Ways to Save Money on Taxes When Purchasing Property in Australia

Ways to Save Money on Taxes When Purchasing Property in Australia

Many Australians invest in real estate, financial markets, and other assets both at home and abroad. Managing the tax implications of your assets can help you build wealth.

To keep your taxes under control, it’s more vital than ever to disclose investment income, especially income from overseas, keep proper records, calculate capital gains or losses on disposal appropriately, and follow the many regulations and concessions available to investors.

Things to Keep in Mind While Buying a House

Claim Initial Repairs as Capital Works

Investors frequently make the mistake of claiming quick deductions for initial repairs or capital upgrades. Initial repairs to correct damage, faults, or deterioration that occurred at the time of purchase are typically considered capital in nature and are not deductible, even if they are done to make the property rentable. A better strategy would be to claim capital works deductions over a 40-year period for these repairs and enhancements.

Pre-Pay Interest

If you have a fixed-rate loan and an annual income that’s about to push you into the next tax bracket, it’s typically worth prepaying your interest for the following 12 months so you may claim the deduction in the tax year in which you file your return.

You may also use this method to pay for other services. Some service providers may even give you a discount if you do so.

Foreign Investments

If you are an Australian resident who owns assets in another country, you must report any capital gains or losses on such assets in your tax return. You may also have to report income from foreign investments on your tax return.

Even if your money is housed in a foreign bank account for you, you can get it. You may be eligible for an Australian foreign income tax offset if you obtain overseas income or gains that are taxable in Australia and paid foreign tax on them.

Apply For PAYG Withholding Variation

You should request a PAYG withholding change if you’re negatively gearing a property and have experienced cash flow concerns in the prior year. This approach, which is frequently employed by those who claim higher-than-normal deductions, allows you to collect your tax benefits every time you get paid your wage, rather than in a single amount at the end of the fiscal year.

Claim Borrowing Expenses

Keep Your The following costs are eligible for deductions in 2022:

  • Fees for establishing a loan.
  • Mortgage insurance is provided by the lender.
  • Your lender will charge you a fee for a title search.
  • Fees for drafting and filing mortgage paperwork (costs/legal fees).
  • Fees are charged by mortgage brokers.
  • Fees are associated with a valuation that is necessary for loan approval.
  • The mortgage is subject to stamp duty.

Receipts

The Australian Taxation Office (ATO) contacts an increasing number of rental property owners each year to check their claims. This is why, while claiming deductions, you must be more attentive than ever before, and this extra vigilance must begin with the safekeeping of all key receipts.

Keep Up To Date with Changes

Just because your accountant allowed you to make a claim last year doesn’t indicate you’ll be able to do so this year. The ATO makes significant changes to its rules on allowable tax deductions on a frequent basis, so you should check the collection agency’s website for updates on a regular basis.

For example, investors might claim travel expenses paid when visiting their investment property on official business for a lengthy period. However, when the legislation changed on July 1, 2017, investors lost this protection.

Minimise Capital Gains Tax (CGT)

Consider swapping contracts after July 1 to delay the tax for another year if you’re seeking to sell your home and lock in a significant capital gain. This gives you more time to save the money you’ll need to pay it. Remember that if you keep your investment property for more than a year, your CGT is reduced by half. Before submitting your tax return, it’s usually a good idea to obtain assistance from an accountant.

Find a Great Accountant

The last piece of advice is to surround oneself with successful people. It’s a phrase we hear over and over, and it’s because it pays off. Great accountants are like surveyors in that they understand where the lines are drawn. Furthermore, their costs are tax-deductible.

Conclusion

If you want to save taxes on your property you will need to do plenty of research before coming to a conclusion as buying a property is an extensive job and if not done properly, it is a huge loss for the buyer. So keep your research up to date before jumping into the market of purchasing a property.

BUY AND SELL NEAR YOU

Find out what your friends are Buying or selling

Advertise with Us