Your first EOFY as a landlord: what to do before 30 June
The end of the financial year sounds like something only your accountant needs to think about. For a new landlord it is simpler than it looks. A little preparation now means a smooth 30 June and a faster, cheaper visit to your accountant later.
Here is what end of financial year actually involves for a rental property, what to have ready, plus the few traps that catch first-time investors.
What EOFY means for your rental
Each financial year you report two things to the tax office through your accountant: the income your property earned and the expenses you paid to keep it running. Your accountant uses those figures to work out your position. If your expenses are higher than your rental income, the difference may reduce the tax you pay on your other income. Your accountant will explain how that applies to you.
The whole process rests on having clean records. That is the part we look after for you through the year. More on that shortly.
Get your records together
Your return is built from the rent you received and the costs you carried. Common rental expenses a new landlord can usually claim include:
- Property management fees
- Council rates and water charges
- Strata or body corporate levies
- Building insurance and landlord insurance
- Repairs and general maintenance
- Interest on your investment loan
- Advertising to find a tenant
- Smoke alarm servicing and other compliance checks
- Pest control and gardening
Most of these flow through us and already sit in your records. The ones to gather yourself are anything you paid directly, such as your loan interest summary from the lender.
The one thing new landlords get wrong
There is an important difference between a repair and an improvement. It changes how the cost is treated.
A repair returns something to the condition it was in, such as fixing a leaking tap or patching a section of fence. These can often be claimed in the same year. An improvement makes the property better than it was, such as replacing the whole kitchen or adding a new deck. These are usually treated as capital and claimed gradually over time.
New investors often assume every dollar spent on the property comes off this year's income. It does not always work that way. You do not need to sort this yourself. Keep the invoice. Your accountant will place it in the right category.
Do not leave depreciation on the table
Depreciation is the wear and tear on the building and its fittings over time. It is one of the largest deductions available to a property investor, yet it is the one most often missed because it does not involve money leaving your pocket each year.
A quantity surveyor can prepare a depreciation schedule for your property. It is a one-off cost that often pays for itself many times over. Even older properties usually have claimable items. If you do not have one yet, it is worth looking into before your accountant prepares your return.
Your before 30 June checklist
- Confirm we have your current postal and email details for your statement
- Gather any invoices you paid directly rather than through us
- Find your loan interest summary from your lender
- Arrange a depreciation schedule if you do not already have one
- Book a time with your accountant before the July rush
What we take care of for you
This is where having a manager earns its keep. Through the year we record every payment and store every invoice in our system. At the end of the financial year we produce an income and expenditure statement for your property that you can hand straight to your accountant. No shoebox of receipts. No chasing figures in July.
If you would like a copy of your statement, or you are not sure what your accountant needs, just ask. We are happy to walk you through it.
Your first EOFY, made painless
If you have questions about your property's records or what to have ready, book a quick call and we will sort it out together.
Book a 20 minute call