With the new financial year just starting, it’s a good time to start thinking about tax. Some people dread the mere mention of the word. But for property investors, tax can actually be positive.
One of the benefits of owning investment property is the many tax deductions you may be eligible to claim – potentially saving you thousands of dollars in tax each year.
One big tax deduction is the interest payments on your investment loan. Another is depreciation, which is calculated at 2.5 percent of the property value every year for 40 years – this really adds up and is the reason why many investors prefer to buy new properties.
Investors can also claim running costs such as rates, water, insurance and a few annual servicing costs, too. Once these three types of deductions are added up, the tax benefits can be substantial.
To claim any deductions, you must provide proof to the Tax Office. So make sure you always keep receipts, invoices and other documents relevant to your investment property. It might seem complicated, but your accountant does this every day of the week, so be sure to speak to them or a tax professional.
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Dwyer Property Investments recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.