Dee Why / Collaroy Blog

Profitable property investing is a fantastic strategy for growing wealth. However, owning a rental property is never a license to print money, and success often depends on treating the investment like a small business.

Moreover, commercial success, whether its business or investment ownership, usually involves working with specialists such as an accountant. An accountant can advise you about the benefits of a negatively geared property, but more significantly he or she can advise whether you should buy the asset in your name, using a self-managed super fund or in a family trust.

A tax-efficient structure whether is a DIY super fund or a trust can potentially maximise the overall taxation position of your property. But making this decision without an accountant is fraught with hazards.

Likewise, an accountant can help determine if you’re better off buying a brand new or older property. As a rule, an investor can claim more ‘deprecation’ deductions for a new property. Depreciation describes the wear and tear on your property, and its furnishings and fittings. As a consequence, the ability to claim depreciation can make buying a new property more tax-effective than established homes, at least for the first five or so years of ownership. Nevertheless, you can claim depreciation against the expenses involved in renovating an older property.

An accountant worth his or her salt will urge you to get a depreciation schedule. A depreciation schedule is an accounting procedure for determining the amount of value left in a carpet, stove top or hot water system after a period of use. Obtaining a depreciation schedule is a must for a savvy investor, and without it, you’ll miss out on potentially thousands of dollars in deductions. Better still the costs of a depreciation schedule, which can be between $650 and $700 for each report, are tax deductible.

While claiming depreciation is a fabulous and necessary bonus for property investors, replacing old carpets, stoves and ovens still require some upfront cash. So, it’s usually best to keep some money in the kitty to cover costs, so that your investment property continues to look it's very best. Additionally, an appealing property will keep quality tenants committed. To ensure you have this financial war chest in place, talk to an accountant about the value of budgeting, and do it well before the end of the tax year on 30 June 2018.

To find out more about the real estate buying and selling opportunities on the Northern Beaches, contact a Raine & Horne Dee Why Collaroy sales agent on (02) 9971 9000.