EOFY tax tips
By: Jess Thornton, June 2019
With the end of financial year nearing, it’s time to get excited about maximising your tax refund. The end of the financial year is the perfect time to make sure you’re doing everything you can to stay on top of all the tax opportunities available to you.
Here are a few tax tips to consider while preparing your tax return. Remember to seek advice from a qualified professional to ensure you make the most of all relevant tax deductions.
Tax tips for all property owners
There are a few key tax minimisation strategies that all property owners can use to lower their tax bill.
Working from home
For those who regularly work from home with a dedicated home office, there are a few options for tax deductions that could be at your disposal (this tip goes for tenants too). You may be able to deduct:
- Depreciation of office equipment, including a computer
- Work-related phone and internet costs
- If your home is your principal place of business, you may be able to claim a portion of occupancy expenses and a portion of running expenses
If you work from home but prefer the couch, or simply don’t have the space for a dedicated home office, you could be missing out on some valuable deductions. However, you can still deduct the depreciation of office equipment and work-related phone and internet costs.
If you’ve got a spare room you could rent out, there are more benefits than just a little extra income. Renting out a portion of your home opens up a realm of new tax options. You could be exempt from a portion of your capital gains tax, in most instances, it will correlate to the portion of floor area set aside to produce income, and the period you use the home to produce income.
It’s best to engage a qualified professional, especially if you’re an investment property owner
Get yourself an accountant
When it comes to lodging your tax returns it’s best to engage a qualified professional, especially if you’re an investment property owner. Finding a specialised accountant will give you piece of mind that they will help identify every deduction you qualify for, and the next year you can claim the accounting costs as a deduction too.
Tax tips for investment property owners
For investors, tax deductions are often a crucial tool for the cash flow management of their properties.
Repairs, maintenance and improvements
As long as your property is being rented out, investors should generally be able to claim an immediate deduction on repairs and maintenance to their properties. From leaking taps or a broken window to a fresh lick of paint, now is the time to get fixing.
When it comes to purchasing new appliances, if possible, it’s best to hold on until the next financial year. If you buy an appliance in June, you’ll only be able to claim one month’s depreciation in the current tax year. Whereas if you can wait until the new financial year, you’ll be able to claim an entire year’s depreciation the following tax period.
While improvements are not tax deductable, they can make for a great investment if they will significantly increase the rent you can charge or make the property more appealing to potential tenants.
Pre-pay expenses in advance
Investment property owners have the opportunity to pre-pay expenses related to the upkeep of the property. Some expenses, such as agent’s fees or gardening, may be able to be prepaid, and some may even offer a discount.
When you borrow money to invest and the income from the investment is less than the expenses, this is called negative gearing. Making a loss on your investment will reduce your taxable income, and in turn reduce the amount of tax you have to pay.
If you’re interested in negatively gearing your investment property, it’s important to consult a professional to make sure that negatively gearing your investment property will put you in a better financial position.
The opinions expressed in this article are the opinions of the author(s) and not necessarily those of Resimac. The above is general commentary only and is not advice tailored to any individual’s financial situation. We recommend seeking advice from a mortgage or finance professional before implementing changes relating to your finances.