Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

Ten Tax Tips for Rental Property Owners

Jun 19, 2013

Over 1.8 million people claimed more than $38.5 billion in rental deductions in their tax return last year.  With June 30 rapidly approaching, it is time to do some urgent tax planning.  Here are some excellent tips from Adrian Raftery, author of 101 Ways to Save Money on Your Tax - Legally! 2013-14 edition (Wrightbooks, June 2013, AU$24.95), for you to action and maximise your tax refund from your rental property this year.  

1. Initial repairs

A common mistake is to claim initial repairs or capital improvements as an immediate deduction.  Initial repairs to rectify damage, defects or deterioration that existed at the time of purchasing a property are generally considered capital in nature and not deductible, even if you carried them out to make the property suitable for renting. 
Depreciation could be claimed on this expenditure as a capital works deduction over 40 years.

2. Prepay interest

If you are expecting that you will have a lower income next year (due to factors such as maternity leave or redundancy) then why not prepay interest for up to 12 months in advance before year end on your rental property and reduce your higher income this year. 

3. Depreciation schedule

If your investment property was built after 18 July 1985 then it is definitely worthwhile organising a depreciation schedule from a quantity surveyor.  You should be able to recoup their fee in your first tax return as deductions can be in the thousands each year.   

4. Travel to see your property

The old wives’ tale of claiming two trips per year is hogwash.  You can claim as many trips as you like so long as the purpose of the trip is to genuinely inspect the property and you don’t tag a family holiday onto it.

101 Ways to Save Money on Your Tax - Legally! 2013 - 2014

5. PAYG Withholding Variation

Negatively gearing a property and struggled with cash flow over the last 12 months? Don’t want to wait all year for a juicy refund again next year?  Then why not arrange a “mini-tax return” called a PAYG Withholding Variation Application and have less tax taken out of each pay packet.  

6. Foreign investment properties

The ATO is also cracking down on taxpayers with properties overseas as they get more data each year from other tax jurisdictions.  Make sure that you disclose any income that you receive as you are taxed on worldwide income as an Australian tax resident.  These properties can be potentially “negatively geared” as you can claim deductions such as interest, repairs, rates and insurance on these properties.

7. Keep your receipts

Each year the ATO makes contact with many thousands of taxpayers with rental properties.  With the ATO increasing their audit activity this year yet again it is important that you can explain and justify your claim.  The ATO motto is no receipt = no deduction so you could be costing yourself $$$ by not keeping those dockets!

8. Minimise capital gains tax (CGT)

If you are trying to sell your property and about crystallising a nice capital gain or two then consider exchanging contracts after 1 July to defer tax for another year.  And remember that if you hold your investment property for more than 12 months you reduce CGT by half.

9. Get a great accountant

Avoid paying too much in tax or leaving yourself to a visit from the taxman.  Great accountants are like surveyors ... they know where the boundaries are.  And their fees are tax deductible!

10. Just do it!

You now have got some great tax tips, it’s time to take action.  Times are tough so every dollar saved counts. 

These tips were provided by Mr Taxman, Adrian Raftery, author of 101 Ways to Save Money on Your Tax - Legally! 2013-14 edition (Wrightbooks, June 2013, AU$24.95). This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.
 
For further information or to request an interview, please contact: Katie Elliott, Wiley Publicist (T) 03 9274 3225 (E) kelliott@wiley.com. Adrian Raftery can also be reached directly on 0418 210 599. ?

Comments

"In reference to: 6. Foreign investment properties The ATO is also cracking down on taxpayers with properties overseas as they get more data each year from other tax jurisdictions. Make sure that you disclose any income that you receive as you are taxed on worldwide income as an Australian tax resident. These properties can be potentially “negatively geared” as you can claim deductions such as interest, repairs, rates and insurance on these properties. I believe that as a New Zealand Citizen on a Non Protected SCV that income from overseas rental property and capital gain is exempt from Australia Tax. Do you consider that to be the case? Thanks in advance."

By: Jane on Oct 07, 2013 9:57PM

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • " Today I'm so rich with the help of Mr Williams Programmed ATM Card i never believe this could really help me out when i saw Matthew given on his testimony on Facebook how he was helped with Mr..."

    By: Kristy at Jun 20, 2018 12:38AM

    Post: The Full Cost of Motoring in Australia

  • "Hello Everyone. DO YOU NEED A LOAN ? APPLY NOW IF YOU ARE INTERESTED! We offer the best loan, we offer Debt Consolidation Loan Up to 5 Million *Business setup Loan Up to 10 Million *Personal..."

    By: Anderson Scott at Jun 20, 2018 12:33AM

    Post: Foreign currency trading

  • "If you are going through hard times or poverty you must not be depressed,because this is a good chance for you to be rich and happy once more, kindly contact divinecardhacker@gmail.com to get your..."

    By: jose at Jun 19, 2018 3:38PM

    Post: The secret to getting your loan approved

  • "Good News BLANK ATM CARD... i have my own ATM CARD programmed and covered to withdraw the maximum of $3,000 Dollars per daily for a maximum of 30days. I am very happy about this because I have mine..."

    By: Mark Greg at Jun 19, 2018 3:10PM

    Post: The Full Cost of Motoring in Australia

  • "Good Day Everyone Are you a business man or woman? Are you in any financial mess or Do you need funds to start up your own business? Do you need a loan to start a nice Small Scale and medium..."

    By: Mr Refael Luciano at Jun 19, 2018 11:41AM

    Post: The secret to getting your loan approved