Have you spoken to your accountant recently? If not, stop what you’re doing and set a meeting up ASAP. Tax time is almost here and to make the most of the financial year that has been, it pays to get organised. There’s only five weeks to go!
What can you do to get ready? Firstly, gather your documents. Have them all ready and in the one place to make it easier to answer your accountant or financial advisor’s questions.
- List your expenses
- Organise your deductions
- Pre-pay interest on your investment loan
- Seek help from financial experts
The interest charged against the loan on your investment is claimable come tax time, which is why it’s important to get in early to make sure everything is included come time to lodge. For interest to be claimed, the property must be either rented, or available for rent throughout the year you are claiming for. Periods where the property was not in a state to be rented (i.e. being renovated or unsafe in anyway) are not claimable.
Interest on the loan can be claimed provided you have used the loan to purchase the rental property, purchase a depreciating asset for the property, completed repairs to the property and/or finance renovations. If interest has been pre-paid, you may be eligible to claim up to 12 months in advance.
If you have used the loan to purchase a property as well as another non-property related expense, you can only claim the interest on the portion of loan against the property.
You can’t claim for any period you used the property for private purposes, regardless of the amount of time it was used privately. If you are ahead on your loan repayments and choose to redraw, you are not able to claim interest on this.
Remember, when it comes to preparing for tax time, include all income you receive including short term, income from insurance payouts and retain rental bond; ensure you’re getting your expenses right; and make sure your record keeping is up to date.
It is important to get the right advice for your circumstances and your type of investment. Ensure you seek help from your financial advisor and/or accountant to make sure you’re not short changed this EOFY.
