INCREASING YOUR BOTTOM LINE WITH INVESTMENT PROPERTY

Claiming everything you’re entitled to from the ATO is one proven method of increasing your bottom line with investment property.

Investment property expenses you can NOW claim

Understanding the ATO’s latest rules on what you can claim on your rental property can significantly increase your returns.

The ATO allows you to claim an immediate deduction (against your current year’s income) for the costs associated with:

maintaining
repairing
managing and
improving your property, as well as
mortgage interest and some legal costs

Maintain, repair or improve – but DON’T blur the lines

MAINTENANCE

The ATO defines maintenance as: “work to prevent

deterioration or fix existing deterioration”.

painting
cleaning
gardening
lawn mowing and
pest control

are all considered maintenance.

Something like regular servicing of the hot water system or air conditioning unit is considered maintenance as well.

REPAIRS

The ATO defines repairs as: “work to make good or remedy defects in, damage to, or deterioration of the property”.

So, for example, if the hot water system breaks and you pay to have it fixed – that’s a repair.

IMPROVEMENTS

The ATO defines improvements as anything that will increase the value or life of the property or anything that goes beyond the definition of repairing.

Replacing the old hot water system with a new solar system (even if the old system was no longer working) – that is considered an improvement.

THE ATO EYES ARE WATCHING YOU…

The distinction is important (and the ATO keeps a keen eye out for improvements incorrectly claimed as repairs).

Maintenance and repairs are eligible for an immediate deduction. Improvements are NOT.

You also cannot claim a deduction for the cost of improvements in the year you incur them.

Capital improvements (such as renovating a bathroom or kitchen) must be claimed as capital works deductions over several years.

Property management AND maintenance of your records

Property management is generally an area where you will have substantial expenses, regardless of the age or condition of the property.

The ATO says expenses including:

advertising for tenants
body corporate fees and charges
council rates
water charges
land tax
property agent’s fees and commission, as well as
insurance costs (building, contents, public liability)

may all be eligible for an immediate deduction in the year it is incurred.

It is important for you to keep accurate records to make sure you are claiming everything you’re eligible for to support your claims.

Interest just got interesting

It is common knowledge that you are able to claim against the interest paid on your investment loan, however it is important to remember the property must be rented out or genuinely available for rent in the income year you are claiming a deduction.

You may not be aware however that you can also claim the interest on a loan used to:

purchase a depreciating asset for the rental property (like a new hot water system)
a loan used to pay for repairs to the rental property (like fixing the hole in the wall the tradies made while removing your old hot water system), or
a loan used to fund renovations.

Legal expenses – we object!

Legal fees always sting a little, so it’s good to know the ATO will allow some of them to be claimed as deductions.

For example, if you have to pay legal fees to:

evict a non-paying tenant, or
take court action for loss of rental income, or
defend a damages claim related to your rental property

you can claim them as an immediate deduction.

It’s all about YOUR opportunities

If you are not positioning yourself to take advantage of all the tax deductions available to you, then you are wasting these opportunities to have more money in YOUR pocket. Understanding what you can claim, and then making a claim, is one of many proactive steps you can take to improve your financial position and gain a greater return on your investment(s).

Did you know – you can claim your tax deductions back in your pay each week?

If you are struggling to finance your investment property week to week and cannot wait until the end of tax time, then you may request a PAYG withholding variation with your pay officer. This essentially means that the amount of tax you pay (according to your projected investment property deductions) can be withheld from the ATO each pay cycle and remains in your hands until it is reconciled in your tax return at the end of the financial year.

HOWEVER – it will mean you are unlikely to get a big fat tax return each year. So chat with us to see what options will suit you and your cash flow best.

Need help?

If you would like guidance on utilising rental tax deductions available to you in an ever-changing financial and taxation landscape, contact our office today for assistance.

Disclaimer: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. ©2019

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4 Tips For Finding That Perfect High Yield Property

By Kola Dev • March 19, 2025

Any property guru worth their salt will tell you that a dream property investment has nothing to do with a prestigious address or sleek amenities. The ultimate goal, is to find that perfect “high yield” property that will give you maximum returns for as little input as possible. Yield refers to the amount of cash a property produces as a percentage of its value and is calculated by the rental income you are receiving compared to the purchase price. There’s a lot more that goes into the calculations, which I’m happy to run you through, but to give you an idea on what to look for, I’ve put together some simple tips. 1. Do your research. There are plenty of stats out there that will give you the median rental yield for each suburb. This is a great place to start! 2. Look for dual income properties such as a house with a granny flat. You can potentially have two streams of rent coming in, meaning the chance for a higher rental yield significantly increases. 3. Have you thought about looking rurally? Country towns offer some great properties at a low price and because the cost of living is low, the rental yields tend to be higher. 4. Always think forward. Be on the lookout for up-and-coming areas and ask yourself if they’ll still be flourishing in five years time. At the end of the day, you need to be realistic. Just because a property has a high yield doesn’t mean it’s going to be a great investment. As a mortgage broker, I can talk you through your options for investment loans so you can see what your monthly outgoings might look like. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.

