Tax Time Tips for Property Investors – Avoiding ATO Scrutiny, Optimising Deductions, Repairs, and Depreciation (Ep. 265)

Previously known as “The Property Planner, Buyer and Professor”

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Episode Highlights

0.58 – Dave kicks off the episode…. Tax time!

4.11 – Cate defines what non-deductible interest payments are and why they are a focus for the ATO

6.10 – Redraw versus offset: Dave shares some examples of the messes he’s seen people create due to confusion about distinguishing the two

14.17 – What is the third thing that ATO are targeting investors for?

22.14 – Next week’s teaser: The July monthly market update

27.40 – Cate’s depreciation boo-boo

36.04 – How do you know if you have a property with any deductions? Mike shares the three triggers

48.28 – Gold Nuggets


Show notes

Dave hosts this week’s show and Mike is in the hot seat to shed light on some of the items that the Australian Taxation Office, (ATO) is focusing on this year. Specifically, the ATO is honing in on a few key areas that often trip up property investors. What could these be? Tune in to find out…

From deductible expenses to claims for repairs and maintenance, there are quite a few ways that investors make boo-boo’s at tax time.

Redraw versus offset: What is the difference? And how do borrowers sometimes make a mess of it? Dave shares the six key principles that he and his team share with their clients in relation to this very topic.

What is the third thing that the ATO is targeting investors for? Mike details the rules around properties that are not occupied full time by tenants, and he also shares an interesting fact that a lot of people wouldn’t realise. What is the implication if an investment property has been inhabited by the owner before it becomes a rental property? This applies to over 20% of investors!

Repairs versus capital improvements… what’s the difference? What do people often get wrong? And why does timing matter? Mike sheds light on these questions.

What did Cate get wrong with her tax depreciation a few years back? Mike enjoys ribbing Cate, but it was an expensive oversight, and one that the Trio don’t wish on our listeners.

Mike shares the five basics that an investor needs to know about tax depreciation, from timing to feasibility, the magnitude of the return to the firm who tackles the depreciation schedule. His simple list of three triggers should give every investor a hint as to whether it’s worthwhile conducting the depreciation schedule.

Cate shares her tips for making tax-time a bit easier, particular for multi-property investors.

Gold Nuggets:

Dave Johnston’s gold nugget: If you have a property portfolio and you feel that you haven’t been getting strategic mortgage advice, it may be a good idea to go and see a strategic mortgage broker. They may even identify some tax deductions that you’ve been missing.

Mike Mortlock’s gold nugget: We shouldn’t be thinking “tax time is coming and now we have to do all this work.” What systems can investors put in place to make tax time a bit easier? Mike has some great suggestions.

Cate Bakos’s gold nugget: If you’re already active in property, your tax affairs are probably starting to get a bit detailed. It might pay to go and see an accountant to prepare your return for you by the time your return is getting detailed.


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