Tax Time!! What Do I Need To Take To My Accountant?

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tax timeTax Time!!

If you are on top of your game you’ll already be asking yourself what do I need to take to my accountant to maximize tax deductions for rental properties. If you’re part of the majority – you’ll be quaking in your boots at the thought that it’s tax time once again!

end of financial year salesI spent last weekend swooning around the city shops spending up big in the end of financial year sales. This weekend was struck with reality and the need to finalize my own book keeping before it’s time to visit my accountant.

My dear old father in law never used anything except the good old ‘spike’ to keep his receipts on – bless him. I prefer something I little more comprehensive  icon_smile

This financial year we had 10 properties in our portfolio. Whether you’ve got one, ten or more investment properties, you’ve got to have an organized way to keep track of all your paperwork and finances.

I’ve developed rock solid systems for our investments and business and I have the tools and reports I need to keep track of them.

For years now I’ve used Quicken to keep all our financial records. I love this system. It’s a simple and user friendly way to keep track of income and expenses so you stay on top of your book keeping for tax time. The system also allows for plenty of reporting and budgeting if you want those sort of features too, but I like to keep things as simple as possible.

Getting your tax done by a professional accountant who is familiar with property investing will maximize tax deductions for rental properties and help give you a stress free experience.

There are some fundamental documents and pieces of information you can make sure you have before you visit the accountant. Being prepared will help to keep the cost of your visit down as most accountants will charge you by every minute they spend working on your tax.

Here’s a list to help you get organized and gather the things you need.

Figures and Documents Your Accountant Needs

Asset Register

If you don’t have one of these already, I suggest you make a fresh start on one of these for the new financial year. It’s a register that lists ALL of your assets, including your properties.

In this register you will list the name of every asset you buy, the date of purchase and cost.

You can claim depreciation on your investment properties (and perhaps some of your other assets). Having a register will give you a handy reference for your accountant, and whenever you are required to list your assets, such as on loan applications. Having this register was a blessing when I had a recent telephone call with a broker who wanted all our assets and liabilities.

An asset register is not an essential item for your accountant, but believe me when I say it will make your life a lot easier.

Do the work once and use it over and over again.

Settlement Statements

If you have sold any of your investment properties during the last financial year you will need to take along your Settlement Statement. This will have been sent to you by your solicitor or conveyancer who acted on your behalf at settlement. It will list all the amounts of sale, stamp duty, charges and other important information your accountant will need.

Loan Interest

You’ll want to list all the interest payments you have made on any of your investment property loans.

If you are in the unfortunate position of having some of your properties cross-collateralized, then be sure to divide up the interest payments and allocate the right proportion to each individual property.

Accuracy here helps you determine the true yield or return on investment of each individual property.

Expenses: Travel, Maintenance, Repairs

Some minor expenses for your investment properties may have been paid by your property manager directly. In this case, they will show up on the Property Management Report. You may also have some invoices and receipts for expenses you have paid directly. List these expenses against the correct property.

If you have travelled to see your property at any time (after settlement) it’s likely that you can make a claim against your out of pocket expenses for the trip. Keep and document all fuel, accommodation, meal and other incidental dockets in relation to the trip. Your accountant will determine which of these costs can be claimed.

With properties in our portfolio all across Australia, we can offset some of the expenses on most of our travel against one or another of our properties. Have a good discussion with your accountant on this matter so you know in advance what is claimable and what is not. Often you need to know before you travel so you can be sure you have the correct records to verify your claims, like emails to managing agents or tenants to arrange the visit etc.

Property Management Statements

Most real estate companies are fairly prompt with sending through the end of year Property Managing Statement. This will list all the rent received, any expenses they have paid on your behalf. It will also list their managing fees. Your accountant will need all these figures to complete your taxation return.

Depreciation Report

After you settle on a property, you should order a Quantity Surveyor to complete a depreciation report. The report takes into consideration two main elements:

  • Capital works allowance; and
  • Plant and equipment.

From this report, your accountant can make a calculation for an ongoing tax deduction year after year for a limited time.

The first time you include a newly acquired investment property in your taxation claims, your accountant will need the Depreciation Report to refer to. From that point onwards, calculations can generally be made based on the previous years taxation records.

I love to maximize tax deductions for rental property. Our property portfolio has helped us legally reduce our tax by thousands of dollars over the years. This is a good checklist I use every year as I gather what I need to take to my accountant at tax time. I hope you find it useful too icon_smile

I’m happy to pay tax, but see no point in tipping the tax man! What about you?

Leave a comment below, and feel free to share this information with others who may find it useful.

Here’s to your success!

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2 Responses to Tax Time!! What Do I Need To Take To My Accountant?

  1. Julie July 3, 2014 at 6:38 PM #

    Thanks for a very useful checklist. I’ll be sharing this with a couple of property investing friends. Cheers.

    • Fay McLean July 4, 2014 at 10:53 AM #

      Good stuff Julie. Glad it’s helpful. Everyone needs it – that’s for sure. Cheers.

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