End of financial year falls on this coming Tuesday 30 June, and there is still time to make sure you are maximising tax strategies for your investment properties.
The end of the financial year is nearly here, and for any investor that is yet to get themselves sorted, there is still a little bit of time left. Here are some priorities for property investors ahead of the new financial year:
Munzurul Khan, principal of Keshab Charted Accountants, said that from a property investor’s point of view, making sure all your bills are paid off before 30 June can mean there is more you are able to deduct against the current financial year.
These can range from repairs like painting or hot water systems being fixed, council rates, water rates, insurances – all of these are deductible if paid before 30 June, he said.
2. Annual depreciation
In addition to bills, Mr Khan said that now is an ideal time to get a depreciation report, ahead of Sunday’s deadline.
“If there is a quantity surveyor’s report, it’s required as a depreciation for your property, then I would much rather pay that quantity surveyor’s invoice [before] the 30th of June, and that means it will also be deductible before the 30th of June,” he said.
If there is anything that can be paid before 30 June, doing so could mean more tax deductions.
“[An] example of prepayments is interest as an example that you can pay up to, say 12 months of interest, in advance, if your… bank allows you to. Similarly, let’s say, insurance, that insurance payment… you can also pay it in advance,” he said.
“Whether it is applicable in your circumstances or not, it depends on purely your financial circumstances, individual financial circumstances, and you must run that through with your accountant before you finalise that.”
4. Timing of a sale
If an investor is looking to sell a property right up until 30 June, Mr Khan said there are still some moves investors can take to maximise their position and tax strategy.
“If someone is [in the process] of selling a particular investment property… if there is a choice that the contract becomes exchanged unconditionally, say, after 30th of June as opposed as before 30th of June, there may be an interest to push it after 30th of June,” he said.
“This is simply because your capital gains tax is not going to be applicable for one additional year,” he said.
He stressed this is applicable on a case-by-case basis only.
Lastly, Mr Khan said that property investors “must, must, must speak to your accountant before the end of the financial year”.
By letting them know what you have done, he said accountants can provide other suggestions to maximising the time that you have before and after the end of the financial year, as while advice is always helpful, each investor is their own individual and as such has their own individual circumstances to deal with.