4 things every investor needs to do at tax time
The end of the financial year is fast-approaching, and with it comes a cornucopia of responsibilities and necessities. This is the time of year that you must account for all of your hard work and investment capital, giving you the opportunity to both pay and claim back some tax.
It can be a confusing period, especially if you are new to investing in Melbourne, but follow these four tips and you’ll find that tax time is less of a stress and more of a breeze.
The right accountant can make your investments much easier to manage.Invest in a good accountant
While it may be tempting to cut out the middle man and try to file your tax return yourself, the fact is that accountants go through specialist training for a reason. Even regular income tax can be complicated enough, but couple that with the additional rules that are included with residential property, and it becomes positively devilish. Insurance payouts, money received from the tenant for the purpose of repairs, and so on – these are just a few of the features that you might not know how to declare.
However, it isn’t just about ensuring you are tax compliant. A good property accountant can make sure you are claiming all the benefits you are entitled to as well. It’s more than just number-crunching with the right professional.
Get in touch with your property manager
Making life easier for the owner is part and parcel of the service.
Using a property management service has a multitude of benefits throughout the year: marketing your asset, finding tenants and mediating disputes, ensuring maintenance proceeds properly, and that’s just the beginning. Making life easier for the owner is part and parcel of the service, and that factor also comes to the fore during the end of financial year rush too.
Rather than having a series of receipts and invoices from a number of different individuals and companies, your property manager can provide you with all the necessary documentation to fill out your return accurately, as well as claim your benefits to their fullest extent. This makes tax easier, but also gives you the chance to get a complete look at how well your current property investment strategy is working – and if any changes are in order.
Don’t delay your submission
While the financial year officially ends on June 30, you actually have until October 31 to lodge your tax return. While that may seem like a long period of time to get your finances in order, in reality it is far better to get your taxes sorted sooner rather than later. Unexpected issues could crop up, making it difficult to meet the deadline, and should you miss this date, you can be fined $180 for every 28 days past the date.
Don’t put off filing your return, ensure that you are on top of your property investment finances and submit your return in a timely manner.
Tax time can become a serious headache without the right help.Appreciate depreciation
Many investors forget that the falls in value incurred to many permanent fixtures of your investment property can be claimed as a deduction, and the differences can be significant. BMT, for example, describes how a $400,000 townhouse can depreciate by $8,500 in the first year. By the end of the fifth year, this reaches $35,000.
All of that is capital that you can claim at the end of the financial year, and if you want to ensure your claims are accurate, you’ll have to make sure you are depreciating at the right rate.
This time of year is a flurry of activity, but with the right assistance, it doesn’t have to be a stressful one. Get in touch with the property team at Nelson Alexander for everything you need to know about buying, selling or managing your investment property.
