A negatively geared rental property is a great way to reduce your tax, but some do not take full advantage of the tax deductions available. I have compiled a list of seven ways to maximise your deductions and get the most out of your property:
- Try and arrange an interest only loan on your rental property. If you have surplus cash you are best to pay down non-deductible debts not related to the property, such as home loans, credit cards, personal loans etc.
- You can claim depreciation on a property, but this is something that very few people actually do. A quantity surveyor can produce a report which allows you to claim depreciation. This is such an effective tax deduction because you are not out of pocket for depreciation expenses.
- Keep a folder where you hold all your receipts once paid. This means you will not forget about the rates notice, or the times you had the lawns mowed, as the receipt will be in the folder.
- Every dollar counts, even if you spend $1 on a washer from the hardware store to fix a leaking sink keep the receipt, it all adds up.
- Keeping with the theme of “every dollar counts” make a log of every time you phone or post items to your estate agent or tenant, these items can add up.
- If you are making a repair to the property, please consult us before you go ahead with it. Some items may be classed as improvements and therefore be depreciated over its effective life, rather than written off in the year the expense was incurred. Did you know that replacing damaged polished floors with carpet would normally be classed as an improvement and make it depreciable rather than a straight out tax deduction for repairs?
- Keep a log book of the times you travel to see your rental property. You should be able to claim this as a deduction. This deduction may have to be apportioned if part of your travel is for a holiday.
This is not an exhaustive list, but it can help you get the most out of your rental property. Always remember, if you are making any decisions and you are not sure if it will be deductible, call your accountant to discuss.
Article Written by Paul Wineberg
Paul is a member of the Institute of Chartered Accountants
and a Director of South East Accounting.