If you’re anything like me, you’ll probably have discovered this week that your accountant is fully booked out for the next two months. So, despite your good intentions to be on top of your life admin, now you’ve found yourself with some extra time to get your house in order and properly prepare for this year’s tax deductions.
There’s been a lot of information floating around the internet about work from home expenses and other deductibles/tax offsets that the government has either extended or simplified for the 2020-2021 financial year. But as an investor one of the biggest make or break deductions that you can claim, and one that a lot of people fail to get right, is your tax depreciation schedule.
If you’ve purchased an investment property that was built after September 1987 or even if it was built before that but has been renovated, then you need to get a professional tax depreciation schedule done now!
Even if you’ve owned your investment property for a while you can still claim the depreciation going forward and have it backdated by two years.
Aside from the interest portion of your loan, your depreciation schedule is one of the largest tax deductions you can make as a residential investor. Which is why it’s important to have it done professionally and not just rely on the estimation that your tax accountant would provide.
If you do, you could be missing out on hundreds or thousands of dollars in deductions every year because your accountant is not physically inspecting your asset and therefore cannot accurately value your property.
However, the best tax depreciation specialists will also be registered tax agents and will therefore know exactly what you can and can’t claim in accordance with the guidelines of the ATO.
If you don’t know where to start you could check out the guys at Herron Todd White, they’ve been helping investors make the most of their assets for over 50 years! I’d recommend subscribing to their Month In Review too as it’s full of information on what’s happening right across the Australian market.
Another wonderful thing about having a professional depreciation schedule prepared and owning an investment property in general is that the tax deductions can actually put money back into your pocket each pay cycle instead of waiting for the end of every financial year. This is known as a PAYG withholding variation and while everyone’s circumstances are different, if you haven’t already you should discuss with your accountant how this could benefit you.
Potentially, it could open doors for you as an investor to continue acquiring assets by way of improving your cashflow. But if you’re not interested in owning more properties then it’s still extra cash in your hands each week to play with! Hello stock market!
On that note, if you’re looking at the tax you paid this past year and thinking, “wow, I’ve paid a lot” then it might be time to start investing or add to your portfolio.
So, give Clark Real Estate a call to discuss what kind of investment properties we have on the market now that could help improve your future cashflow and reduce your tax!