As the end of the financial year fast approaches now is a good time to catch up on all your paperwork for your investment properties. As some of us have additional time at home due to the COVID-19 pandemic, the extra time you spend on getting organised now will save you the stress later. Here are the administrative tasks you can get on top of right now to get to EOFY feeling organised and in your accountant’s good books.
Does your investment property have a Tax Depreciation Schedule?
Did you know that you could be saving thousands of dollars simply by claiming depreciation for an investment property? Unfortunately, 80 per cent of investors are simply unaware of the deductions available for the structure of a building (capital works) and the easily removable plant and equipment assets contained within an investment property.
Capital works deductions can be found for the walls, doors, roof and fixed structures of any property in which construction commenced after the 15th of September 1987.
It is worth noting that even if a property was constructed prior to 1987, there may be still be capital works deductions available for any new structural items that have been added within the legislated dates. This is the case even if a renovation was completed by the previous owner of the property.
Unlike capital works, depreciation for plant and equipment items is not restricted by legislated dates, rather the individual quality and depreciable life of the assets found within the property.
Review your loan interest rates and payment options
Great fixed home loan rates are common, but these rates are subject to market fluctuations. With rates as low as they currently are, assess whether having a fixed or variable rate loan is best for your situation. With many people currently facing financial challenges, you should also evaluate your options and put together your contingency plan if you may be unable to pay your mortgage, or if a tenant can’t pay their rent.
Review your credit cards
While you’re at it, have a look over your credit cards. See if there are any better deals out there for you, in both interest rates and loyalty programs such as frequent flyer programs or cashback offers.
Tax time is a great opportunity to review your insurances on your properties. Yes, it is a painstaking task, but it can save you hundreds or thousands per annum. If one particular insurer is affected by a major event (like a bushfire) then they can increase premiums across the board, so checking your insurances is vital.
Review your rental prices
At the same time, take five minutes and review the rents you receive on your portfolio and compare them to rents available on the major real estate websites. This will be particularly important as the COVID-19 pandemic evolves, and potential market influences make their way through the community. If you have tenants whose leases are due for renewal, make sure you get in early and be extra diligent about prices across your portfolio.
Review maintenance & repairs
Obtain a copy of your income and expenditure report for this financial year and review the expenditure on the maintenance and/or repairs. Our clients can do this via their owner portal which also allows a live report to download. If you notice a recurrence in some areas like plumbing or appliances it may be more cost effective to replace the item rather than trying to fixing these issue.
Taking the time now to get the administration side of your investment property portfolio organised will help your tax time to go smoothly and help you make sure your investments are structured for long-term growth and success. Before you make any changes to your insurances, finances or other costs associated with your investment property, make sure you seek personalised advice from a professional.
Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.