You might be asking yourself, “How can I maximize the tax benefits from my rental properties this year?”

With the financial year rapidly approaching its end and the 2015 budget having been announced on May 12th, now is the perfect time to start planning for minimising your tax bill – by utilising your investment properties for the financial year ending on 30 June 2015.  See below for some tax tips:

1.Prepay Interest

If you are expecting that you will have a lower income in the 2016 financial year (due to factors such as extended maternity leave or redundancy), WM suggests prepaying interest for up to 12 months in advance. By paying this interest on your rental property before the end of the financial year, you will reduce your 2015 taxable income. 

2.Interest 

Interest deduction is a benefit often missed by investors who buy their rental properties through a house and land package.  You can claim interest on loans that have been taken out to purchase land, which is intended for the construction of a rental property.

3.Depreciation Report 

Depreciation is usually the second-biggest deduction available for investors – yet many people neglected to claim this when completing their tax return.  If the rental property was built after the 18^th of July 1985, WM suggests doing a depreciation report from a quantity surveyor.  The fee for preparing the depreciation report is also tax deductible. 

4. Assets costing less than $300

You generally get an immediate deduction for depreciating assets costing $300 or less, provided they are not part of a set.

5.Depreciation

If you have purchased depreciating assets costing more than $300, we suggest you to use the diminishing value method as to maximise rental property deductions in the first five years.

6.Low-Value Pooling

If the value of last year’s assets is under $1,000, WM recommends you to pool these assets in a low-value pool, where they can be depreciated at a more favourable “pool rate” of 37.5%.

7.Borrowing Expenses

If you have bought a new investment property this financial year and borrowed above 80% value of the property, WM recommends to claim borrowing expenses, including lender’s mortgage insurance, the loan establishment fee, stamp duty charged on your mortgage, the title search fee charged by your lenders and valuation fees required for loan approval, over five years or term of the loan unless those expenses are under $100.

8. PAYG Withholding Variation

If you have had a rental loss from your investment property and have struggled with cash flow in the last financial year, WM can help you to lodge a PAYG Withholding Variation Application. This means less tax and more money in your pocket.

9.Possible Deductions

You may be entitled to claim immediate deduction on the following rental property expenses in the income year you incur these expenses:

• pest control
• property agent’s fees and commission
• quantity surveyor’s fees
• secretarial and bookkeeping fees
• security patrol fees
• stationery and postage
• repairs & maintenance
• tax-related expenses
• telephone calls and rental
• travel expenses
• water rates
• electricity and gas
• gardening and lawn mowing
• in-house audio/video service charges
• insurance (building, contents, and landlord)
• land tax
• body corporate fees or strata fees
• cleaning
• bank charges
• council rates
• Advertising for tenant           

10.Get a Property Tax Specialist’s Advice

WM’s final tip is to get your advice from the right people.  Are you currently getting your property tax advice from general tax agents, bankers, brokers, real estate agents or quality surveyors?

This information is of a general nature only and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances before taking action.

To discuss your situation further, please call WM, Innovative Business Accounting & Property Tax Specialists on 08 7120 2384 or email us on support@wmbta.com.au