Adelaide’s Leading Investment Property Tax Accountants
Are you looking to dive into property investing, and not sure how to navigate the tax side of things? Perhaps you’re a seasoned investor, and looking for a property accountant that can help you manage your tax requirements while maximizing the benefits available to you.
National Accounts are experienced property tax accountants with decades of experience in providing optimal return on our clients’ property investments. We’re committed to helping you reach your financial goals with your property portfolio at all stages of your investing journey.
How Does Owning an Investment Property Affect Your Taxes?
The income you receive from your investment property is classified as taxable income by the ATO, just like your salary and any other forms of income you receive.
But that doesn’t necessarily mean that if you own an investment property, you’ll pay more tax. In fact, investment properties come with a range of tax benefits that can save you money at tax time.
As the owner of an investment property, you have the ability to claim a tax deduction for many of the costs of owning and running your rental property. You can also use tax strategies such as depreciation and negative gearing to further reduce the amount of tax you actually pay on your income from all your combined sources.
Why You Need an Investment Property Tax Accountant
Finding the right tax accountant for your investment portfolio is extremely important for ensuring that you’re staying compliant with your tax obligations to the ATO, as well as making sure that you’re not missing out on any tax benefits available to you as a property investor.
Our investment property tax accountants can help you:
Structure your investment portfolio to fast-track your financial goals.
Improve your cash flow and maximize your tax returns.
Ensure you’re claiming all deductions you’re legally entitled to including depreciation and expenses related to running, improving, and managing your investment property.
Structure your debt optimally to enable you to purchase more investment properties.
Develop strategies that leverage your current position for better growth.
What Investment Property Expenses are Tax Deductible?
As an investment property owner, you are able to claim a variety of expenses related to your rental property come tax time.
These expenses can all be claimed against the income produced by the rental property, and can include –
Rent received during the tax year
Interest paid on the loan used to purchase the property
Lenders mortgage insurance (usually written off over 5 years)
Depreciation of the building value as well as various fittings and fixtures (if the building is under 25 years old)
Repairs made to the property during the period it was leased
Improvements to the property (these need to be depreciated rather than deducted in full)
Upkeep of the property such as cleaning, gardening and lawn mowing
Property agent fees including costs incurred advertising for tenants
Body corporate fees and council rates
Water and sewerage charges
As you can see, the costs of running an investment property can be offset against the income you receive from it, which reduces your tax.
However, it’s important to remember that these expenses may or may not be applicable to you depending on your circumstances. A tax accountant can look at your portfolio and give you a clear picture of what you can legally claim in your situation.
What Is Capital Gains Tax on Investment Property?
A capital gain or loss is the difference between what the property cost you to buy and improve (the cost base), and the amount you receive when selling it. Simply put – if you sell the house for a profit, you make a capital gain. If you lose money when you sell, that’s a capital loss.
Each time you sell an investment property, you must report your capital gain or loss on your tax return for that year, and pay a Capital Gains Tax (CGT) on any profit you make from the sale.
How To Avoid Capital Gains Tax on Investment Property in Australia
As the saying goes, the two things you can’t avoid in life are death and taxes. But while you cannot avoid CGT altogether, there are a few things that you can do to reduce the amount you will have to pay.
One way is to hold onto your investment property for at least 12 months. By doing this, you are entitled to claim a 50% discount on the capital tax for that property, meaning that only half of your capital gain would be subject to CGT at your marginal tax rate.
Another beneficial strategy for minimizing CGT is to make sure you include all applicable expenses when calculating your cost base at the time of sale.
The cost base used to calculate your capital gain includes more than just your loan amount. Your stamp duty, legal fees and agent’s selling commission can all be included in your cost base, reducing the tax you’ll pay on the profit you receive from the property’s sale.
With that in mind, it’s very important to keep good records of all these transactions so your CGT can be calculated accurately and you don’t miss out on any opportunities to reduce your tax owed when you sell.
Calculating CGT correctly can save you thousands of dollars in tax when you sell your property, so it’s a wise idea to seek assistance from a tax professional such as us here at National Accounts. It’s our business to know the things that you don’t, so we can help make your tax work better for you.
What Are The Tax Benefits of Owning an Investment Property?
If you are a property investor, there are a number of tax benefits that you can take advantage of.
Depreciation is one of the most obvious deductions, which can save you thousands of dollars a year on tax.
Additionally, using strategies like negative gearing, claiming interest on your mortgage, and using equity loans (which you don’t have to pay tax on) can help you free up more cash flow to expand your portfolio faster and easier.
That being said, investment property accounting can get complicated quickly if you don’t know what you’re doing, but there are plenty of benefits available to property investors that get the right advice.
Get in Touch with our Investment Property Accountants Today!
The team at National Accounts have years of experience in helping Australian property investors structure their portfolio for maximum tax benefits.
If you’re looking for expert advice on growing your wealth through property, our trusted property investing tax accountants can provide the right strategies for hitting your goals faster.