If you are negative gearing rental properties it is important to make the most of your savings. By making sure that you have the most savings from the tax breaks you can build your wealth over time and afford further investment properties.
Keep a log of all of your traveled kilometres
If you need to regularly visit your properties in order to fix and maintain the property, as well as for general inspections, you should keep a log of those visits for tax deductions. If the property is a long distance away it can be hard to justify this expense regularly (as it will usually be cheaper and more convenient to hire a local handyman), so it's a good idea to get some advice from a tax agent to see what normal expenses should be.
Get a depreciation schedule generated
Even if your property is relatively old it is a good idea to get a depreciation schedule which helps you to write off the cost of the depreciating fittings and fixtures in the house. This can be particularly valuable for new apartments and houses which are rented with new appliances such as dishwashers, as these rapidly depreciate and can add to your negative gearing deductions. The cost of the schedule can also be deducted against your rental income.
Maximise your (investment) loans
If you are in the process of growth your portfolio it makes sense to hold as much as possible of your lending against the rental property, while keeping loans associated with your residential home as low as possible. This means when you sell a property you should deposit any profits against your home loans and continue to put down as little deposit as possible against your investment loans to maximise the negative gearing benefits.
Make smart upgrades to the investment property
When you are looking to rent a property to enjoy negative gearing benefits it is a good idea to make smart upgrades, which you can deduct against the rental income. This can include investing in upgrades that increase rental income and/or future sale price such as window coverings or flooring.
If you are looking to make the most of the negative gearing benefits as an investor it is a good idea to get some tax advice from a tax agent who is experienced in negative gearing. They can give you specific advice that is suited to your income and property portfolio.
