Sevensmartstrategiesto reducetaxableincome
Successfulpropertyinvestingoftenhingesonjusthow welllandlordsmanagetheirtaxes.So,iftheendofthe financialyearhasyoubreakingoutintoacoldsweat, thenitistimetoimplementsomesystemstokeepon topofpaperworkImportantly,takethetimetoexplore waystoreducetaxableincomeandmaximisereturns. Yourpropertymanagerandfinancialadvisormayalso havesomesuggestionsLet’slookatsomeofthemost commonstrategies
1.Deductibleexpenses
Itmaysurpriseyoujustwhatcanbedeductedasan expensewhenitcomestoyourinvestmentproperty
Thisincludesmortgageinterest,propertymanagement fees,bodycorporateandstratafees,councilratesand insurancepremiums,aswellasrepairsandmaintenance costsThereareseveralappsyoucanusetokeepa digitalrecordofexpenses.Orcreateyourownsystem–butmakesureitisorganisedandsecure
2.Depreciationofassets
Investorscanclaimalossinthevalueofthewearand tearonitems,suchasappliancesandfurnitureItis calculatedonthe‘effectivelife’andthecostoftheitem Youcanobtainadepreciationschedulefromthe AustralianTaxationOffice(ATO)oraquantitysurveyor. Recordsstartfromthetimetheitemispurchasedand mustbekeptforfiveyears
3.Homeofficeexpenses
Landlordswhomanagetheirportfoliofromtheirhome
officemaybeabletoclaimaportionoftheirutilitybills, homeinsuranceandmortgageinterestBesureto adheretoATOguidelines
4.Interest-onlyloans
Structuringloansasinterest-onlycanprovideshorttermreliefbyreducingmonthlymortgagepayments. Whileprincipalrepaymentsdonotcontributeto deductibleexpenses,interestpaymentsremaineligible fortaxdeductions,helpingtolowertaxableincome.
5.Repairsvs.improvements
Itisimportanttoknowthedifferencebetweenrepairs andcapitalexpensesforoptimisingtaxoutcomes Repairsaregenerallydeductibleintheyeartheyoccur, suchasfixingbrokenwindowsorreplacingpartofthe gutteringImprovements,suchasfloorcoverings, heatingoraddingbuilt-inwardrobes,maybesubjectto depreciationrules
6.Utilisenegativegearing
Negativegearinginvolvesoffsettingthelossincurred frompropertyexpensesagainstothertaxableincome, potentiallyresultinginataxrefundThisstrategyis especiallyvaluableforlandlordswithproperties generatingrentalincomebelowthetotalexpenses
7.Engageaprofessional
Seekingadvicefromaqualifiedtaxprofessionalor accountantwithexpertiseinAustralianproperty taxationisinvaluableTheycanprovidepersonalised guidance,ensurecompliancewithtaxlaws,andhelp identifyadditionalopportunitiesforreducingtaxable income
Aguidetosellingarental propertywithtenants
Sellingarentalpropertywithtenantscanfeel overwhelming,butitdoesn’thavetobewiththeright approach Somesimplestrategiescanmakethis processasstraightforwardandstress-free, importantlykeepingeveryonehappywhileprotecting yourowninterestsLet’stakealookatsomekeysteps: Canyousellapropertywithtenants?
Absolutely!Itisnotalwayspossibletogotomarketat thesametimealeaseisendingItalsooftenmakes financialsenseforinvestors,especiallyifyouhaveto makehomeloanrepayments.Additionally,other investorsoftenprefertopurchaseapropertythathas reliabletenants,and,insomecases,thiscanhelppush asaleovertheline
CanIkeepmytenantshappyandsellthe propertyatthesametime?
Theanswercanbea‘yes’ifyouarerespectfuland considerateoftheircircumstancesAlong-term tenantmaynotbehappyiftheyarefacingthesaleof their‘home’CommunicationiscrucialYoumustlet yourtenantsknowthatyouaregoingtosellbefore listingonthemarketThiswillalsoallowthemtoplan forunexpectedexpensesforremovalists,cleanersand utilityconnections
Arethereanyguidelinestofollow?
Everystateandterritoryhasdifferentlegislationwhen itcomestosellingatenantedpropertySo,besureyou talktoyourpropertymanagerabouthowitmay impactyourplans Forinstance,inNSW,ifyoudon’t tellatenantwhentheyaresigningtheleasethatthe propertyisgoingtobesold,theycanendthe agreementandmoveout
Canatenantedpropertystillbeinspected bybuyers?
Yes!However,ifthepropertyhastenants,youwill havelesscontroloverhowwellthepropertywillbe presentedMosttenantswilldotherightthingand ensureeverythingistidyandinreasonablecondition
Needextraspace?
Asalandlord,youcaneasilypreparefornewtenantsor manageexcessitemswithTAXIBOX Throughour partnerprogram,you’llhaveaccesstoasimple,stressfreestorageandmovingsolutiondelivereddirectlyto yourproperty Whetheryou’restoringfurniture, declutteringforrenovations,orin-betweentenants, TAXIBOXremovesthehassle noremovalists,trucks, ortripstostoragefacilitiesrequired
Inmoststatesandterritories, writtennoticemustbe providedtothetenantsatleast 24 hoursbeforethe property willbeshowntoapotentialbuyer CanIoffermytenantincentives?
Incentivesareagreatideatoencouragetenantsto keeptheproperty inspection-ready Italsoprovides somerelieffromany inconvenienceduringthe marketingcampaign Someideasincludetaking $50 to $100 offtheweekly rentinexchangeforthetenant tokeeptheproperty tidy Youcouldorganisea cleanerfortheday oftheinspection, leaveasmall thank yougift, suchasabox ofchocolates, orofferto provideareferenceforfuturerentals
If yourtenantsareunhappy about yourdecisionto sell, itmay bebesttoofferthemanearly releasefrom therentalagreement Whileitmay meanmissingout onincome, itdoescomewithbenefits Itwillallow you toaccesstheproperty andfix anythingthatneeds repairs, suchaspainting, newcarpetorsomesimple updatesthatcouldhelpsecureasale Speakwith your property managerabouthowmuchnoticeislegally requiredandthebestprocess
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