As the financial year nears a close, RP Data's National Research Director Tim Lawless has outlined what to consider when filing your taxes.
In particular, he says it's the record keeping for the end of the financial year that is an absolute must. These details are generally broken down into three distinct areas: income, expenses and depreciation.
The tips from Lawless are listed below on these three areas and more.
"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 payments have been accounted for and that rental income amounts correspond with bank statements."
"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 benefit possible."
"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. An RP Data powered agent can provide you with all these details. 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 for 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."
Keep in mind, RP Data are not taxation advisers, accountants or financial planners. They recommend you seek independent professional advice and guidance when undertaking your end of financial year activities.