Saving Tax With Your Investment Property
The most popular way Australians reduce their Income tax is by having an Investment property.
Tax saving is a very crucial factor that can make or break your cash flow in investment property by far. Below is a simple guide that shares how investment property affects your tax return.
Most of the people think investment in real estate is expensive and is not something for them to desire. Well, it’s true but at the same time, it is manageable to fulfill your desire of investing in real estate if you know how you can save on your taxes and how it can help you increase your cash flow.
“Most of the people think investment in real estate is expensive and is not something for them to desire. Well, it’s true but at the same time, it is manageable to fulfill your desire of investing in real estate if you know how you can save on your taxes and how it can help you increase your cash flow.”
You can claim Tax return on the below items if you own investment property.
Interest and Loan costs –
All interest bank charges you against your investment property is tax-deductible.
For example, if you pay $15,000 interest on your investment loan and $300 in loan fees, both of these costs are deductible against your personal income tax, beware of the principal sum which is not tax-deductible.
Depreciation –
Depreciation alone can make property cash-rich if used wisely and by choosing the right type of property. It comes with the property and you don’t have to pay anything more to get the depreciation benefits, the only thing you need is a depreciation schedule that can be used by your accountant during tax filling.
If the property was built before 16 September 1987, you won’t be able to claim depreciation on the original construction costs. Similarly, you can’t claim depreciation deductions on renovations that took place before 27 February 1992.
Building structure, appliances, fitting, and fixtures all depreciate in value over time and the depreciation schedule will outline all these values in detail.
Accounting costs –
While most people use tax accountants to seek professional advice, few know that the fee paid to the accountant in relation to the investment property is tax-deductible and can save some of your tax.
There is a long list of tax deductions that you can make if you are an investor.
A few are mentioned below.
· Council rates
· Land tax
· Water rates
· Strata fees
· Rental advertising costs
· Repairs and maintenance
· Pest control
· Garden and maintenance
· Insurance
· Agent’s fees
· Stationery and phone costs
· Legal expenses
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