Effective Tips On How To Save Tax On Investment Property

Save Tax On Investment Property

Do you want to know how to save tax on an investment property? If you find it difficult to understand tax-related data or information, you may be missing out on a lot! Here’s a comprehensive guide for all of those who would definitely want to obtain tax deductions on their income. If you have been confused about what to do, this blog will help you put your worries to rest.

Capital Works Deductions

When you purchase a property, there are expenses that are a by-product of maintenance responsibilities. However, you can receive a deduction on renovation or structural improvement costs. You can claim capital works deduction by applying to the Australian Taxation Office (ATO). A standard error in judgment is claiming deductions on initial repairs. These repair costs are usually capital in nature and do not qualify for tax deductibility benefits. Capital works deduction claims are made for repair expenses over a period of 40 years. For further detailed information, you can visit the ATO’s official website.

Depreciating Assets

Although purchasing a depreciating asset is not applicable for a tax-deductible claim, it can qualify for a deduction over a while. Also, the more years you wait before making a claim, the depreciation costs become larger. This results in lower tax bills and taxable income. The ATO provides a depreciation pricing chart for transparency. However, you may calculate it yourself and claim the desired amount provided you can prove it and get it accepted. It is best to opt for expert advice to secure maximum tax benefits.

Interest Payments

You can avail of the 12-month rule opportunity to save up on tax on investment property. The rule allows taxpayers to prepay payments in order to receive an instant one-time tax deduction. If you had borrowed a fixed-rate loan, prepay your interests in the current fiscal year. This will let you claim a tax deduction in the next financial year when lodging the annual tax return report. Even certain service providers allow for a prepayment scope which can also aid in securing a discount. To know more about such tax deduction provisions, you can seek assistance from an expert property tax accountant or browse the ATO website.

Pay As You Go Withholding Variation

Do you have a negatively geared investment property? In simpler terms, it refers to a previously made property investment that is causing you a financial loss. In this case, it can be challenging to make ends meet. However, the PAYG Withholding Variation can help you sort this mess out effectively. Instead of receiving an enormous tax refund amount by the year-end, you can claim for a PAYG Withholding Variation. This means that your employer can withhold lesser taxes on your income and provide you with more cash. Thus, this strategy is beneficial to pay out debts immediately and create a financial balance.

Borrowing Costs

Another effective hack is to claim for borrowing expenses. This claim can be made on costs such as stamp duty on a mortgage, broker fees, mortgage insurance and a few others. One can avail of full deductions in the same year if the total deductible borrowing costs estimate to $100 or less. If you repay the loan before five years, you can claim for deductions in the same year. The deduction is calculated based on the balance amount of the borrowing costs.

Legislation Changes

Since the tax policies and concession provisions are subject to change almost every year, it is vital to stay updated. Being uninformed can disrupt your financial plans and strategies. The benefit you could avail of the preceding year may or may not be in effect the current year. If you are not updated, you may be unprepared, and this can cause you a lot of financial damage. Thus, consulting the ATO website before taking business decisions can help avoid confusions. Referring to the website from time to time can help you frame effective strategies. Make it a habit to never miss out on a new tax strategy!

Receipt Management

If you wish to claim deductions and enjoy tax benefits, your financial receipts must be in place. Since the ATO needs to inspect claims, receipts are required as evidence proof. To keep your financial records safe and recorded, you may hire a tax accountant. Accountants practice record-keeping for tracking financial transactions. Besides, the ATO makes it clear to have your receipts accurate and organized for claiming deductions. So, if you have just started on a business endeavor and were unknown to this, keep that receipt safe.

Cut down on CGT

Minimizing CGT is all about how to save tax on the sale of a property. You can keep an asset on hold for more than 12 months to avail a 50% discount on your Capital Gains Tax (CGT). You can also fully utilize CGT concessions if you are a small business owner. Taking advantage of such concessions can help you contribute the extra cash to your super fund to avail retirement benefits.

Hire an Expert Accountant

Hiring an experienced accountant can help you with accurate tax return reports, quick problem-solving and proper advice, contact Opulent Accountants today!

Leave a Reply



Nishant Kosambi
Nishant Kosambi
2 February 2023
Excellent work by Dayan, Chamie, Lihini and the entire team. They have always been very professional and helpful. They have taken care of my business and personal tax obligations for many years. They have also sought financial solutions for me. I am very happy with how thorough Dayan is with his work. Clear communication and regular follow-ups all the way. 5 stars for this gem of a person and his team.
Ajith Ratnarajah
Ajith Ratnarajah
6 November 2022
These guys are very professional. You get the best of both worlds of a personalised service from a company rather than from an individual accountant. Their processes are well established. I would strongly recommend Opulent for any small, big companies and high net worth individuals.
Da Bella
Da Bella
12 August 2022
I consider myself extremely luck to be introduced to Dayan and his team. I found the solution to my loan requirement in one meeting itself...Super efficient, friendly and humble....Opulent finance rocks!!
srikanth chintalapudi
srikanth chintalapudi
11 July 2022
Dayan and his team did it again!!! They're proactive and provided timely advice in the recent sale of my investment property. They're advice saved me a lot of $$. Dayan and his team have been assisting me for the last 10+ years and they're always a lifesaver. Highly recommend!
Chamith Subasinghe
Chamith Subasinghe
15 February 2022
The team at Opulent have been extremely helpful and resourceful in securing a home loan for me. The responses have always been quick and progress made quickly through the loan application process. The advice provided by Opulent is high quality and very useful, special call out to Ishara and Dayan who have been very knowledgeable, experienced and professional. I have recommended Opulent to my friends and they have had positive experiences as well. I would highly recommend giving Opulent a go!
Daniel C
Daniel C
26 December 2021
Highly recommend Opulent Accountants! I've been lucky enough to deal with Hasi, Dayan and Charlene and all three of them have been a great help. Thanks guys.
5 November 2021
Great Accountants and Mortgage Brokers. Prompt, Professional, Well-informed and Responsive.
Kesh Aryaratne
Kesh Aryaratne
11 October 2021
The team at Opulent are professional, accessible, friendly and most importantly prompt in getting matters sorted. I have had the pleasure in dealing with both Dayan and Hasi who have guided me throughout and have been extremely helpful in getting my complex tax matters sorted on time and in a professional manner. Great work guys.
Mukesh S
Mukesh S
29 September 2021
I was apprehensive to take the plunge into refinancing my loans. However Dayan and his team were very patient and made it a point to respond to all my queries and doubts . They must be leading busy lives themselves, however they were flexible and accommodative of my requests for meetings at close of business hours. Further I noticed that they are particular in their and the customer's paperwork. Along with Dayan, I'd like to call out the efforts put in by Ishara for ensuring a smooth transition. She has ben patient with my many queries and diligent in her handling of the paperwork. Thank you Dayan and team.