End of Financial Year Tips for Landlords

June 19, 2024

As the end of the financial year (EOFY) approaches, it’s crucial for property investors to get their affairs in order. Here are some essential steps and tips to help you prepare effectively and maximise your tax benefits.

1. Consult with Your Accountant

A knowledgeable accountant is invaluable for property investors. Your accountant should:

  • Understand your financial situation and advise on structuring your investments.
  • Clarify the tax implications of your property income and associated expenses.
  • Help you maximise your cash flow if your investment is negatively geared, ensuring you benefit from tax deductions throughout the year.

2. Organise Your Records

Maintaining thorough records is key to claiming tax benefits. Ensure you:

  • Keep receipts and documents in order.
  • Have a depreciation schedule prepared by a quantity surveyor, detailing all depreciable items in your property. A depreciation schedule from a registered quantity surveyor can save you significantly on taxes. It allows you to deduct the cost of depreciation on items such as:
    • Floors, appliances, blinds, carpets, furnishings, and renovations.

3. Consider Making Repairs

Repairs made to your property are fully tax-deductible in the year they are incurred. However, be aware of the distinction between repairs and improvements:

  • Repairs are immediate fixes and can be fully deducted.
  • Improvements (e.g., extensions, renovations) must be depreciated over time.

4. Regular Maintenance and Upgrades

Timing maintenance and upgrades close to EOFY can maximise your deductions:

  • Small upgrades like painting, new appliances, or installing air conditioning can enhance property value and appeal, providing potential deductions.

Tenants Urgent Repair

5. Time Your Transactions

The timing of your expenses and income matters:

  • Most expenses are deductible in the financial year they are incurred.
  • Income from renting or selling a property is counted in the year it is received. Selling before 30 June will count towards this year’s income, impacting your capital gains tax.

6. Prepay Next Year’s Expenses

To reduce your taxable income, consider prepaying some of next year’s expenses such as:

  • Interest on a fixed-rate home loan.
  • Rates, levies, and insurance premiums.

Consult your accountant to understand the criteria and benefits of prepaying expenses.

7. Track and Claim All Expenses for Tax Return

Ensure you claim all allowable expenses:

  • Maintenance costs, cleaning, garden upkeep, and tenant advertising.
  • Running costs like council and water rates.
  • Interest on investment-related loans and various insurances (landlord, building, contents, public liability).
  • Property management fees, body corporate fees, and capital works.

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