| Tax Tips for Property Owners |
The Real Estate Institute of Australia (REIA) President David Airey states that record keeping for the end of the financial year is an absolute must. These details are broken down into three areas - income, expenses and depreciation.
Please see the tips below on these areas.
Income
"Income related to the investment property is probably the simplest area to keep track because there is generally only one revenue stream for each property: rental income. A good property manager will provide a concise summary of rental payments received over the last financial year. Investors should ensure all rental income amounts correspond with bank statements."
Expenses
"Expenses can be somewhat more complex, as it involves a (very) wide variety of items. It is important to ensure all of the claimable expenses are included as part of the end of year assessment on the property in order to obtain the greatest tax benefits possible.'
Depreciation
"Depreciation refers to normal 'wear and tear' to the asset, capital works and other depreciable items such as fixtures, fittings and appliances. The depreciation schedule is one of the most important documents relating to an investment property. For investors it is best practice to engage a quantity surveyor before the property is leased, in order to have a complete and accurate depreciation schedule in place. If you are seeking to claim depreciation on improvements or construction work, but don't have receipts, you will need a valuation report on the property."
Property Purchased in '09 Financial Year
"If the property was purchased in the latest financial year, the tax office will require details of the property including the purchase date, settlement date and purchase price. Other purchase documentation will include paperwork relating to the mortgage (borrowing and set up costs of the loan, stamp duty on the mortgage and government charges) and the date the property was made available to rent."
"The end of financial year is also a timely occasion to update the value of your investment property or portfolio of properties. A computer generated valuation can provide a cost effective valuation of your assets quickly and accurately. Understanding whether your asset has gone up, down or sideways in value can provide a good indication of how much equity is available within your investment portfolio; a great launch pad for future investing in the new financial year.'
Source: www.rpdata.com
Please keep in mind that it is always best to seek independent professional advice when undertaking your end of financial year activities
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