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Ease your tax season stress

This article provides a checklist of records that property investors need to keep for tax purposes.

It’s the same time every year but it seems that no matter how prepared investors are for June 30, when it comes to gathering up the necessary documentation to complete tax returns, this exercise creates more stress than it should.

This process can be made much easier if proper methods of record-keeping are put in place – and the best part is that once you have your system in place, it should work every year.

To make tax time easier this year, all you need are a few manila folders marked with the following:

  • Loan statements: These statements are important for calculating, and subsequently deducting, the interest costs on your investment loan.
  • Invoices and receipts for repairs, replacements and capital works: These costs may be claimed on your tax return.
  • Rates notices: These notices detail the applicable rates charges on your property, and should be retained alongside your other records to be claimed as a tax-deductible expense.
  • Real estate statements: These statements detail necessary information about your rental property income, the real estate agent’s management costs, and perhaps even repairs undertaken on the property.
  • Insurance policies: Keep these on hand at tax time as any premiums for building replacement, contents, or landlord insurance can be claimed as tax-deductible expenses.
  • Depreciation schedule: Depreciation is a valuable means of generating tax deductions. Keep a depreciation schedule and include any depreciation on buildings or fittings in your tax return to help reduce your assessable income.

It also makes sense to keep this information together in a secure location. A good idea is to scan documentation and store the information electronically to minimise the piles of paperwork. Some mobile phone apps allow you to take a photo of a document and save it in various document formats. However, it is important to retain the hard copies.

Be aware that any records relating to deductions claimed for property expenses must be retained for at least five years in order to comply with the requirements of the Australian Taxation Office.

Take the extra time to set up your system this year and when the next June 30 rolls around you will be so glad you did.

The information on the Website is of a general nature only and has been prepared without taking into account your, or any other investor's, particular financial needs, circumstances and objectives. The information on the Website should not be construed as financial, taxation or legal advice. Fenwicke Financial recommends that you seek personal financial advice that addresses your specific needs and situation before making investment decisions.