Property investors know that if they want to maximise their returns, tax time is the most crucial time of year. It pays to have the right team on your side to make the most of your rental output. At Blackburne Mortgage Broking we are not accounting experts, but we know a team who are.

We have asked Matt Hodges, Accountant and Associate Director from Danpalo Group to give us his top tax time tips for maximising your rental output.

1. Putting your investment to work

Claiming a deduction for a decline in the value of your building over its life is one of the largest tax deductions you can claim (behind interest). If you are purchasing a property with a recent build date, a tax depreciation report ensures you are getting the maximum tax benefit from your property, and the cost of the report itself is fully tax deductible.

2. Claiming back the cost of borrowing

Many people don’t realise that many of the costs incurred in the borrowing process can be tax deductible. Keeping records of your investment loan statements ensure your accountant can claim back bank and government charges incurred over a 5-year period.

3. The end of tax deductible trips to rental properties

From 1 July 2017, costs incurred in travelling to inspect residential rental property are no longer tax deductible. This means you can no longer claim expenses including fuel, accommodation and flights.

4. Are you repairing or upgrading?

When money is spent on a property it is important to determine whether it is a repair to its existing form that can be outright tax deductible, or whether it is a capital improvement that must be depreciated over an extended period. This is due to the difference in tax treatment of the two methods. Ensuring you keep all your receipts will ensure your accountant treats it appropriately.

5. No more second-hand depreciation

From 1 July 2017, when you purchase a pre-owned residential property you can no longer claim depreciation on the depreciating assets of the property as at purchase date. However, you can still claim deductions for assets installed as new after this date.

6. Should I prepay interest?

Depending on your loan facility, there may be the ability to prepay the interest on the loan 12 months in advance. While the decision would very much depend on your financial circumstances, bringing a deduction forward into a different tax year can bring a significant tax saving.

Make tax time work for you and ensure you have the right people in your corner. If you would like to get sound accounting advice from a trusted group of professionals, inform Blackburne Mortgage Broking and we can put you in touch with the Danpalo Group.