Every financial year panic sets in as tax time looms. A mad rush commences to gather together all the necessary documents to complete the required returns. This process can be made much easier if proper methods of record keeping are put in place. The following checklist provides some good ideas for simplifying your record keeping.
Loan statements: These statements are important for calculating, and subsequently deducting, the interest costs on your investment loan.
Invoices and receipts for repairs, replacements and capital works: These costs may be claimed on your tax return.
Rates notices: These notices detail the applicable rates charges on your property, and should be retained alongside your other records to be claimed as a tax deductible expense.
Real estate statements: These statements detail necessary information about your rental property income, the real estate agent’s management costs, and perhaps even repairs undertaken on the property.
Insurance policies: Keep these on hand at tax time as any premiums for building replacement, contents, or landlord insurance can be claimed as tax deductible expenses.
Depreciation schedule: Depreciation is a valuable means of generating tax deductions. Keep a depreciation schedule and include any depreciation on buildings or fittings in your tax return to help reduce your assessable income.
It also makes good sense to keep all of this information together in a secure location. Many people scan documentation and store the information electronically to minimise the piles of paperwork. However, it is important to retain hard copies as a back-up just in case your computer crashes or is infected by a virus.
Be aware that any records relating to deductions claimed for property expenses must be retained for at least five years in order to comply with the requirements of the Australian Taxation Office (ATO). Your financial planner or tax agent can help you with your record keeping.