SPEND UP BIG NOW!

Around 2.22 million Australians should be looking forward to that time of the year when they potentially have the Australian Taxation Office (ATO) smile down on them.

Yes, tax time. If you are one of the two million-plus investors who collectively own around three and a quarter million investment properties, you may be happy that the end of this financial year is not that far away and that perhaps a handy chunk of your property management expenses may be reimbursed through tax returns.

Tax time might start on July 1 but now is the time for owners of investment properties to spend up. Quite simply put, the more you spend the more of a chance there is for a healthy refund.

There are strategies you can embark on. One is to pre-pay mortgage insurance before June 30. Mortgage repayments are the biggest deduction for many investors.

PAY YOUR LANDLORD INSURANCE.

Prepaying the interest on your investment loans may be an option to increase the current year rental deductions. Get cracking on repairs and maintenance. Spending money on getting these things done before June 30 means that the deduction can be recorded in tax returns from July 1, rather than waiting a year to make the claim. Amazingly, one of the best tax tactics is often not given enough attention. Many investors don’t maximise their tax refund through having a depreciation schedule or depreciation report.

A depreciation schedule outlines deductions that investors can make for the declining value of many items, including curtains, carpets and even a house’s bricks and mortar.

Garden gnomes and eight other unusual tax breaks:

/ Garden gnomes

/ Barbecues

/ Backyard fencing

/ Clotheslines

/ Sheds

/ Outdoor furniture

/ Solar lights

/ Wheelie bins

/ In-ground swimming pools

The in-ground pool is often one of the most valuable outdoor assets as it can attract a healthy first year tax deduction as well as additional deductions for associated filtration and chlorination systems.

While depreciation benefits tend to be higher for new properties and those that have been furnished, even older properties can have thousands of dollars’ worth of depreciation, and this is particularly the case when the home has been renovated.

Top tax deductions for landlords:

/ Mortgage interest

/ Depreciation

/ Maintenance and repairs

/ Landlord insurance

/ Water rates

/ Cleaning

/ Advertising

/ Management fees

/ Pest control

/ Gardening and lawn work

Online depreciation reports may cost investors between $200 and $300 while a more comprehensive report might cost more than $700; but this cost is tax-deductible in itself and you spend once for the life of your investment property.

BMT Tax Depreciation, one of the most well known in the industry, analysed ATO deprecation data and client deductions and found that three quarters of investors don’t make the most of depreciation.