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Investment properties are a strategic way to build wealth, but as an owner you have an opportunity to maximise the benefit by understanding the valuable tax-saving opportunities available. By understanding and applying (the correct) available deductions and strategies, you can significantly improve your financial returns.
Whether you’re just starting or already managing a portfolio, exploring these benefits can ensure your investment performs at its best.
With that in mind, we thought we’d create an overview to get you started before you speak with the Attune team about your investment property goals and subsequent tax opportunities…
As a property investor, you’re entitled to claim several common expenses to reduce your taxable income:
• Mortgage Interest: The interest portion of your loan repayments is deductible, providing substantial savings, especially early in the loan term.
• Council Rates and Insurance: Essential ownership costs like council fees and landlord insurance can also be claimed as deductions.
• Property Management Fees: If you use a property manager, fees for tenant placement, rent collection, and inspections are deductible, making outsourcing more affordable.
Understanding and claiming these deductions consistently ensures you’re not leaving money on the table and strengthens your financial position. Setting your structure up correctly from the start will go a long way in ensuring you’re eligible for deductions that fit within your strategy.
Beyond the obvious, there are lesser-known deductions that could add up:
• Depreciation on Fixtures and Fittings: Assets like appliances, blinds, and carpets lose value over time. A depreciation schedule, prepared by a quantity surveyor, allows you to claim this annual loss in value.
• Prepaid Expenses: If you’ve prepaid for repairs, services, or insurance, you may be able to claim the full amount within the current financial year, depending on timing.
• Advertising Costs: Any expenses associated with finding tenants, including online listings, signage, or agent fees, are deductible.
If you’re after advice on how these deductions might apply to your investment(s), chat to the Attune Advisory team and we can assist with implementing them.
The distinction between repairs and improvements has a major impact on your deductions:
• Repairs: Work that restores the property to its original state, such as fixing plumbing, repainting, or repairing an appliance, can be claimed immediately in the financial year the expense occurs.
• Improvements: Changes that enhance the property’s value, such as building a new deck or upgrading a kitchen, are capital expenses. These can only be claimed over time as part of the property’s depreciation.
Understanding this difference ensures accurate reporting and compliance while maximising your returns and once again, the Attune team can help you put together both current deductions and a depreciation schedule that assists with forecasting the benefits you’re receiving from your investment.
When selling your property, planning for CGT is essential to protect your profits:
• Holding Period: By holding the property for at least 12 months, you qualify for a 50% discount on the taxable gain, significantly reducing the tax burden.
• Improvement Records: Keep detailed records of renovations and improvements, as these costs can increase the property’s cost base and reduce your taxable capital gain.
Proactive CGT strategies allow you to retain more of your hard-earned profit.
Navigating the tax complexities of investment properties can be challenging, but expert advice makes all the difference. At Attune Advisory, we specialise in helping property owners unlock the full potential of their investments. From identifying deductions to long-term CGT planning, our tailored strategies ensure your portfolio works harder for you.
Ready to maximise your property’s performance? Contact Attune Advisory today on 1300 866 113 and take the next step toward achieving your financial goals.
