For real estate investors, making money through increased profits, as well as creating wealth, can be priorities. When it comes to tax time, there are steps you can take to maximize the benefits of your real estate investment. Leah Oliver of Minnik Chartered Accountants explains.

As the end of the financial year approaches, real estate investors are thinking about their taxation. In this article, I share tax tips and advice you may want to consider to help you maximize the tax benefits of your real estate investment.

20 tax tips for real estate investors

  1. Understand the performance of your real estate investments and get your data in order by maintaining a personal accounting file, using software such as Xero.
  2. Connect bank accounts in your accounting file, ensure your bank feeds start from July 1, update your accounting and reconcile all personal bank, card and credit accounts.
  3. Upload supporting documents to your accounting file and attach them to transactions, using an app like HubDoc for efficiency and paperless storage.
  4. Check the accuracy of the annual statements from the real estate agent and the online platform (e.g. Airbnb if you use it), to ensure that all income and applicable deductions are included.
  5. Obtain annual, semi-annual or quarterly statements of rates and levies from legal persons, if applicable, and upload them to your file.
  6. Gather loan statements for your properties with home loans, to calculate your potential interest and borrowing cost deductions.
  7. Download quarterly statements for municipal and water rates.
  8. Download annual statements for your property insurance policies.
  9. When buying or converting a primary place of residence into an investment property, be sure to get an appraisal of it, register the property with the state tax office, request a property tax notice annual report and include it in your accounting file. .
  10. Download invoices and receipts from gardeners, cleaners, pest controllers, etc. For vacation homes, include utility bills such as electricity and gas, as well as internet, restocking of supplies, and incidental costs of running the business.
  11. Upload copies of tradespeople’s invoices and clearly indicate whether the expenses are for repairs to an existing asset or structure or renovations, as this may have income tax or property tax implications. capital gains.
  12. For properties that are relatively new or renovated (i.e. within the last 10 years), arrange an amortization schedule with a quantity surveyor.
  13. Make sure office related deductions in relation to your properties are recorded on your file – these may include deductions for stationery, postage and telephone costs.
  14. Prepare details of unforeseen circumstances (eg legal disputes or natural disasters) and include details of any additional costs you have incurred as a result.
  15. Prepare details of other miscellaneous items not mentioned above – if you are unsure about a claim, give your accountant as much information as possible and seek their advice.
  16. For properties you purchased during the fiscal year, upload copies of signed sales contracts, settlement statements, and legal invoices for future capital gains tax purposes.
  17. For properties you purchased during the fiscal year, also include the date the property became ‘available to rent’ (i.e. the date you advertised it to tenants) .
  18. For properties you sold during the fiscal year, include copies of signed sales contracts, settlement statements and legal invoices from the point of sale and the original date of purchase, for tax purposes on capital gains.
  19. For properties you sold during the fiscal year, include a timeline of the life of the property, including details on factors such as the date ranges for which you used it as a place of residence principal in relation to as an investment property, periods of construction or renovation, periods of vacancy and unusual events. This information is, again, for capital gains tax purposes.
  20. Contact your accountant or adviser and arrange an annual tax plan for you and your family, to ensure you make wise investment decisions, access the tax savings you are entitled to during the year underway and you are planning the financial years ahead.

Main image source: Creativa Images/

Minnik’s professional group encompasses not only accounting and tax services, but also wealth strategy, finance and legal services. Leah is passionate about personal wealth counseling and helping business owners achieve financial freedom. You can follow her on LinkedIn.

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