It appears strange that an Australian with more than 1 million dollars in annual income would pay no taxes.
According to Yahoo Finance last year, 69 millionaires achieved taxable income levels below the threshold of $18,200, through deductions.
The number of tax-free members in this year’s zero tax club seem to be similar to last year.
Each of the millionaires claim about $50 million in tax deduction’s to get into the tax free bracket. Millionaires, do in fact, take the normal deductions we do – such as work-related expenses and charitable contributions. However, the average Joe would not be able to claim one massive claimable cost.
Those are the costs associated with managing tax affairs.
An Australian can claim expenses incurred by using a tax agent or accountant to complete the tax return. These can range from $50 – $300.
However, many millionaires incur thousands, if not hundreds of thousands, seeking professional help with their taxes in order to lower their tax burden.
So what are some other ways you can minimise how much you pay in tax?
When you report rental property expenses on your tax return, you will be able to take advantage of numerous potential tax deductions, which will boost your refund and increase your rental income.
What are Tax-Deductible Rental Property Expenses?
Rental property owners can claim any expenses related to their rental income if they own rental properties that earn them income. In addition to the costs of owning and operating your rental property, you can deduct these expenses (from your taxable income) and they are plentiful!
Here are 25 rental property expenses you should check for to ensure you are claiming them correctly on your tax return:
- Advertising for tenants
- Bank charges
- Body corporate fees
- Council rates
- Electricity ( While rented or available for rent )
- Gas (While rented or available for rent)
- Gardening and lawn mowing
- Insurance – building, contents, landlord
- Interest on loans
- Land tax
- Legal expenses (tenant related)
- Mortgage discharge expenses
- Pest control
- Property agent’s fees and commissions
- Capital Works (claimed at 2.5% of the cost per year)
- Quantity surveyor’s fees
- Repairs and maintenance
- Secretarial and bookkeeping fees
- Security patrol fees
- Servicing costs e.g. smoke alarms
- Stationery and postage
- Tax agent fees
- Water charges
- Property related purchases less than $300. Or *Depreciation of purchases above $300.
Negative Gear Your Property
Creating tax losses with negative gearing is achieved by deducting costs that outweigh investment income. When a property owner’s deducted expenses exceed the property’s rental income, the owner can deduct the net rental loss from his taxable income.
A lot of investors who buy properties to rent out to tenants don’t expect to make money on the rent. Instead, they buy properties with the intention of cashing in on a property’s long-term capital growth. Which is to say, they buy a property in the hope that its value will eventually increase to a point whereby a healthy profit can be made from its sale.
How We Can Help You Reduce Your Tax?
At Chase Edwards, we believe you have a right to understand and share our wealth creation strategies. When you engage us to reduce your tax, we will take you through our tax reduction strategies, step-by-step, in language that is both transparent and easily understandable. A senior tax strategist will not only look at your current income and potential deductions; They will also investigate previous tax returns, your employment or business situation, asset ownership and structure, as well as a range of other factors that may allow you to maximise your return on investment.