Tax Tips for Property Investors
Want to hear Aaron's Brain explode as he tries to discuss something he knows very little about on a Podcast???? Then this episode is for you.....
Want to hear Aaron's Brain explode as he tries to discuss something he knows very little about on a Podcast???? Then this episode is for you.....
Episode: | EP85
Show Topic: | Tax Tips for Property Investors
Cast: | Aaron Horne, Patrick Berry & John McGregor
Show Length: | 20-30 Minutes
Date/time: | 30/06/2021 @ 8:45am
Location: | 4one4 Real Estate - 414 Main Road, Glenorchy
End of the financial year: 30th of June
Start date on processing of 2020-21 tax returns: 7th of July
In March 2020, Australian Taxation Office (ATO) Commissioner Chris Jordan revealed that an audit of property investors found errors in just shy of nine out of every ten returns reviewed.According to the ATO’s website, among the common errors made by rental property owners “that concern us” were:
(1) Claiming deductions for properties that are not genuinely available for rent,
(2) Claiming deductions for loan interest expenses when a portion of the loan was used for private purposes
(3) Incorrect categorisation of capital works and capital allowances
(4) Not having records to substantiate income received and deductions claimed
(5) Incorrectly apportioned claims for interest deductions
Tax Return Details: A tax return is a form you complete online, on paper or get a tax agent to help you with, that tells (1) how much money (income) you earn and (2) if you are claiming any deductions.
This information is used to check if you: (1) have paid enough tax or too much, (2) need to pay the Medicare levy or surcharge, (3) can get any tax offsets (for example, the low and middle income tax offsets).
If you pay more tax than you need to, ATO will refund the extra amount to you (this is known as a tax refund). If you don't pay enough tax then you may receive a tax bill.Reasons to Lodge Your Tax Return:had any tax taken out (withheld) from income you receivehad $1 or more of foreign incomeare a liable or recipient parent under a child support assessmenthad business or investment incomeare leaving Australia and have a study or training support loan
Some Important Points: “Residential property investors can claim a range of expenses, just as long as they have appropriate documentation and receipts”
Deductible expenses:
- interest on the mortgage
- property management fees - repairs and maintenance
- providing renovations/ enhancing the property
“If you did have a tenant that was unable to pay you for a length of time, then you’re likely to have a much bigger tax write off.”
(For more information, especially on the detailed processes, advise the listeners to visit www.ato.gov.au)
The status of your property can determine your tax concessions
- Before you file your taxes, understand the status of the properties in your portfolio.
- If you’re not currently renting your property to anyone, ask yourself – is your property available for rent? As this can impact how tax affects it.
Make sure all repairs, improvements, and construction costs are recorded properly- Keep a track of all the expenses and investments you’ve made on each of your properties, as these may allow for some tax dedications.- you can claim a 2.5% deduction of the construction costs for 40 years from the date when the construction was completed-if you paid for initial repair after purchasing a property or had to fix damages that resulted from renting out your property, you can claim deductions for the cost.
Take note of your capital gains and losses- Your capital gains or capital losses refer to the difference in dollar value between when you bought and improved a property to what you receive upon selling that property. (these can affect your deductions)
-If you make a capital gain, you must include the gain in the income year that it was acquired. On the other hand, a capital loss can be carried forward and be deducted from capital gains in later years.
Organise your records
-Whether you’re a buyer, an owner, or a seller, keeping your documents organised during the entire year instead of trying to source them all when tax time approaches can be stressful, and you may even miss some. -Try scanning all transaction receipts so you could keep them in one place
Ask for an expert’s help-The first person to start with is a quality tax accountant as they can provide more specific advice that’s suited to your circumstances and financial goals.
Episode: | EP85
Show Topic: | Tax Tips for Property Investors
Cast: | Aaron Horne, Patrick Berry & John McGregor
Show Length: | 20-30 Minutes
Date/time: | 30/06/2021 @ 8:45am
Location: | 4one4 Real Estate - 414 Main Road, Glenorchy
End of the financial year: 30th of June
Start date on processing of 2020-21 tax returns: 7th of July
In March 2020, Australian Taxation Office (ATO) Commissioner Chris Jordan revealed that an audit of property investors found errors in just shy of nine out of every ten returns reviewed.According to the ATO’s website, among the common errors made by rental property owners “that concern us” were:
(1) Claiming deductions for properties that are not genuinely available for rent,
(2) Claiming deductions for loan interest expenses when a portion of the loan was used for private purposes
(3) Incorrect categorisation of capital works and capital allowances
(4) Not having records to substantiate income received and deductions claimed
(5) Incorrectly apportioned claims for interest deductions
Tax Return Details: A tax return is a form you complete online, on paper or get a tax agent to help you with, that tells (1) how much money (income) you earn and (2) if you are claiming any deductions.
This information is used to check if you: (1) have paid enough tax or too much, (2) need to pay the Medicare levy or surcharge, (3) can get any tax offsets (for example, the low and middle income tax offsets).
If you pay more tax than you need to, ATO will refund the extra amount to you (this is known as a tax refund). If you don't pay enough tax then you may receive a tax bill.Reasons to Lodge Your Tax Return:had any tax taken out (withheld) from income you receivehad $1 or more of foreign incomeare a liable or recipient parent under a child support assessmenthad business or investment incomeare leaving Australia and have a study or training support loan
Some Important Points: “Residential property investors can claim a range of expenses, just as long as they have appropriate documentation and receipts”
Deductible expenses:
- interest on the mortgage
- property management fees - repairs and maintenance
- providing renovations/ enhancing the property
“If you did have a tenant that was unable to pay you for a length of time, then you’re likely to have a much bigger tax write off.”
(For more information, especially on the detailed processes, advise the listeners to visit www.ato.gov.au)
The status of your property can determine your tax concessions
- Before you file your taxes, understand the status of the properties in your portfolio.
- If you’re not currently renting your property to anyone, ask yourself – is your property available for rent? As this can impact how tax affects it.
Make sure all repairs, improvements, and construction costs are recorded properly- Keep a track of all the expenses and investments you’ve made on each of your properties, as these may allow for some tax dedications.- you can claim a 2.5% deduction of the construction costs for 40 years from the date when the construction was completed-if you paid for initial repair after purchasing a property or had to fix damages that resulted from renting out your property, you can claim deductions for the cost.
Take note of your capital gains and losses- Your capital gains or capital losses refer to the difference in dollar value between when you bought and improved a property to what you receive upon selling that property. (these can affect your deductions)
-If you make a capital gain, you must include the gain in the income year that it was acquired. On the other hand, a capital loss can be carried forward and be deducted from capital gains in later years.
Organise your records
-Whether you’re a buyer, an owner, or a seller, keeping your documents organised during the entire year instead of trying to source them all when tax time approaches can be stressful, and you may even miss some. -Try scanning all transaction receipts so you could keep them in one place
Ask for an expert’s help-The first person to start with is a quality tax accountant as they can provide more specific advice that’s suited to your circumstances and financial goals.