National society MCG Quantity Surveyors has identified five steps real estate investors can take immediately to help provide a much-needed tax refund increase during these difficult economic times.
Mike Mortlock, managing director of MCG, said these tasks could ease the burden on investors while improving the value of their property.
“If real estate investors intended to take some of these actions on their investment, but hadn’t had time to do them yet, my suggestion is that they tackle it immediately,” he said. declared.
“Doing these easy steps now will maximize your tax returns, a much-needed boost given the challenges of the rising cost of living.”
Mr Mortlock said rising interest rates, cost of living pressures and rising construction costs would be reasons why investors should learn about their EOFY finances.
“Our research shows that investors are becoming more cautious about their financial arrangements, and their level of engagement will only increase as fiscal pressures force us all to look for ways to maximize our bank balances,” he said. -he declares.
Tackle tedious repairs and maintenance
Mr Mortlock said minor repairs and maintenance carried out now will be due immediately.
“Our company’s latest 1000 Assets report shows that approximately one-third of all investment properties receive post-purchase renovations, with an average expenditure of approximately $25,000 to $30,000 per property,” a- he declared.
But even small jobs can bring a benefit.
“I’m talking about those minor works that you have deferred, any repair, no matter how small, entitles you to claim the cost of the materials used to deal with it,” he said.
“In addition, labor costs are claimable if you use a contractor. Work may include landscaping, something landlords may be able to do themselves with permission from the tenant.
“Now is the time to act because all expenses you incur in June are 100% deductible in July.”
Pay the interest on your loan in advance
Mr Mortlock said in 2022 that if you could afford to pay your annual interest bill in advance, that should be considered.
“Australians have managed to increase their savings throughout the pandemic with increases in their clearing accounts and savings,” he said.
“I would suggest devoting some of that treasure chest to prepaying your interest bill for the coming year, the amount you pay is immediately recoverable on your 2020/21 tax return.”
Get an amortization plan
Depreciation schedules prepared by duly qualified professionals allocate extremely advantageous tax-deductible depreciation to the fixtures, fittings and finishes of your property.
“If you haven’t organized an amortization plan yet, then get started today!” said Mr. Mortlock.
“Fortunately, investors are increasingly aware of their benefits.
“Our latest 1000 Assets report found that the time from payment to ordering a calendar fell to around eight months in 2022, more than half the time it was in 2016.
“For just a few hundred dollars, an amortization schedule can bring homeowners thousands, that’s an incredible return on investment.”
Buy items for your property
While it may be difficult to have items fully installed before the end of the year, there is nothing stopping landlords from purchasing freestanding items that contribute to the rental return.
“Look to buy items that are self-contained or can be installed quickly,” Mortlock said.
“Maybe it’s about selecting light fixtures or blinds this weekend and putting them in place.
“You could choose rugs or even prepay for tiles and carpeting.
“You can also buy things like potted plants and other garden ornaments, or floor lamps, appliances like a new chest freezer.
“All things that will be used by the tenant, contribute to increase the rent and can be deductible.”
Contact your advisors
‘If you haven’t yet registered with your property advisors, you should do so before the end of the month,’ Mr Mortlock said.
Mr Mortlock also said property managers keep a tally of deductible repairs and upgrades as part of their annual rental statement, and this will need to be read by your accountant.
“In addition, your property manager will provide advice on work they can coordinate in the coming week to help you improve your deductions by the end of the year,” he said.
Mr Mortlock said the other advantage of professionals is that their fees are tax deductible.
“Don’t forget to include these business expenses on your tax return this year.”