Tax and Bookkeeping Tips For Your Investment Property

Tax and Bookkeeping Tips For Your Investment Property

Tax and Bookkeeping Tips For Your Investment Property

Posted on June 9, 2020 by Mirren Property Investment

Financial plans and goals are crucial to make sure you’re on track with your investments. In real estate investing, it’s not enough to just purchase a property, you have to be clear on what path you want to take in terms of financial strategy, you also have to monitor your progress, and learn to prepare or adjust for potential problems. The following are useful tax and bookkeeping strategies for your year-end financial planning. 

Understand What You Can and Cannot Claim

Part of your strategy is being knowledgeable when it comes to your taxes. You should understand how taxes work and know your advantages and disadvantages as an investor. Did you know more than 80 percent of investors make mistakes when calculating their deductions? To prevent this from happening, make a list of claimable tax deductions for your investment property. Here are some of the most common claimable tax deductions you don’t want to miss out on:

Advertising costs – If you’ve posted ads for your rental property through the internet or used printed media such as signs and brochures, you can claim these expenses in the same year.

Land Tax – Do you have a rental apartment on your investment property? If so, you can use land tax as a deduction. The amount changes significantly between states so it’s advised to consult a tax advisor.

Legal Expenses If you’ve evicted a tenant or going to court for unpaid rent, you can claim all your expenses for the preparation of legal documents.

Loan interests  You can claim the interest on your loan for investment properties and any bank fees for servicing that loan. 

Repairs – Repairs made during the lease period is deductible and should be carried out within the initial 12 months of ownership. However, the improvements you make aren’t deductible and can only be claimed if they were depreciated and claimed during the course of their life (ex.appliances).

RentThe income you receive from rent is taxable to the property owner. However, the rent must be at the normal market rate in order to claim the expenses in the complete amount. It must also be declared in the year which it was received. Getting a rental investment property comes with its fair share of questions. Find the answers to your most common rental investment queries here.

As an investor, you need to be aware of all your property expenses as this will help you save money in the long run. Here are other deductions you can claim to maximize your tax breaks:

  • Agent fees
  • Annual power guarantee fees
  • Appliance depreciation
  • All tax-related expenses
  • Bank charges
  • Bookkeeping fees
  • Cleaning
  • Council rates
  • Electricity and gas
  • Gardening and lawn expenses
  • In-house audio/video service charge
  • Insurance of your rental property
  • Building and public liability insurance
  • Mortgage discharge expenses
  • Pest control
  • Quantity surveyor fees
  • Repair and maintenance
  • Security
  • Strata fees
  • Telephone
  • Temporary tenant relocation
  • Water charge

Importantly, stay transparent and honest

As easy it is to try and cheat by simply claiming renovations or other activities which you have done yourself, don’t do it. Penalties are harsh for people who claim wrong expenses as well as those who fail to declare their income. Sometimes, you can have an honest mistake of recording an expense twice, to prevent this from happening, try to avoid expenses paid by your property manager.

Don’t Throw Away Your Receipts

“No receipt, no deduction” is the ATO’s motto which is why it’s important to keep all receipts of your expenses. Whenever you claim a deduction, you must have the records to show for it. The ATO contacts rental property owners annually to inspect their claims, and each year the number of people they survey is growing. To ensure you don’t run into problems, safeguard all your receipts.

Receipts must show the following:

  • Name of supplier
  • Expense amount
  • Products or Service Description
  • Date paid
  • Date of the document

Take Advantage of Property Depreciation

One way to reduce your taxable income is by claiming maximum depreciation deductions. Depreciation is defined as the decline in value tax deduction for building structures and assets of income-generating real estate. Most residential rental properties depreciate at a rate of 3.6 % per year. Many people fail to claim these deductions resulting in thousands of dollars lost.. 

Find A Good Accountant

Taxes have become a lot complex in the last few years and finding a qualified professional to do tax for you is more important than ever. But perhaps the number one mistake of most investors is hiring an accountant who doesn’t understand property.  Not all accountants are knowledgeable in real estate, so make sure you’re working with someone who specializes in the exact investment property you own.

You need someone who isn’t just good with taxes, you need someone who is also up to date with laws surrounding property. Good accountants can give you insight into what you can and can’t claim. They can also give you appropriate advice when claiming your deductions. Accountants can even be a valuable part of your team so don’t hesitate to invest in hiring top talent for the job.

Many investors try to do tax themselves and end up miscalculating or working a lot harder than they should. Hiring a trusted accountant is always better when you want to save money. Here are just some of the things a great accountant can help you with:

  1. Leverage tax benefits for your investments
  2. Track your business transactions
  3. Keep your financial record organized into a system
  4. Help you achieve maximum results

Need a good accountant? Reach Joy Ford, at Beyond Taxation.

Final Thoughts

The secret to maximizing your profit is to make every investment property work for you. By knowing all about your tax advantages and strategies you can do so you won’t spend weeks worrying about paperwork, you can manage your tax in the most efficient way possible. Making the most out of your potential tax deductions won’t make you rich—but it surely will help you save a lot of money in the long run.


  1. Investment property tax deductions – what you do not want to miss out on” —
  2. 7 tax tips for real estate investors at EOFY” —
  3. EOFY tax return tips for property investors” –
  4. Eight tax tips for end of financial year property investment planning” –

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