Figure out what you can claim

It’s crucial to know what it is you are and are not able to claim on your tax refund, explained Darnbrough.

“Many people have no idea that they can claim a tax deduction on petrol or home office expenses,” she said.

“You don't have to run a business from home to claim things like stationary. Rather, you just need to have a dedicated place to work at home.”

Property investors often don’t realise there are a range of expenses they can claim for. These include:

  • Agents' fees

  • Advertising

  • Body corporate fees

  • Capital expenses

  • Building maintenance and repairs

  • Cleaning

  • Insurances

  • Home loan fees

  • Interest payment

  • Council and water rates

  • Travel to/from a property for inspections

“One aspect that property investors often overlook when lodging their tax return is depreciation deductions. Depreciation applies to new and existing residential properties and in most cases owners of an investment property or properties are likely to be able to claim something,” Darnbrough suggests.

Consider an advisor

As everyone’s situation differs, it may be worth getting yourself a financial advisor to help determine the deductions.

Review your situation

“Part of good tax management involves making plans for the year ahead rather than facing a last minute rush,” said Darnbrough.

Mortgage Choice’s tips:

Formalising salary sacrifice super arrangements: Making salary sacrificed super contributions offers a simple way to save on tax and build wealth. It involves having part of your before-tax salary paid into your super rather than taking the money as cash in hand. 

These contributions are taxed at 15%, which is likely to be below your marginal tax rate (which could be as high as 46.5%), so more of your money goes towards growing your super rather than paying the tax man. Up to $25,000 annually can be added to super through pre-tax contributions ($35,000 if aged 60-plus). This limit includes your employer's compulsory contributions.

Examine your asset structure: It is important to review how your assets are structured on a regular basis (at least once a year) to make sure you are achieving a balance of flexibility of use and protection from creditors and excess taxes. If done effectively, asset structuring can provide tax advantages, family tax protection and the longevity of assets.

Use your tax return to your advantage: Every little bit of savings can put potential buyers closer to property ownership. Those looking to purchase property could consider contributing their tax refund into a high interest paying savings account or they could utilise the tax refund to reduce any existing debt. Having too much debt can make a difference when it comes time to apply for a home loan.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer


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