As tax time approaches we’ve had many questions from clients about how to legitimately reduce your tax bill as an investment property owner.

Here are 4 easy tips that may help

1. Always wait at least 12 months before you sell
   You might be keen to sell your investment property straight away, but if you can resist for 12 months you are eligible for a 50% discount on the rate of capital gains tax (CGT). You are generally required to pay CGT on any property you own but don’t live in. For properties that you have lived in for a time but have also rented out as an investment, you are generally required to pay CGT on the period where you were not the occupant.
2. Prepay expenses 12 months ahead and get immediate tax deductions
   Receive an immediate tax deduction by prepaying rental property expenses up to 12 months ahead. The payment must be for a period that is 12 months or less, ending on or before 30 June. Examples include insurance, body corporate fees, rates and interest. Check out the prepayment rules section of the ATO website for more detail. Always review your tax position for the financial year before prepaying any rental expenses to ensure it provides, not detracts from the benefits of negatively gearing your property.
3. Always declare income, don’t risk it!
   You might think it will reduce your tax bill to not declare some of your income, but there could be serious financial consequences. The data matching technology now used by the ATO has significantly improved their ability to detect undeclared income. Information extracted from your bank accounts, health insurance funds, BAS statements, superannuation accounts and even social media is compared to information provided in your tax return.
4. Use an app for recording expenses
   Reduce your tax bill by claiming all allowable deductions on your rental property. Take a photo of your receipts as you go and use an app – such as ATO’s free app – to help you sort, tag and manage your expenses ready for your tax return.

For more advice on how to optimise your investment property tax bill to ensure you’re not paying more than you have to – speak to WhiteStar Accounting. Simply email joer@whitestar.kinsta.cloud or call 1300 652 824 and speak to Joe.