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8 of the best EOFY tax tips for landlords

By Kyle Robbins
04 July 2023 | 11 minute read
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It’s never been more important for investors to be prepped for tax time, according to a real estate expert.

The principal and director at Ayre Real Estate, Craig Donohue, has flagged how “in a year where rental increases have been a hot topic and the ATO is taking a closer look at investors, it’s never been more important to be prepared and informed at tax time”.

He was referring, in part, to the recent announcement by the Australian Taxation Office (ATO) that it would be data-matching information from property managers, landlord insurance providers, and financial institutions to ensure investors do not deliberately or accidentally leave tax income or inflate their deductions this tax time.

By having good structures and checklists in place, Mr Donohue highlighted how landlords can not only ensure compliance with the taxman but can also streamline their operations and maximise the performance of their investment property or properties.

So how can landlords ensure they’re prepared for not only the end of financial year (EOFY) but also the upcoming financial year?

  1. Review property performance

“EOFY is a great time to take stock of your investment property and review how it is performing and whether it is meeting your investment goals,” Mr Donohue said.

This review may include looking at current rent payments and outgoings with an accountant and/or a property manager.

“Now is the time to set goals for the next financial year to ensure you are getting the most out of your investment,” he advised.

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  1. Verify lease agreements

At this time of year, landlords should be reviewing their lease agreements to confirm lease terms, rental rates, and any upcoming lease expirations or renewals.

Mr Donohue stressed that it’s “important to communicate with tenants well in advance to address lease-related matters”.

  1. Conduct property inspections

Schedule and conduct property inspections for the assessment of any necessary repairs or maintenance work before the end of the financial year.

  1. Review insurance coverage

Mr Donohue recommends assessing the coverage of your property insurance. This will ensure it is not only up to date but also adequate for the property’s current value.

It’s also worth reassessing your landlord insurance policy, taking into account any changes in risk factors.

  1. Evaluate rent rate

Now is the time to analyse the current rental market and evaluate the rental rates for any/all of your properties.

Mr Donohue advised looking into whether any rent increases are justified and, if so, initiate any necessary adjustments “within legal guidelines”.

This is especially relevant in the current market, the principal iterated.

  1. Collaborate with accountants

For those who aren’t already working with one, Mr Donohue advised engaging a qualified accountant to be by your side. This professional can not only assist with your tax return but also provide advice — “on what you can and can’t claim”.

  1. Prep and plan for capital improvement

The EOFY is the perfect time to review a rental property’s condition. This will allow investors to identify “potential capital improvements that may enhance the value”, according to the director.

He advised: “Develop a plan and budget for necessary upgrades or repairs and discuss these upfront with your accountant to gain an understanding of what is classified as a repair or a capital expense and how it may impact the performance of your investment property.”

  1. Develop (or arrange) a depreciation schedule

Especially relevant to newer properties, the expert highlighted that investors might be able to claim the natural wear-and-tear of a property (and its assets) over time.

This is where an accountant also comes in handy — they can help you engage the services of a quantity surveyor, who will then compile a report that fully sets out the depreciation structure of the asset.

All in all, Mr Donohue noted that preparation and planning for the year ahead is “key” at tax time.

“Now is a good time to get your documentation and checks in order and set goals.”

He further advised: “If you’re unsure or new to the process, start the conversation with your property manager and accountant sooner rather than later.”

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