6 tax tips for investors: Two thirds fear housing market will crash

NEARLY two thirds of investors fear the housing market will crash and are stressed about being able to afford to hold on to their properties, according to a new survey.

The survey commissioned by TaxTank in May reveals nearly 80 per cent of property investors believe interest rates will continue to rise and more than half have had to take action to manage loan repayments, including increasing rent.

Upset frustrated young man holding reading postal mail letter

A new survey has found investors are stressed about rising interest rates and fear the housing market will crash.

A third of investors admitted to raising the rent on their properties, 15 per cent said they had refinanced their mortgage, another 15 per cent said they were pursuing a higher income, and seven per cent were selling their properties.

More than 600 Australian property investors were asked about how changes to the property investment landscape were impacting their approach to tax time and their overall financial management.


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TaxTank founder Nicole Kelly said the survey showed property investors were navigating a fast-moving and constantly changing property landscape, and being pushed to make financial decisions they may not have considered only 12 months ago.

Photography By Paul A. Broben - 0418757727 - brobes.com

TaxTank founder Nicole Kelly.

“This is putting many taxpayers in difficult situations, where they need to simultaneously weigh up the pros and cons of managing a property with the realities of needing to pay larger monthly bills amid an uncertain economic backdrop,” Ms Kelly said.

The survey found the Australian Tax Office’s (ATO) growing powers are causing further challenges for property owners, with 70 per cent of investors concerned about increased scrutiny from the ATO.

In recent months, the ATO has announced banks would be obligated to hand over transaction data of property investors to increase accuracy in the tax return process, and the federal budget included $89m for the ATO’s ‘crackdown’ on incorrect tax claims — including landlords who are over-claiming tax deductions.

Commissioner of the Australian Taxation Office (ATO) Chris Jordan. Image: Lukas Coch.

Almost three in five investors surveyed believe recent legislative changes are difficult to navigate, more than 70 per cent are concerned about missing out on possible deductions, and 57 per cent are worried about making a mistake.

“The increased power given to the ATO and their increased scrutiny of property investors is clearly creating significant concern and stress,” Ms Kelly said.

Buyer’s agent and Aus Property Professionals founder Lloyd Edge said investors should take proactive measures to optimise their tax returns and improve their financial outcomes.

Supplied Money Aus Property Professionals director Lloyd Edge

Aus Property Professionals director Lloyd Edge.

“By claiming everything they are entitled to, including maximising depreciation and all costs, investors have the potential to transform a negatively geared property into one that returns a positively geared outcome after tax,” Mr Edge said.

“Many investors overlook these benefits, which can make a significant difference in their overall financial position. Landlords need to seek professional advice and stay informed to make the most out of their property investments.”

Angry businessman holding his head

A new survey has found property investors are stressed in the lead up to tax time given industry conditions.

Here are Mr Edge’s tips for investors at tax time:

1. PAYG tax variations

Property investors should consult their accountants regarding eligibility for a PAYG tax variation for their investment properties.

This allows investors to adjust their tax withholdings throughout the year, based on their estimated taxable income from their investment properties.

Implementing a PAYG tax variation can enhance cash flow throughout the year, offering protection against interest rate increases and facilitating better financial management.

2. Hire quantity surveyors to create depreciation schedules

Engaging the services of qualified quantity surveyors is a crucial step in accurately assessing and claiming depreciation on investment properties.

These professionals specialise in identifying depreciable assets and determining their values. By leveraging their expertise, landlords can maximise their tax deductions and generate substantial savings.

3. Understand tax deductions

To optimise tax returns, property investors should familiarise themselves with the various tax deductions available to them.

Deductible expenses can include property management fees, repairs and maintenance, insurance premiums, advertising costs, and more.

By having a comprehensive understanding of these deductions, landlords can strategically structure their expenses to maximise their tax benefits and improve their financial outcomes.

4. Understand the difference between a ‘repair’ and an ‘improvement’

Distinguishing between repairs and improvements is crucial for accurate accounting and tax compliance.

Repairs are considered expenses incurred to restore a property to its original condition, such as fixing a broken window or repairing plumbing issues.

These repairs are generally tax-deductible in the year they occur.

5. Plan for future maintenance

Proactive planning for property maintenance and repairs is essential for investors.

By addressing potential issues in advance, landlords can minimise costs and maintain the value of their investments.

It is prudent to allocate a portion of the tax return towards a dedicated fund for future repairs. This approach allows investors to be prepared for unexpected maintenance expenses, ensuring the long-term viability and profitability of their properties.

6. Seek professional advice

Consulting with property experts, accountants, and tax advisors specialised in property investing is highly recommended.

These professionals have the knowledge and experience to help you navigate the complexities of property investment taxation and can provide invaluable guidance tailored to individual investment strategies.

The post 6 tax tips for investors: Two thirds fear housing market will crash appeared first on realestate.com.au.

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