Tax time tips for Melbourne property investors

3 min read

The financial year is drawing to a close, and with it comes the opportunity to take stock of your investment journey.

It's important to have all the information required when lodging your tax return as a property investor. This includes evidence of your rental property income and expenses, as you can claim a deduction for many of these costs. Capital gains tax may apply when you sell your rental property, so keep all records for the period you own the property and for 5 years from the date you sell it.

Follow these tips to transform tax time from a stressful hurdle into a strategic advantage:

Record keeping:

  • From receipts and invoices to bank statements and lease agreements, maintaining meticulous records for your investment property is paramount. This ensures a smooth and efficient tax preparation process.
  • Repairs vs. Depreciation: Know the difference – repairs are immediate fixes, while depreciation reflects the gradual decline in the value of the building and certain assets. Both are claimable, but they fall under different categories.

Maximise your deductible expenses:

  • Declare all rental income: Transparency is key. Be sure to declare all your rental income to avoid any surprises from the ATO.
  • Offset with approved expenses: The good news? You can claim a range of expenses against your rental income. This includes council rates, water rates, strata levies, property management fees, property insurance, interest on your investment loan, and borrowing costs associated with acquiring the property.
  • Don't forget depreciation: Claim depreciation on the building structure and eligible assets within the property. This valuable deduction can significantly reduce your taxable income.

Negative Gearing (if applicable):

  • If your rental income doesn't cover all your expenses, you might have a negatively geared property. This isn't necessarily bad news – you can potentially claim this net loss to offset your taxable income from other sources, potentially reducing your overall tax bill.

Seek expert guidance:

  • Melbourne boasts a wealth of qualified accountants who specialise in property investment. Consider consulting one to ensure you maximise deductions and file your tax return accurately. A good accountant can advise on tax strategies specific to your investment portfolio and financial goals, helping you achieve long-term success.
  • Partner with a Melbourne property specialist. A qualified property management team can handle Renter management and maintenance throughout the year and simplify tax time. They can provide consolidated documentation for accurate filing and maximise your claimable deductions. This streamlines the process and offers a valuable opportunity to assess your investment strategy and identify potential adjustments.

Stay informed:

Don't let tax time slow you down:

By following these tips and keeping meticulous records, you can streamline tax time and potentially claim significant deductions on your Melbourne investment property. Remember, this is general information, and seeking professional advice is always recommended.

Ready to conquer tax time with confidence?

If you need help with your tax return, or if you're looking to sell or change the management of your property, our expert team at Nelson Alexander can help. Contact us today for a confidential conversation.

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