The top 5 questions every property investor should ask themselves at tax time

With the end of the financial year fast approaching it’s a good time to sit back and analyse your financial position. Investors should be questioning their property portfolio to make sure it’s performing at its best. Regardless of how many properties you own you need to treat them all like a business and undertake regular reviews. Ideally these reviews should be done every six months but no less than annually.

Too often, I find investors are reluctant to question whether their property investments are getting the best return. For some reason they seem to favour leaving them tick over in the hands of a property manager.  This is laziness as a property manager only provides part of what’s needed to create a real estate portfolio that operates at the highest level.  If you want to maximise the benefits of your investment you must ensure you are receiving the best possible return on it.

As a stocktake, Bright recommends you should ask yourself the following questions:

1. AM I CONFIDENT THAT I AM MAKING MY PROPERTY ASSETS WORK FOR ME? - Insist that your property manager undertakes regular rent reviews to make certain your rental rate matches or exceeds current market values and if it’s consistently falling below the mark, then you’ll need to ask why? As a starting point ask yourself: “Have I selected an inefficient property manager, do I need to undertake some improvements or have I purchased a property that performs below average and will continue to do so?”

2. AM I TAKING ADVANTAGE OF ALL THE TAX DEDUCTIONS I AM LEGALLY ENTITLED TO? - Surprisingly many property investors claim significantly less back from the Tax Office than they are entitled to each year simply because they don’t claim every legitimate deduction. Tax rules and regulations change every year and you need to keep abreast of the current environment.  For this reason it pays to invest in a proactive accountant who can structure your properties tax-effectively and keep you up-to-date on all the latest rulings from the Tax Office.

3. AM I ON TRACK TO REACH MY RETIREMENT NEEDS? - Make sure your financial plan is on track to meet your retirement needs and includes the timings of when you want to buy more property to build up your asset base.  Small adjustments over 10 or 20 years will make a significant financial difference when it comes to retirement.

4. AM I PAYING THE LOWEST INTEREST RATE AVAILABLE TO ME? - A drop of even 0.25 per cent will save you tens of thousands of dollars over the life of the loan but be sure the conditions of the loan also marry with your future plans. It is advisable to review your interest rate level every one to two years to make sure you’re getting the best deal. You may even find that your current lender is willing to match a competitors’ rate, saving you the hassle of moving, but you’ll never know unless you ask!

5. ARE THERE ANY FINANCIAL CHANGES THAT I NEED TO IMPLEMENT NOW TO MAKE IT EASIER FOR ME TO ACHIEVE MY PROPERTY PLAN FOR THE COMING FINANCIAL YEAR? - By writing down clear goals for the future growth of your portfolio it will make it much easier to determine how much money you’ll require for the necessary deposits. Then you can incorporate this information into your overall financial plan. If you want to add to your portfolio in the next 12 months then start planning now and setting the required savings targets and get your finances in order.