With tax time fast approaching, now is the ideal opportunity to review your property investment and plan for the year ahead.
We recommend speaking to your accountant prior to June 30 about what measures can be undertaken to reduce your tax. For instance, do you have any imminent repairs, renovations, or major purchases like ovens or hot water systems that need replacing? Fixing or replacing these items could help reduce your tax for the current financial year.
Other things you should consider, if you have the spare cash flow, is what benefits you may get from pre-paying the interest portion of your investment loan?
Many investors, especially with higher than average incomes, can benefit from this to lower their taxable income – effectively bringing the tax savings forward one year. You should also regularly review your expenses associated with the property. This could include insurances, property management fees, owner’s corporation fees and any other expenses that you could possibly reduce and save money.
The most obvious of these is to speak to your mortgage broker about reviewing your loan and interest rate. There has been a lot of change in this space recently and if you have not reviewed your loan in the last 12 months you should certainly do that now – this could potentially save you hundreds of dollars per year.
For all other expenses, there is no reason we shouldn’t be reviewing them every two to three years. It’s best to shop around to ensure you get the best deal possible and not just go for the cheapest option, which might not be the most suitable for you.
Ensuring you are maximising the tax benefits of your investment property and reducing your expenses can free up extra cash flow to live a better and more comfortable lifestyle or potentially provide you with the opportunity to invest again!
Just make sure you keep all of your receipts to provide to your accountant so you can claim all that you can at tax time.
That’s it for today. If you have any questions on your property investment and tax savings, don’t hesitate to get in touch with your Relationship Manager