Rental property investing continues to be a popular form of investing for many Australians.  However, some investors are failing to seek advice from an appropriately qualified taxation adviser before making the investment, usually resulting in the investor not considering the various tax concessions associated with different types of properties.  The concessions are significant and will often reduce the cashflow impact associated with the early stages of such an investment.  

Rob Giffard, a principal from GiffardSim Accountants at Nowra said that he advises many clients about the various tax treatments associated with rental properties.  "The difference in the tax treatment can be significant and is a critical consideration before you invest.  In many cases it can mean more than a few thousand dollars extra a year in tax deductions".

Some investors may be reluctant to pay a few hundred dollars to seek advice before investing, but they need to consider how insignificant this amount is in comparison to the potential annual tax savings that may be experienced.  Mr Giffard said that he usually addresses several elements of the investment transaction with his clients; including, asset ownership and structuring, minimising the cashflow impact of the investment, financing options, depreciation and capital works deductions, capital gains tax implications, as well as 'what if' analysis where changes to interest rates and property vacancy may impact on affordability.

Investors who currently own a rental property may also benefit from a fresh look at the tax deductions they are getting as a result of owning the property.  Depending on the age of the property investors may be able to claim commonly missed deductions such as capital works and asset depreciation, "these two areas of deduction are often left out by investors but they may be able to claim the deductions, leading to a significantly improved annual tax position" Mr Giffard said.

Current and potential rental property owners wishing to maximise the tax deductions associated with their current or future rental property should contact GiffardSim Accountants for further specialised advice.

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