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

Quote

captcha

Moumita Ghosh
Moumita Ghosh
2020-11-18
Verified review
We've been meeting Dayan for years now and he is great with his advice and is very knowledgeable and pragmatic. We recently used his services to get the home loan for our house and he and his team went above and beyond to get us the best possible deal. Ishara in his team was super communicative and responsive in following through and made the process very easy for us. Highly recommend them!
Cara Neela
Cara Neela
2020-10-24
Verified review
Dayan and Hasi are wonderful, wouldn’t hesitate to recommend them! They went through all with a fine tooth comb to ensure all was correct. Thanks to you both and the Opulent team!
Jason Barry
Jason Barry
2020-09-29
Verified review
I was looking for a different accountant and was recommended to Opulent Accountants. I have been blown away with there service. I wish I moved accountant sooner. Platinum Plumbing Enterprises P/L
Afshin Koohestani
Afshin Koohestani
2020-09-10
Verified review
Uditha Illeperuma
Uditha Illeperuma
2020-09-08
Verified review
Opulent Finance gave professional advice for my unique home loan requirement. They respond quickly with the proper information. The process was smooth and I felt comfortable to deal with the team. The team is friendly and professional to deal with. Highly recommended for any one looking for finance.
Dinesh Fernando
Dinesh Fernando
2020-09-03
Verified review
Very happy with the service provided in getting my tax returns done. Mr. Dayan is very helpful and professional and has extensive knowledge in his field of expertise. Highly recommend if you are looking for a hassle free and prompt service.
Ronald Turner
Ronald Turner
2020-07-16
Verified review
Opulent were absolutely fantastic to deal with, they are competitively priced and incredibly proactive and friendly. For me I have been much better off using their fantastic services as opposed to doing tax returns myself. Sum was amazing, incredibly knowledgable and super friendlyI'll certainly be back with Opulent next year
Milinda Wickramasinghe
Milinda Wickramasinghe
2020-07-05
Verified review
Opulent team has been fantastic and it has been truly a pleasure dealing with the team for more than 10 years. Dayan and Ishara have gone above and beyond to assist and communicated with me even when I was overseas. Excellent service has being provided in a professional and timely manner. I would highly recommend the team.
Chami Ranaweera
Chami Ranaweera
2020-04-28
Verified review
I have been working with Dayan last 9 years. All of my loans, refinance and tax are done through Opulent.Dayan and his team including Ishara are very helpful and easy to deal.
Edmund Lobo
Edmund Lobo
2019-12-02
Verified review
We were new entrants to the cattle farming scene. All the rules and regulations surrounding primary production can be very confusing. The team at Opulent Accountants walked us through all the steps, set up the necessary ABNs and Company / Trust accounts, filed the related pending BAS and Tax returns, and is currently keeping us up-to-date with all ATO related transactions. We recommend them highly to all.