Property owners and those looking to buy property are encouraged to take steps now to maximise their tax refund, according to Australia's largest independently-operated mortgage broker, Mortgage Choice.
Use your tax returns to achieve your property dreams
"Reassessing financial aspirations and identifying ways to make the most of any tax benefits can help investors achieve their property dreams sooner," company spokesperson Belinda Williamson said.
"Knowing what expenses can be claimed over the short and long term can make a big difference to a tax refund. In preparation for lodging a tax return, now is a good time for property investors to organise any receipts and statements that relate to their rental property or properties."
"Keep in mind investors may be able to claim for a range of expenses, including agents' fees, advertising, body corporate fees, capital expenses, building maintenance and repairs, cleaning, insurances, home loan fees and interest payments. Don't forget council and water rates, plus the cost of travel to and from the property for inspections can also be claimed."
"One aspect that property investors often overlook when lodging their tax return is depreciation deductions. Depreciation applies to new and existing residential properties and in most cases owners of an investment property or properties are likely to be able to claim something."
"Depreciation on the original costs of construction can be claimed on any residential property built after 17 July 1985. However, it is always a good idea to check with the Australian Taxation Office or a depreciation specialist as there may be exceptions to this rule. Claims can also be made for items that are falling in value over time, such as fixtures and fittings, floor coverings, appliances and built-in wardrobes. Owners in strata buildings should keep in mind they may be able to claim depreciation on a portion of the value of items and equipment in common areas, such as carpets and furniture in foyer areas."
"Each investor's situation is different and for this reason it is important to consult a financial planner and/or accountant to help determine any tax deductions. Astute investors will also contact their local mortgage broker for a quality referral to a professional surveyor who can prepare a fully tax compliant depreciation schedule to help maximise the tax refund, which may be used for future investment opportunities."
Tax time also presents opportunities for homeowners to achieve their property dreams sooner.
"Those who receive a healthy tax refund may decide to deposit the extra cash directly into their mortgage as a lump sum payment. If a borrower with a $300,000 home loan at 7% who is five years into their 30-year loan term contributes a lump sum payment of $500, they will save around $2,359 in interest and cut one month off the loan term. Repeating this process each year would have a sizable impact on a borrower's loan situation," said Ms Williamson.
"Making extra repayments into your home loan can speed up the accumulation of equity and help you repay the loan sooner by reducing the length of the loan term and interest payable over the life of the loan."
Future homebuyers could get a step closer to entering the market with help from their tax refund.
"Every little bit of savings can put potential buyers closer to property ownership. Those looking to purchase property could consider contributing their tax refund into a high interest paying savings account or they could utilise the tax refund to reduce any existing debt. Having too much debt can make a difference when it comes time to apply for a home loan," Ms Williamson said.
"Everyone's situation is different, so consult with the experts to ensure your financial goals are on track to help you achieve your property dreams sooner."
To contact the editor, e-mail:
Most Popular Slideshows
- Australia Bids Adieu to Adam Spencer's Mornings on ABC's "702 Breakfast" Show [PHOTOS]
- Top 10 Hottest Celebrities with Shocking Weight Loss (And Find Out Their Secrets!) [PHOTOS]
- SEE PHOTOS! Eva Longoria Wears No Panties at Cannes 2013, Revealed in Embarrassing Wardrobe Malfunction [SLIDESHOW]
- Demi Lovato Snapped Getting Flirty with The X-Factor Boss, Simon Cowell? [PHOTOS]