7 Quick Ways to Upgrade Your Home

By Kola Dev • March 19, 2025

The continuing boom in property prices has tempted many homeowners to invest in renovations to maximise the value and then put their home straight on to the market. There’s no doubt you stand a better chance of enjoying a great return on your investment if you modernise your home. Properties that enjoy a mix of the traditional and the contemporary are in big demand among today’s buyers and nothing ticks the boxes more than a brand new kitchen or bathroom. Two increasingly popular features at the moment are a dedicated home office and a design that connects the indoors with a garden or entertaining area. But renovation projects of this size can become expensive. If your budget doesn’t allow for large-scale upgrades, there are plenty of ways to enhance the value of your home at little cost. Here’s a seven-point guide to upgrade your home. 1. Break out the brushes It’s amazing how a fresh coat of paint will improve a property. Don’t focus only on the walls but attend to the skirting boards, ceilings and architraves. Select neutral colours as these make rooms feel bigger. 2. Go green Small-scale improvements to your gardens work wonders. Focus on the front yard as this creates an all-important first impression. 3. That’s entertainment If your property lacks an area to entertain, this is a great low-cost project to enhance your property’s desirability. Consider adding a deck or a barbeque area. 4. Floor ’em A mixture of different floor types can make a home feel bitsy while a home with consistent flooring creates a great sense of flow. Replacing the floor can be a painful project but you’ll be amazed how much bigger your home feels. 5. Say it with storage You can never have too much storage. A bedroom without built-in robes is just asking for clothes on the floor. Think about storage in bedrooms, bathrooms, kitchen and laundry and looks at ways to create clever storage solutions in nooks and under the stairs. 6. Kitchen upgrades If yours is a little tired, don’t worry – you don’t have to rip it out and spend big dollars. Consider replacing only the doors, drawers and handles. You’ll achieve a transformation at the lowest possible cost and it will feel like new. 7. Unbeatable bathroom Like the kitchen, this can be an expensive renovation. You can avoid replacing tiles by using a professional company to spray-paint them. This treatment can also be applied to sinks, baths and showers. New tapware and shower screens complete the refresh for a fraction of the cost of ripping and replacing. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment. *This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.

7 Tips for Organising Your Finances Before You Buy A Home

By Kola Dev • March 13, 2025

There are many tips for buying a property, but there’s one essential element that no one can avoid - getting your finances in great shape before you start. Knowing what you can afford is a critical element of finding your first home or the next one that takes you higher up the property ladder. The most successful buyers begin their search with their finances in order and a pre-approval letter from their bank or lender. They know their budget and tailor their efforts accordingly. There’s no greater waste of time than visiting properties that are beyond your price range. Using a mortgage broker can help you shortcut the hours of research through various banking products and good brokers have detailed market knowledge and can offer an array of products. We can suggest the loans most suitable to your circumstances and assist you with paperwork, and review your credit history. We can also help you understand any grants or tax exemptions from state and federal governments that you may be eligible for. Below are a few tips for securing the finance that will help you find your dream home. 1. Clarify your finances If you’re a homeowner, you’ll need to obtain a valuation on your current property and provide proof of current earnings. A first-time buyer will ideally have 10% of the purchase price as a deposit to get the best interest rate and conditions for their first loan but the more the better. Money for legal fees, property inspections and taxes need to be set aside, too. Make sure your tax returns are up to date to prove your earnings. It will make life easier. 2. Low barrier to entry You can obtain a conventional loan with as little as 5% of its total as your deposit. Some government-backed loans do not require a deposit. 3. It pays to save The more you save, the less you borrow. And that means lower your monthly repayments for you over the term of the loan. 4. Go for a grant First-home buyers should research the current grants from various levels of government that are designed to encourage them into the market. 5. Credit crunch You’ll need a good credit history to be attractive to lenders. Check yours out by using companies such as Experian and Equifax. If your track record is not the best, we can discuss ways to address this. If errors appear in your credit history, dispute them immediately. 6. Find the right loan You can save thousands of dollars by choosing the right mortgage product for your situation. It pays to shop around and make a note of not just the interest rate but the fees that come with it and other services that may be offered. As your mortgage broker, we can guide you through this process. 7. Be pre-approved A written undertaking from your lender will help you focus on what you can afford, as well as signal to a prospective seller and their agent that you’re not kicking tyres. Watch out for lenders who will only “pre-qualify” you, as this represents only an estimate of what you can afford and does not offer any guarantees of intention to lend. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.