Prepare for EOFY: The Essentials for Investors

As the end of the financial year (EOFY) draws near, property investors need to get organised to ensure they get maximum benefits.

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 a must for property investors.

They 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.

We have a brilliant company we work with and are happy to refer you to them.

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 or renovations) must be depreciated over time, so the tax benefit is received more gradually.
  

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 your property's value and appeal while providing potential deductions.

Even simple jobs that are often overlooked, such as gutter cleaning, can be worthwhile.

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 and may impact your capital gains tax.

We can also help you plan your exit strategy if you're considering selling.

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

Ensure you claim all allowable expenses, including:

• Maintenance costs.
  
• Cleaning and garden upkeep.
  
• Tenant advertising.
  
• Council and water rates.
  
• Interest on investment-related loans.
  
• Landlord, building, contents and public liability insurance.
  
• Property management fees.
  
• Body corporate fees.
  
• Capital works deductions.
  

It is also important to know your property's market value when it first became a rental.

We can assist by providing a professional appraisal, which may help minimise future capital gains tax.