A rental property which is negatively geared can be a great way of reducing your tax. Property owners should take advantage of the various tax deductions available. This would help them in getting the best out of their assets. Below are some of the effective ways which can be used to minimize tax reductions.
Acquiring loans using your rental property
You can use the money obtained and any other surplus cash you might have to pay some of the non-deductible debts which are not related to your property. These debts include personal loans, credit cards, and home loans.
Claiming depreciation on your property
Almost all the properties and items depreciate with age. Very few people claim depreciation on their properties. A quantity surveyor can help you in producing a report which you can use to claim depreciation. This is one of the most effective tax deduction strategies. You will no longer pay for the depreciation expenses. You should never miss out on this major deduction.
Compiling all your receipts
All the receipts for the paid expenses should be kept in a folder. This will help you in remembering the rates notice. The accountant can also revisit the folder containing the receipts when computing tax.
Living in your property
This is another method of reducing tax deductions. You can allow someone to live in your property and then claim it to be your place of residence. This can save you from paying tax for six years. This period was set to allow for those people who could be having job transfers both regionally and overseas.
Keeping your property pad for a duration of more than one year
This will help you in reducing the capital gain tax. This can be done holding the newly bought property for at least 12 months. This will reduce the capital gain tax on your property by fifty percent.
Keeping a log book
This is the book which you record the number of times you have travelled to see or inspect your rental property. This can be claimed as a deduction.
Remember that every dollar counts
You should keep the theme that every dollar counts. You can do this by preparing a log of the various items posted to the tenants or agents. These items can add up however small they might be.
Consulting the tax man before making repairs on your property
You should consult the tax man before going ahead with any repairs. These include the repairs done on the damaged floors. Some of the items might be classified as improvements. These items can be depreciated and thus help in reducing the tax deductions.