End Of Year Documents

Preparing Your End-of-Year Financial Documents

As the financial year comes to a close, get a head start on your tax return by gathering the necessary documents you’ll need. To make the tax filing process go smoother, property investors should prepare ahead of time, which will help eliminate errors and ensure a thorough return. Below are some of the essential figures and documents all property investors should include for tax filing purposes.

Expenditures

Expenditures relating to maintenance and repair of your properties can be deductible. When preparing your tax return, you’ll want to have receipts, invoices, and other records that show the cost of materials and labor. Also, if you’re planning to make repairs to a property, it may be wise to Plan the  expenditure to  be in the financial year that you need a tax deduction.  If you have a large income in one year plan the expenditure for that year.

Prepayments

You can gain further deductions in this financial year by prepaying certain expenses for the coming year now. Next year’s income protection insurance premiums and bank interest can be paid before the end of June to claim a deduction for that financial year. If you want to utilize this strategy, it does take some planning.  It's too late for this year but there are some things you can orgainise for the future.  When you set up your loan make sure it is the type of loan that the bank will accept prepayments on - not all loans are suitable.  If you plan on making a prepayment the bank will need to set this up by the beggining of June - don't leave it until the middle of June or it will be too late...

Rental Management

If your properties are managed by an outside company, their fees should be included as they are deductible.  When preparing your tax return, make sure you have statements that show your management fees and your rent roll, which will show your rental losses. Most rental managers will send them out at the end of the year, making your job easier and if they don't - ask for them to do so

Capital Gains

Keep your property contracts handy to help you calculate capital gains for tax purposes. A 50% discount is available for capital gains where the asset has been held for over 12 months. You’ll use the contract date to determine  if your gains qualify not the settlement date.  It is important to check your dates if you are planning on selling to ensure you have calculated the 12 months by the ATO's Rules

If you have had a capital gain you will need to provide a list and documentation of all capital expenditure.  (Legal costs, Selling Costs and improvement costs but not cost of owning the asset)

https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/Capital Losses

If you’ve released capital losses in the current financial year to offset gains, you’ll need the documentation to help prepare your tax return. Capital losses may be carried forward to future financial years should you not have enough gains to absorb them this year.  These can only be offset against capital gains - not income.

Accountant

Probably the most important thing to do is to get your information together for your accountant and ask your accountant if there is anything you can do to minimise your tax…