Don’t panic, yes the end of financial year is just around the corner, but I’ve got your back. It really doesn’t have to be as stressful and frantic as we all make it out to be. I’m here to help stop you freaking out and give you a few simple steps to get your EOFY sorted calmly, professionally, and promptly. It is important you understand how your agency’s EOFY process works, who is responsible for it, and what steps need to be taken to ensure it runs as smoothly as possible.
PREPARATION
Preparation is the key to a stress-free end of financial year, regardless of how many properties you own. At the end of June, your agency should issue you two statements: one for the end of month, and one for the financial year dating July 2020 – June 2021.
As we near the end of the month it may be a good idea to get an appraisal on your investment property. Regular checks on the market value of your property are important, for a number of reasons, including but not at all limited to:
- Ensuring market value rent is being achieved
- Ensuring your super funds financial accounts meet legal requirements
- Determining the value of assets to support a SMSF member’s pension
- Determining possible equity in the property
- Re-evaluation of your investment strategy
- Assist with Tax Depreciation
- Understanding your financial position
It is all well and good to be organised, but what actually can you claim on your investment properties?
· Interest – Be sure to only claim funds that are relevant to your investment properties, not the property you live in.
· Insurance – You can claim landlord, building, contents and public liability insurance that you have taken out on your investment property.
· Property Management Fees – You can claim the fees that you pay to your property management agency. Including advertising for tenants.
· Council and Water Rates
· Depreciation – You can claim depreciation based on a depreciation report or from individual assets purchased for the property. Like white goods and air conditioners.
· Capital Works – You can claim anything that increases the value of your investment.
· Ongoing Expenses – Keep track of all maintenance, repairs or improvements made to your property. Gardening and lawn mowing maintenance are also covered.
· Reasonable travel expenses to inspect your property
· Apartment and unit buyers can potentially claim against common areas
Expenses you cannot claim:
· Those relating to your personal use of the rental property
· Utility bills paid by the tenant
· Borrowing costs where you have borrowed against the equity in the investment property for private use
· Costs relating to the purchase or sale of the investment property
Remember many of the costs relating to the purchase or sale of the investment property can be included in the cost base. For this reason, it is important you keep detailed records of your spending from the beginning of your investment journey. Identifying all eligible costs may both reduce your capital gain or increase any capital loss which can be carried forward to apply to future capital gains.
To make taxation claims, you need to keep official documentation including receipts and bank statements. For the best advice contact your accountant or financial adviser direct.
BE ACROSS ALL COMMUNICATION
One of the most important steps is making sure you are across the process. You will need to know when you will receive your EOFY statement, how you can access it, who do you address any questions or concerns.
TIPS TO MAKING THE MOST OUT OF YOUR RETURN
1. Choose the right accountant
2. Engage a qualified Quantity Surveyor for a depreciation schedule – Fees are claimable
3. Keep records of everything relating to your investment
4. Understand capital gains and other tax terms
5. If you are considering selling make sure you have owned the property for more than 12 months
6. Conduct an end of financial review and ensure your investment strategy is still working for you financially
This information is general in nature and does not constitute financial advice, please seek professional advice from your professional adviser or accountant.
TAYLAH ANTONIOLLI – MARKETING & COMMUNICATIONS COORDINATOR
07 3202 3040
A go getter and doer, Taylah is a no excuses, get the job done kind of girl. With a strong work ethic and high attention to detail, Taylah is happy to help out wherever she can. Armed with a degree in business specialising in marketing and public relations Taylah brings fresh ideas and innovation to the iThink team.