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WELCOME to June, the best month of the year for real estate investors.
Why is it the best? Well, it's not because of the weather (except if you're one of those folk who prefer winter over the glorious heat and long days of an Aussie summer).
It's because June is a time of opportunity, delivering the chance to make some big bucks as early as July.
The vast majority of property investments are negatively geared, where you get a tax refund because costs outweigh the income, and June allows investors to turbo-boost the effect.
The costs don't have to strip money from your back pocket. There are non-cash deductions that provide great gains, and a few other tricks to bring in a healthy tax refund. Here are a few ideas to get you thinking.
1. Appreciate depreciation.
Writedowns of the value of carpets, curtains, air-conditioners and even the building cost of a home pay big benefits and cost nothing.
It's worth getting a depreciation schedule drawn up by a quantity surveyor, which will probably cost about $600 but is also tax-deductible, and is often guaranteed to more than recoup your money in deductions.
2. Get your hands dirty.
If any repairs or maintenance are required at the investment property in the next few months, do it in the next few weeks so you can claim back the tax benefits next month.
3. Prepay interest.
You're going to have to pay interest on the investment loan anyway, so if it works from a tax-planning perspective, you can pay a year's interest in advance and claim the deduction early in the new financial year.
Just remember if you don't continue to do it, there will be a future year where you pay no interest but still must claim the income.
4. Become a deduction detective.
Missing out on a legal tax deduction for an investment property means missing out on money. The Australian Taxation Office's website has a great guide, Rental Properties, which lists all the rules, regulations and tax deductions available to property investors. If you're still unsure, seek professional advice from an accountant. It will be worth it.
Embrace June, and the potential property gains it offers, and you may find some sunshine warming your finances in July.
Anthony Keane is the editor of Your Money.
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