Buying an investment property can be a fantastic way to build wealth and secure your financial future. Navigating the tax implications of owning an investment property can get complicated if you do not stay on top of your finances. Stay on top of it all with our guide to saving on Investment Property taxes.
We have compiled some key tips for planning and strategic deductions that can help you save on taxes and generally improve your overall return on investment. Read on to learn how to leverage tax deductions to boost your returns on your Positive Income Property.
1. Claim All Eligible Investment Property Tax Deductions
- Loan interest: This is the interest you pay on your investment property loan
- Property depreciation: The gradual decline in value of your property and its fittings over time.
- Management fees: Fees paid to a property manager for handling tasks like finding tenants and maintaining the property.
- Council rates: Rates paid to your local council for essential services.
- Repairs and maintenance: Costs associated with general upkeep and repairs to the property.
Keeping detailed records of all your investment property expenses is essential. Receipts, invoices and bank statements will be crucial come tax time.
2. Understand Negative Gearing and Capital Gains Tax
Negative gearing: This occurs when your investment property expenses exceed the rental income you receive. While it can lead to a tax deduction in the short term, remember that negative gearing is a strategy best suited for the long term. Positive Income Properties can help you choose properties with strong rental yields to minimise negative gearing.
Capital gains tax: When you eventually sell your investment property for a profit, you’ll need to pay capital gains tax on the difference between the purchase price and the sale price. However, you can offset some of this tax by including relevant investment property tax deductions throughout your ownership period.
3. Consider a Tax Accountant
Consulting a qualified tax accountant specialising in property investment can be invaluable. They can help you understand the specific tax implications of your situation and ensure you’re claiming all the deductions you’re entitled to. An accountant can also advise on structuring your investment property loan optimally.
4. Stay Informed
Tax laws can change periodically. Staying informed about any relevant changes through the ATO website or consulting your financial adviser ensures you are maximising your deductions and minimising your tax burden.
By following these tips and partnering with Positive Income Properties, you can achieve a low-risk, high-return investment strategy. Our goal is to empower you with the knowledge and resources necessary to succeed in the investment property market. Securing a high-return, low-risk property is just the first step. We offer a wide range of investment properties and can guide you towards properties with strong rental yields and tax-deductible expenses.
Contact Positive Income Properties today and let’s get you started on your successful property investment journey.
Gil Elliott is the Managing Director and Founder of Positive Income Properties. Gil has a rich background in business consulting and property investment. All of these he gained in his nearly four decades of experience in the real estate and marketing industries.
