If you’re an Australian property investor, there are many factors to consider. Investing in rental property involves keeping your records straight from the beginning to ensure that your operations will run smoothly and in accordance with appropriate laws and guidelines.
Receipts are necessary when you own an investment property
You need evidence for when you make claims. These include the rental income and the deductible expenses that you pay for five years from the date that your tax return is lodged.
One of the many things to consider is income tax. Good record-keeping of receipts is necessary if you have an investment property. You need evidence for when you make claims. These include the rental income and the deductible expenses that you pay for five years from the date that your tax return is lodged. Records of the date and the price of the property are also necessary to know any capital gain or loss in case you need to sell the property. Record-keeping likewise includes details of repair and/or improvement costs.
As an Australian property investor, you can legally lower your tax bill. Here are some of the things that you can do:
Hold the property for one year before selling it
Make sure that you are the owner of the property for at least a year before putting it up for sale. If this is the case, you are entitled for a 50 percent discount on the rate of capital gains tax. In general, you will be required to pay the CGT on your rental property. If you lived in your property for a certain period of time then made it a rental property, you need to pay CGT for the time when you didn’t live in it.
Pay rental property expenses up to one year for immediate tax deduction
These expenses include body corporate fees, insurance, and interest. This prepayment must be for 12 months or less, and must end on or before the 30th of June. Of course, it’s important to check your tax status for that financial year to ensure that paying the property expenses in advance will give you the benefits of negatively gearing your property.
Claim all allowable deductions on your rental property
You can use an app to record all of your property-related expenses. The Australian Taxation Office has a free app that allows you to manage and tag receipts of your expenses for your tax return.
Property income tax is something that you need to deal with as an Australian property investor. Seek advice from a qualified individual so you can better understand the ins and outs of this tax type.
Got other ideas on property income tax in Australia? Share your insights in the comments section.