Top 4 tax tips for property investors

These tips are some of the most common and basic ways for investors to minimise their tax bills:

1. Maximise depreciation claims

There are certain items that can be claimed on an investment property. These are items deemed as ‘plant and equipment’, and are treated separately to the dwelling. Items are deemed as plant and equipment depending on several factors, including how permanently they are attached to the building or land. Items that can typically be claimed include:

• Carpets
• Air-conditioning units
• Blinds
• Ceiling fans
• Appliances, such as ovens and hotplates

A full list of depreciable items is available from the Australian Taxation Office. It can be beneficial to engage a quantity surveyor to assess what items you can depreciate.

2. Optimise portfolio structures

The ownership structure of a property portfolio can have a big impact on the amount of tax payable. For couples, as a general rule, negatively geared property should be in the name of the highest income earner, while positively geared property should be in the name of the lowest income earner. Transferring property can be costly, so it’s best to plan ahead and set the structure correctly from the start.

3. Claim travel expenses

In some situations, travel expenses can be claimed as tax deductions. Meals, transportation and accommodation can be deductible in certain circumstances, including when preparing a property for lease, during rent collection or for inspections and maintenance.

4. Investing via SMSF

While they may not be suitable for everyone, investments via a self-managed super fund (SMSF) may be an attractive option for some. An SMSF pays relatively low tax rates. Superannuation funds only pay 15 per cent income tax and 10 per cent capital gains tax during the accumulation phase and 0 per cent tax in the pension phase for most investors.