Effective property investment can hinge on how you structure your accounts, claim your expenses and pay your tax – don’t ignore this crucial step!
Have you been considering investing in property? Or perhaps you have an established portfolio, but it’s not performing the way it should. No matter what stage of the game you’re at, choosing the right accountant to handle your taxes can be the difference between growing your wealth and developing a headache.
You might be wondering exactly what an accountant can do to make your property investment more profitable, and the answer is – a lot! Here’s a quick rundown of what you can expect from property related accounting and tax services.
What can my accountant do for me?
Your tax accountant has the power to make your investment property infinitely more valuable to you. Not only do they have years of experience in accounting, tax and property, they also have the time and resources to investigate and implement every legitimate tax saving they can possibly pass on to you. Aside from the benefits of experience, time and know-how, your accountant should also be properly qualified to perform their job.
There’s also the fact that your tax affairs are not simply erased and restarted every financial year. The Australian Taxation Office (ATO) actively looks for reporting that may be incorrect or false, so accurate record-keeping is your best line of defence. Not only can your tax accountant help you make sure you stay on the right side of the law while maximising your tax return, they also prepare all of the financial documentation that protects you if you ever need it.
These documents are also extremely handy if you are planning on furthering your portfolio with new assets – a bank or lender may look considerably more kindly on an investor that can show exactly what they’re doing with their money and what their overall financial standing is.
Who should I talk to about my investment property and accounting needs?
We recommend talking to REIN Taxation Services. They’re part of the REIN Circle of Safety – service providers we trust and rely on to deliver outstanding value to our clients.
They’ll be able to help you figure out all of the deductibles on your investment property, and help you claim this against your rental income or other income stream to reduce your overall tax burden.
If you’re running a negatively geared property, you may have significant sums you can offset against the tax on your salary. However, waiting for the end of the tax year can stretch your finances to say the least, which is why REIN Taxation Services will help you to prepare Income Tax Withholding Variations (ITVW), if appropriate, to make the most of this money now.
REIN Taxation Services can also help you by preparing tax returns and providing advice on tax structures to ensure that your investment property is working for you and not the other way around.
Is tax-reduction a legitimate strategy?
Reducing the tax you pay be claiming legitimate expenses incurred through a wealth-creating asset is not only legal, it’s an established and highly recognised way to help everyday Australians grow their wealth. At the same time, investment properties provide housing solutions – which is a benefit to the local community.
The ATO provides guidance for property investors on how to treat rental income, expenses and other items. However, there are more than 230 residential rental property items that can have a bearing on your tax liability – so don’t make the mistake of trying to tackle this on your own. Unless you are an accountant, chances are you don’t have the time, knowledge or resources to make sure you are making the most of your investment property.
Your tax accountant can help you to reduce the amount of tax you pay on your negatively geared property’s income and your personal salary, too. All of this money can be used for debt reduction on your principal place of residence or saving for another deposit. In the future, you may choose to retain this property as a cashflow positive investment to fund your retirement, or you could realise the capital on your real estate by putting it on the market when prices are high.
The future of your investment property
Whether you choose to buy more property in the future, sell an investment off or keep what you currently have, could greatly affect your retirement strategy or estate planning, but so could other factors.
Proper legal and tax structuring for your investment property portfolio will help you to protect your assets and wealth you have built up for your family should anything adverse occur. This is particularly beneficial for those who are self-employed, shareholders or directors of companies, and also any high-ranking professional whose job carries risk, such as doctors, lawyers, etc.
Effective tax planning is not only concerned with making sure you take advantage of every opportunity available to you, it’s also about making sure you are never caught off guard when it comes to your wealth and financial prosperity.