3 Top Tax Tips to Help You Navigate Tax Time

As tax season approaches, it’s crucial for investment property owners to prepare accurate tax returns to maximise returns. Leveraging their expertise, Wealth Street has compiled its top tax tips* for property investors to streamline the preparation process.

Keeping records simplifies tax time

Maintain records throughout property ownership to avoid overpaying taxes if you sell or rent the property.

When investing, from purchasing to owning and ultimately selling, it’s important to maintain comprehensive records. These records are essential, especially for determining whether you are subject to capital gains tax upon the sale of an income-generating property.

Buying

Records to keep when you buy include:

• contract of purchase
• settlement statement
• conveyancing documents
• loan documents
• costs to buy the property
• borrowing expenses

Owning

Records to keep during ownership include:

• proof of earned rental income
• all your expenses
• periods of private use by you or your friends
• periods the property is used as your main residence
• loan documents if you refinance your property
• efforts to rent the property out
• capital improvements
• depreciating assets

Selling

Records you need when you sell include:

• contract of sale
• conveyancing documents
• sale of property fees
• how you calculated your capital gain or loss

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3 simple steps to prepare for your return

1   Note down all income when you receive it

If tenants pay rent to a real estate agent or property manager who deducts fees before forwarding the payment to you, report the gross amount (before any deductions) in your tax return.

Rental income includes:

• Short-term rentals (e.g., holiday homes)
• Renting out part of your primary residence
• Insurance payouts
• Retained rental bond money

 

2   Accurately record your expenses

• Eligibility– Only claim expenses for periods directly related to earning assessable income.
• Timing – Some expenses must be claimed over several years: borrowing expenses, capital expenditure and works, improvements and renovations, capital allowance, and depreciating assets
• Apportionment – apportion your claim where:
  • your property was not used as a rental for part of the year
  • only part of your property was rented out
  • you used the property or kept it vacant for yourself
  • you rented it at below-market rates.

Report your income and expenses proportionate to your share of the investment.

 

3   Keep records to prove it all

You should keep records of all income and expenses relating to your rental property for 5 years, as well as purchase and sale records.

The Wealth Street team are here to help you navigate tax time. Without proper strategies, many Australians face significant tax issues. With Wealth Street’s guidance, you can minimise your tax liability and benefit from strategic property investing to improve your financial position.

Disclaimer: Tips provided are general statements. Please seek professional tax accounting advice.