An End of Financial Year Guide for Australian Property Owners

Preparing for the end of the financial year can be a scary time for some, but none more so than property owners and investors.

That’s because owning property brings with it a responsibility to make sure every base is covered when it comes to record keeping.

It also goes without saying that June is a time to ensure all your financial affairs are in order.

So stick with us as we walk you through why it’s important to prepare for end of financial year well in advance, and outline exactly what you need to consider.

Plus, we’ll provide our very best tax time tips to ensure you're ready to tackle it all head on.

Why Prepare in Advance?

It’s simple. By getting organised early, you can avoid the last-minute-scramble and make the whole process smooth and stress-free.

Not to mention you’ll avoid.

Getting sorted in plenty of time also allows you to pinpoint potential deductions, ensure all the necessary documents are in order, and identify any opportunities to minimise your tax liabilities.

Not to mention, starting early helps you avoid the risk of any late-submission penalties, and means you’ll be able to plan your cashflow effectively to prevent unnecessary financial pressure.

Considerations for Property Owners

As a property owner in Australia, there are several main considerations when it comes to end-of-financial-year prep. Here’s what you need to keep in mind:

Rental Income and Deductions

Make sure all rental income, including from short-term stays, is reported accurately. Claiming eligible deductions is equally crucial.

This includes things like advertising for tenants, body corporate fees, cleaning, gardening, pest control and utilities.

Keeping detailed records of these transactions will help maximise your deductions.

Renting Out Some or All of Your Home

If you rent out all, or some of your home through platforms like Airbnb, you’ll need to declare that income.

You can also deduct a portion of expenses proportional to the rental space, such as mortgage interest, utilities and maintenance.

Proper documentation ensures compliance with tax obligations and allows you to take full advantage of any possible deductions.

Capital Gains Tax (CGT)

If you sold a property in the preceding 12 months, you’ll need to assess your CGT liability.

While your primary residence is likely exempt, investment properties are subject to CGT, so understanding it is super important.

This tax applies to any profit made from the sale of a property, calculated as the difference between the sale price and the property’s cost base (purchase price plus associated costs).

For properties held for more than a year, a 50% discount on the CGT may apply, reducing your taxable amount.

If working this out seems daunting, consulting a tax professional is your best bet.

Depreciation

Depreciation, when referring to property, is a tax benefit that lets investors reduce their taxable income by accounting for the decrease in their investment property's value.

And given depreciation is often one of the biggest tax deductions a property investor can claim each year, the best way to stay on top of it is to have a Depreciation Schedule drawn up.

A depreciation schedule is essentially a detailed report that outlines the tax deductions property investors can claim for the depreciation of their investment property's building and assets (excluding land).

A professional depreciation schedule, prepared by a quantity surveyor, will outline the deductions you can claim each year, and this alone can significantly reduce your taxable income.

Prepaid Expenses

Prepaying certain expenses before June 30, like insurance or loan interest, might allow you to bring forward deductions into the current financial year.

This can be particularly beneficial for insurance premiums, interest on loans, and other property-related expenses, but always make sure these prepayments comply with ATO rules.

Record Keeping

Good record-keeping is essential for effective tax preparation and ensures you don’t miss any deductions.

So maintain accurate records of all income, expenses, and transactions, including receipts, invoices and statements.

There are plenty of online and digital tools to help organise receipts and invoices, making it easier to track and retrieve the information you need, when you need it.

Tax Changes and Guidelines

It’s important to stay up-to-date with any changes in tax laws and guidelines from the Australian Taxation Office (ATO).

Tax laws can change from year to year, impacting what you can claim, so regularly reviewing ATO updates ensures you remain compliant and aware of any new opportunities or obligations.

Our 6 Top Tips to Help Make Tax Time Simple

Getting organised for the end of the financial year doesn't have to be a chore.

With a bit of planning and some handy strategies, you can make sure everything is in place well before the deadline.

Here are seven simple steps to ensure you're well-prepared:

Start early

Begin gathering your documents and reviewing your finances a few months before June 30.

This gives you ample time to address any discrepancies or missing information, and reduces stress.

When you begin, systematically review all your financial documents, ensuring everything is accurate and complete.

And if you need a hand? Always seek the services of an experienced tax professional.

Lean on tools

Use digital tools or apps to scan, store and sort receipts, invoices and statements, and maintain thorough records of all your property-related income and expenses.

This makes the preparation process easier and ensures you can substantiate any tax claims easily.

Also consider using accounting software to track your income and expenses, and generate reports, throughout the year.

Review your deductions

Identify and review all potential deductions.

Make sure you have receipts and documentation for all claims, which can uncover potential savings.

This includes things like property management fees, maintenance costs and depreciation.

Consult a tax professional

The easiest way to stay on top of your tax? Engage a professional tax advisor or accountant who specialises in property investments.

They can offer tailored advice, provide valuable insights, help you navigate complex tax laws, identify opportunities for savings and ensure you’re maximising your deductions.

They can also assist in preparing and filing your tax return, to make sure it’s accurate and compliant.

Obtain a Depreciation Schedule

If you haven’t already, get a professional depreciation schedule – or an updated one to reflect any changes or improvements - done up by a qualified quantity surveyor.

This helps you claim depreciation on eligible assets and capital works deductions and can significantly reduce your taxable income.

Stay informed

Regularly check the ATO website for updates on tax laws and guidelines. Staying informed helps you remain compliant and aware of new opportunities for deductions.

The ATO website also provides valuable resources and updates on tax laws and regulations.

Being proactive and preparing for the end of the financial year can save you time, money and stress.

By understanding your obligations, keeping detailed records and seeking expert advice, you’ll be well placed to make most of your tax benefits and avoid any last-minute surprises.

Plus, you’ll be better prepared and more confident, knowing that everything is in order well before the deadline!

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If you’d like some expert guidance and support, we’re ready and waiting to help.

And if you’re just getting started, or looking for more valuable property selling, buying or investing tips, tricks and hints? Check out these other handy articles on our blog:

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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.