When you invest in real estate, you suddenly have a new range of deductions and expenses to consider. Making this process streamlined and fast is important for your stress levels and ensuring nothing is missed in a sudden rush. Failing to give your accountant what they need to get the job done can mean that you miss out on a credit you are entitled to, or worse, you overlook something important and end up on the wrong side of the ATO. We have compiled a checklist of things you need to give your accountant at tax time.
Checklist for real state investors at tax time
Firstly, ensure you have given your accountant details of all your income and expenses related to the property. These include both cash and non-cash expenses, all of which can be claimed back on your return. Cash expenses are those that don’t involve the acquisition of an asset, such as fees and repairs, whole non-cash expenses are those that involve items you can legally claim depreciation on. This could include the sale of a property, which will require your accountant to calculate CGT.
For every property you own, you need to give your accountant the following:
- The address
- The date of purchase
- A copy of the depreciation schedule acquired from a quantity surveyor
- The property’s purchase price
- The total rental income from the property for the tax year
- A breakdown of all the expenses incurred relating to the property
- A copy of your bank statement covering the period July 1 to June 30
- A log of any travel expenses relating to the property, with supporting documentation
- Any questions, queries or clarifications you would like from your accountant.
For an accountant to accurately and competently perform their job, you need to help them by supplying all the information required. They are legally obliged to report and assess the facts and while they have an indepth knowledge of the systems and laws surround taxation, they can’t simply make up figures and details.
Maintain a relationship throughout the year
The best way to ensure your tax return is completed to the best possible standard is to keep in touch with your accountant throughout the year. They can be the perfect person to hold your receipts and have them ready for the next year.
There is a common misconception that an accountant is someone who you can only deal with between July and October, however the contrary is true. Building a relationship with your accountant will help them to understand your property portfolio, your income, expenses, and what you aim to achieve with your wealth creation investments.
An accountant chosen at random in a hurry a week before the tax return deadline is only as good as the information you provide, and if you are rushing to find a professional then the chances are you haven’t been meticulous with your records. Preparing throughout the year is the surest way of getting the tax return you are entitled to.