Yes folks, we are approaching everyone’s favourite time of year; EOFY – end of financial year. I’m sure you all notice that as June 30 approaches people become irascible and busier than a mosquito at a nudist colony. Suddenly no one is available to take your calls (maybe it’s just my calls?), accept meeting requests (again maybe just me), or make any kind of social commitment, ‘sorry, just snowed under with EOFY’ is the response you’ll hear.
Don’t be one of those people who promises themselves every year that they will be super organised well in advance of tax time and then end up being even less organised than the previous year. Don’t leave it to the last minute, and I say this not because I want everyone to operate at a level of efficiency generally only seen in a German manufacturing plant but because by rushing at the end you could cost yourself a small fortune. Things can get overlooked or forgotten.
If you’re a property investor, you really have no excuse not to be all over the detail, mostly because throughout the year the numbers have been kept for you by your property manager and then provided to you in one nice concise annual statement which you hand over to your appreciative accountant. In addition to the info on that annual statement you should ensure you claim:
- interest costs (the daddy of deductions)
- depreciation of fixtures and fittings
- repairs and maintenance costs
- tenancy costs (letting fees, advertising costs)
- insurance premiums
Tax deductions are your friend, they help put more money in your pocket which improves your cashflow. Good cashflow makes a property easier to hold. A property that is a heavy drag on your cashflow increases the risk of having to sell it because you can’t keep up with the cost. Underestimating the importance of cashflow brings many investors unstuck and what was once the key to their financial freedom is now a costly burden.
Another way to put that tax money in your pocket but in each pay packet as opposed to in one hit at the end of the financial year is to instruct your friendly accountant to lodge an ‘Income Tax Withholding Variation’. You’re welcome.
As I’m not a qualified tax accountant, I can only say so much without all of you suing me for providing tax advice. But what I can say is: don’t be stingy when choosing an accountant, yes they can charge like a wounded bull but a good one can be worth their weight in gold.
Whether it’s property or accountants, always go for the absolute best you can afford. And finally, don’t save all of your tax refund, spend some of it. Spending keeps our economy ticking over. Go and support some local small businesses with your tax windfall.
To find out more on what to look for when investing in property, be sure to book into our Table for Eight property masterclass on the 13th of July!
Places are strictly limited, so reserve your seat by clicking below!