{"id":8404,"date":"2016-06-28T16:30:44","date_gmt":"2016-06-28T06:30:44","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8404"},"modified":"2016-06-28T16:30:44","modified_gmt":"2016-06-28T06:30:44","slug":"eofy-checklist-for-property-investors","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/eofy-checklist-for-property-investors\/","title":{"rendered":"EOFY checklist for property investors – John McGrath"},"content":{"rendered":"

 
\nIn his column in\u00a0Switzer<\/a>, John McGrath discusses\u00a0the list all property investors should follow before the\u00a0end of the financial year\u00a0<\/strong>.\u00a0<\/strong><\/p>\n

Here’s what he had to say:<\/h4>\n

With just a few days to go before the end of the financial year, now is the time for investors to attend to those small repairs and maintenance issues you\u2019ve been putting off.\u00a0\"mcgrath\"<\/a>
\nTax deductions are a crucial part of cash flow management with property investment.However to do this you must move quickly as June 30 is only a couple of days away.
\nYou may want to consider getting them done now so you can claim the cost in this tax year.
\nThey\u2019re not a reason to buy \u2013 so don\u2019t go purchasing a new property solely because of the depreciation or anything like that, but certainly take your deductions seriously because they can have a big impact on your bottom line and deducting everything you\u2019re allowed to deduct is part of the drill.
\nI also think the end of the financial year is a great time for investors to take stock of their investment\u2019s performance.
\nHow much income did you receive and how much did you spend on outgoings, including the mortgage?<\/strong>
\nRemember, you can claim a deduction for interest payments only, not principal payments (which is why most investors use interest-only loans).\"29207635_l\"
\nNext question. Is there new equity in the property that could be used for renovations or a deposit on your next investment?
\nIn markets like Sydney where there has been significant annual growth for four years, it\u2019s definitely worth asking your local agent what they think your property is now worth.
\nRemember, the new equity in a property might not be immediately accessible like your wages and rental income, but it\u2019s still money you\u2019ve earned over the year.
\nThe best part is you don\u2019t have to pay income tax on the equity and your bank will give you a big chunk of it (usually 80-90%) in new borrowings if that suits your purpose.
\nGiven it\u2019s that time of year, let\u2019s go over a few common questions about property investment expenses.<\/p>\n

What\u2019s the difference between repairs, maintenance and improvements?<\/h4>\n
    \n
  1. A repair\u00a0<\/strong>is usually partial and restores something to its original state, eg. repairing part of a fence by replacing two palings.\u00a0\"19383767<\/li>\n
  2. Maintenance\u00a0<\/strong>is work that prevents deterioration or fixes current deterioration eg. painting your property or oiling the garage door.<\/li>\n
  3. An improvement<\/strong>\u00a0makes something better than it was originally or provides something in a new and more valuable or desirable form. They generally improve the property\u2019s income production or expected life. For example, if you replace a crumbling timber carport with a brick lock-up garage, you are going beyond simply repairing the carport, you are replacing it with an improved feature.<\/li>\n<\/ol>\n

    What can I claim as an immediate deduction and what has to be depreciated?<\/h4>\n

    Generally speaking, you can claim an immediate deduction for repairs and maintenance as long as your property is being rented out.
    \nWith improvements, you can either claim a capital works deduction or depreciation, depending on the type of improvement.<\/p>\n

    What if I\u2019ve lost my receipts?<\/h4>\n

    If you paid with a credit card or EFTPOS, the ATO will accept bank statements as proof of purchase.<\/p>\n

    Can I do my own tax return?<\/h4>\n

    Sure but I don\u2019t recommend it.
    \nOne of two things will probably happen \u2013 at best, you\u2019ll make mistakes or forget some deductions that will result in you losing money; at worst you\u2019ll get fined by the ATO for your errors.
    \nGet yourself a great accountant, declare all your income and enjoy the peace of mind that your tax professional will identify every deduction you qualify for.
    \nAnd next year, you can claim a deduction for the accounting costs too.<\/p>\n

    EOFY Check List<\/h4>\n

    Examples of common immediate deductions:\u00a0\"tax_house_15_04\"<\/a><\/strong><\/p>\n