- There are some easy things property investors can do now that will pay off come July
- MCG Quantity Surveyors lays out five simple steps
There are five simple steps property investors can take in June to boost dividends in July, according to MCG Quantity Surveyors.
The managing director of MCG Mike Mortlock claims these easy tasks could be
undertaken in the coming weeks, bringing an almost immediate payback.
“Many property investors believe that come June, it’s too late to implement actions that will boost their tax position – but they’re dead wrong.
Mike Mortlock, managing director of MCG
“By making these moves now, you could see thousands of extra dollars come back
to you from the ATO just weeks later – but my advice is to act immediately.”
Mr Mortlock highlights the importance of being proactive in order to maximise one’s financial position.
“While national property values have risen strongly in recent months, there’s been precious little support from authorities for Aussie investors over the past year.
“The Federal Budget, delivered pretty much no relief for investors – so they need to take action themselves in order to boost their benefits before 30th June.”
1. Time to tackle the minor maintenance
It might be the paint touch-ups, the broken fence or the dead plants.
Whatever it is, stop putting off those easy repairs and maintenance that many have been building up during the year.
“There are often many small repair items needed on an investment, but because
they don’t materially affect its appeal or rentability, owners are inclined to put off
attending to them,” Mr Mortlock said.
He encourages property investors to act now, as the costs incurred in June are fully tax deductable come July.
2. Don’t wait – pay your loan interest in advance
For those who have the financial means available – paying loan interest in advance could be a brilliant way to get a tax return.
“Depending on your loan arrangements, paying a huge lump of interest in June can
provide a substantial write-off come July,” Mr Mortlock said.
“It’s a strategy few investors realise is open to them each financial year.
“Here’s my other pro tip: if you’ve redrawn equity from your investment property’s loan, make certain those funds have been used for investment purposes, or the ATO will take you to task.”
3. Renovation initiation
Property upgrades could be an excellent source of tax advantages.
Some reservations can be completed in time for a benefit this year.
“Making any addition to your investment will result in some great deductions, but not all are created equal.
“For example, adding new tiles will only get you 2.5 per cent of the cost as a deduction each financial year, so doing that in June means you only get one month’s worth of that amount.”
According to Mr Mortlock, there are smarter ways for investors to bring upgrade deductions forward.
“Install items worth $300 or less. This could include kitchen appliances, windows and curtains, air conditioners and other generally non-structural assets. As an example, installing a $280 ceiling fan means the amount is deducted straight away.
“Also choosing the right fixture will bring immediate relief. For example, if you install tiles worth $2,500, you’ll get $62.50 times the number of days in that financial year as a deduction. But change the tiles to carpet and it’s 10 times that amount as a 25 per cent deduction.
“Finally – consider installing equipment priced under $1,000 as some deduction rules make this type of outlay late in the financial year extremely lucrative in terms of tax.”
4. Ask the professionals
It’s time to give your property manager and accountant a call. Many property managers will keep a record of the tax-deductible repairs as part of an annual rental statement. This will be essential reading for your accountant.
“Not enough people use June as an opportunity to check in with their professional
advisors,” said Mr Mortlock.
“In addition, your property manager will provide advice on works they can coordinate in the coming weeks that will help improve your deductions by year’s end.”
Mr Mortlock said the other great thing about accountants and property managers is
their fees are also tax-deductible.
5. Consider a depreciation schedule
While these reports may cost a few hundred dollars, the gains could be in the thousands so utilising a depreciation schedule may be a very advantageous move.
Depreciation schedules prepared by qualified professionals can reveal highly beneficial tax-deductible depreciation to a property’s fixtures, fittings and finishes.
“It is extraordinary the number of investors who miss out on literally thousands of
dollars in benefit simply because they don’t get a depreciation schedule,” Mr Mortlock said.
“At MCG, we completed a study which revealed the average loss in deductions due
to investors simply taking too long to arrange for a depreciation schedule was a
“We even had one investor who waited almost 18 years to do a schedule and lost
$41,000 in tax breaks as a result.
“In fact, if you extrapolate our findings across the nation’s total investor population, Aussie landlords are potentially short $2.886 billion on their claimable losses.”