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Is it possible to prepay my deductions on my investment property before 30 June?

April 4, 2024

Yes, it’s possible to prepay deductions on your investment property before 30 June, as confirmed by my colleague Des Besanko. Des is the Managing Director of eight Raine & Horne offices across eight Raine & Horne offices spanning from Brisbane Central to Mackay in Central Queensland. Helpfully, Des is a Fellow of the Institute of Public Accountants (IPA).

That being said, Des suggests you must have the necessary paperwork to execute this process. We’ll delve into the specifics shortly. 

Typically, most landlords postpone claiming deductions for investment property expenses, such as repairing damaged roof tiles or replacing rusted gutters, until after 30 June. However, Des suggests a proactive approach, advocating for spreading these deductions throughout the year. Des advises utilising the ATO’s “pay as you go (PAYG) withholding variation” form, which is accessible on their website (https://www.ato.gov.au/forms-and-instructions/payg-withholding-variation-application). This form enables landlords to “bring forward” their tax deductions, whether weekly, fortnightly, or monthly, aligning with your payment frequency.

Landlords can complete this form either with the assistance of their accountant or independently, submitting it directly to the ATO. Given that specific questions or complexities are involved, seeking help from an accountant could be beneficial. 

Once submitted, the ATO will review the form and, if approved, notify your employer to adjust the tax amount they are taking from your pay packet accordingly.

According to Des, this underutilised tax strategy can alleviate a landlord’s holding costs. He says, “This strategy is particularly pertinent given the current financial climate, where the cost of living and interest rates are increasing, resulting in higher cash outflows. Therefore, this strategy presents one potential method of mitigating some of that financial strain and providing extra cash flow to landlords.”

Des also maintains very few investors know they can bring forward their deductions and urges all landlords to explore this strategy. However, if you’re unsure about the process involved, it’s always recommended to consult with your accountant or directly with the ATO for guidance.