As we approach the end of the 2017 financial year, property investors should consider some measures to minimize the amount of tax that they pay and to prepare for the 2017/18 financial year.
We will outline some tips below and if you wish to discuss any of these items further please call us on 0249694699.
1. Prepayment of expenses
It would be prudent for property investors to consider prepaying expenses such as Council & Water rates, interest on loans, strata levies & Insurance if there is a perceived need to reduce taxable income and thus reduce your tax liability. You should review your personal tax circumstances to determine if the prepayment of expenses is appropriate for you.
2. Repairs and maintenance
Property investors who have a requirement to undertake major repairs on their investment property may consider bringing forward those repairs to the current year rather than delaying the work to the next year. The only issue you need to consider is to ensure that the outgoing is a repair and not an improvement. An improvement is not deductible immediately. If you require further information please contact us.
3. Quantity Surveyors Report depreciation
Where you have purchased a new investment property or undertaken major renovations on an investment property, a Quantity Surveyors (QS) report is essential. The QS report will detail the tax deductions available on the building construction costs as well as the equipment acquired. Maximising your tax deductions with a QS report is a great way to minimize your tax & improve your after tax cash flow.
4. Prepare an Income Tax Withholding Variation (ITWV)
Should you have negatively geared investment property, the loss generated from the investment can be offset against your other income, particularly salary. The reduction of your taxable income provides a reduction in your tax payable. The ITWV allows you to receive the tax benefits during the tax year rather than waiting until the end of the financial year. Receiving the tax benefits during the year provides for a better cash flow which in turn allows an investor to service the mortgage repayments and generally manage the investment. If you require help in preparing an ITWV, please contact us on 0249694699.
5. Capital Gains
Any capital gains realized during the financial year on the disposal of an investment asset can be offset against capital losses incurred during the financial year or in prior financial years. It should be noted that capital gains can only be offset against capital losses.
Tax payable on earnings during the financial can be reduced by making tax deductible superannuation contributions to a super fund prior to the 30th June 2017. Recent changes in superannuation legislation now allow for taxpayers to make contributions up to the maximum deductible level even if they are employed. You should review your circumstances to see if this strategy is appropriate for you.
Should you require any further information on the tips above call the team at The Garis Group on 0249694699.
Creating a beautiful financial future