Here are five tax-effective strategies property investors can take advantage of in the lead up to June 30.
Claim for property depreciation
The majority of properties that generate income qualify for some level of depreciation. Property investors can claim division 43 capital works deduction and division 40 plant and equipment depreciation. The capital works deduction applies to items that are fixed to a property’s structure and includes renovations. The plant and equipment deduction relates to what you can claim for items within the property, such as curtains or blinds.
Use a quantity surveyor
Quantity surveyors can help prepare a depreciation schedule to help maximise an investor’s claim for depreciation. The cost of preparing this report is also tax deductible.
Negatively gear your property
Negative gearing involves generating tax losses which arise from tax deductible costs that are higher than investment income. Where a property owner’s deductible expenses are higher than the property’s annual rental income, the net rental loss can be applied to reduce the property owner’s taxable income.
Claim for advertising costs
Property investors can claim for the cost of finding tenants and persuading them to stay in their property. Direct (where the property investor advertised independently) and indirect (when an agent advertised on the investor’s behalf) advertising costs can be claimed.
Claim for miscellaneous costs
Investors can also claim for costs related to maintaining a safe, clean and pleasant environment. Examples include cleaning costs, gardening expenses, pest control costs and security patrol fees.