Tax records every investor needs to keep

Any experienced property investor will testify to the importance of record-keeping to ensure they gain all the tax advantages the government offers the nation’s landlords.

And with the end of the tax year recently past, no property organised investor should be scrambling to find receipts and bills to file in their return for the Australian Taxation Office (ATO).

As experienced local agents, we always recommend investors work with a property manager and a financial adviser to ensure all their tax bases are covered. You don’t want to miss out on any benefits or get stung by an unexpected ATO bill.

If you’re thinking of buying an investment property – and it’s an opportune time to be looking – then take note of the critical records listed below that you’ll need to keep.

Our professional property management team will cover records relating to the day-to-day expenses, such as repairs and maintenance. Still, every landlord should understand the principles and financial elements of property investment.

• You should always keep at hand documents such as your mortgage papers and insurance, the contract of sale, and receipts for the purchase of depreciable assets.
• Record all rent and any rent-related income.
• Keep relevant bank statements and credit card records.
• Have readily available a copy of the tenant lease and any land tax assessment made on you that year.
• All expenses to be claimed as deductions should include the item, the cost, the supplier’s name and the date of purchase. 
• List all relevant costs of any significant improvements. Your accountant may suggest some are capitalised over a set period instead of claimed in one year. 
• The cost of repairs and improvements must be separate from depreciation costs. That will enable you to work out deductions and capital gains or losses correctly more easily.
• You must retain proof of the property purchase price and the date you entered into the contract of sale. When the time comes to sell, you’ll have to work out any capital gain or loss. The relevant date for this calculation is the contract of sale, not the time of purchase (settlement date).
• When selling, you can claim the costs of the marketing campaign, agent commission, legal fees and so on. This will be set against your capital gain or loss. 
• All records must be kept for a minimum of five years.
• All records should be in English or easily translatable.