Landlords, it’s time to get ready for tax time.

Tax time is imminent and the reality is that many property investors in Australia are simply not ready.

There are a number of things that a landlord must be aware of so that they don’t come under the heavy scrutiny of the ATO when lodging tax returns and making accurate claims.

You should always seek advice from a tax specialist or accountant to minimise any risk to the legitimacy of your claims and also to maximise your return.

Here are a number of things to think about before you head into tax time.

Negative Gearing
The net loss generated by negative gearing can be offset against other income to reduce the tax payable. Landlords may be unaware that interest can only be claimed when the property is available for rent. So if your investment property is only rented out for 6 months of the year, you can’t claim the full 12 months interest.

Insurance
Usually, landlords can claim their landlord insurance premium as a tax deduction. Before tax time, it is well worthwhile that you check your insurance coverage. A standard home and contents insurance policy won’t cover landlords for the specific risks associated with property investing.

Depreciation
If you have not already done so, engage a quantity surveyor to assess your property for depreciation. A thorough assessment of your property features and appliances will give you more tax benefits from your depreciation over the next 30 years.

Expenses
Apartment or unit owners may be able to claim body corporate fees on or community title properties. Landlords who let a fully-furnished property, such as a holiday home, may be eligible to claim some of their rental income as a tax deduction.

Other expenses such as council rates, land taxes, water and sewerage charges might also be legitimate and claimable expenses.

Management Expenses
If you’re a self-managed landlord, you may be able to claim some of the costs of your home office.

If you engage the services of a property manager, their costs can be a deductible expense for landlords. They can also help reduce the burden at tax time by supporting relevant paperwork relating to your property.

When was the last time your property was valued?

*This article first appeared in the May 2018 Midland Express

 

Things have changed in the Kyneton real estate market. A lot, actually.

 

You may have bought your home 30 years ago or even 18 months ago, and the chances are that the valuation on your home is quite different to what you paid for it.

 

So what exactly is an valuation? A valuation is a calculated figure that includes an assessment of the land value and the improvements, taking into account the depreciation of the property since construction. It also includes sales comparison, and a breakdown of living areas, outdoor areas and car areas.

 

In short, it a valuation can also impact on important decisions such as refinancing, future borrowing and your current insurance position.

 

Let’s look at insurance for a moment. If you have a valuation of your property that is relevant to the time that you purchased the property, it is unlikely that your insurance covers that estimated actual cost to rebuild the building.

 

If you are an owner of a residential property including strata developments, or an owner or landlord, it is important that you obtain a valuation of your property to ensure at that you are covered for its actual cost to replace. Many people also forget that the cost of demolition needs to be factored into this.

 

If you are looking at re-financing your home mortgage to borrow for renovations of consolidation of other expenses or debts, it is equally as important that you get an accurate and current evaluation of your home in the current market place. If the value of your property has increased, the chances are the bank (particularly in this current climate of financial scrutiny) will finance you where you need to be.

 

If you’d like your property valued so you can ensure your insurance and borrowing capacity is relevant, head to jenniferpearce.com.au