End of financial year (EOFY) is an important time for all businesses, and property investors are no exception. Along with preparing financials and filing tax returns, EOFY offers property investors the opportunity to conduct a comprehensive financial review, evaluate investment performance, appraise and adjust rental rates, scrutinise essential expenses such as insurance, and set financial goals for the year ahead.
Review Your Finances
To maximise investment returns, identify areas for improvement and set realistic goals for the coming year:
- Conduct a comprehensive review of your financial situation, including rental income, expenses, and property investments.
- Consider any capital gains or losses from property investments, as these can have tax implications.
- Get advice from an accountant, tax agent, or financial adviser to determine your overall financial health and make informed decisions.
Evaluate Your Property Investment
Assessing your investment performance, by determining your cash flow position, is critical for making informed decisions about future investments.
- Review each property in your portfolio to assess its financial performance over the past year looking at factors such as rental income, expenses, vacancy rates, and capital growth.
- Identify properties that are underperforming due to low rental yields, high maintenance costs, or unfavourable market conditions, and decide whether to retain or sell these properties.
- Assess whether any property would benefit from capital improvements or renovations, as these can increase rental appeal and potentially attract higher-quality tenants.
- Consult with a financial adviser or accountant to determine the tax implications and potential benefits of different property investment structures, such as owning properties individually, through a company, partnership, or trust.
Claim All Deductions and Concessions
As a property investor in New Zealand, you can claim deductions for various expenses incurred while your property is being rented or available for rent.
- Familiarise yourself with tax deductions and concessions available to property investors, such as property-related expenses, depreciation, mortgage interest, and repairs and maintenance costs.
- Keep accurate records of your property-related expenses to support your claims for deductions.
Stay Informed About Tax Changes
Ensure you’re compliant with current regulations by staying informed of any updates or amendments to tax laws.
- Know your tax obligations - check the Inland Revenue Department (IRD) website for updates and changes.
- Get advice from an accountant or tax agent to navigate the complexities of tax filing for property investors.
Beware of Tax Refund Scams
During EOFY, there's often a rise in scam emails, phone calls, and text messages, promising significant refunds or pretending to be government agencies.
- Be vigilant of scams targeting individuals during tax season, avoid clicking on links you’re unsure about, and remember: if it sounds too good to be true, it probably isn’t!
- Check the legitimacy of any communication received by getting in touch with the IRD directly.
Check Your Insurance
Annually reviewing your insurance is essential for safeguarding your investment from risks and liabilities, while ensuring that factors such as changes in property value, renovations, or additions are adequately covered in your policy.
- Review your insurance policies, including landlord insurance, to ensure adequate coverage for your property investments.
- Consult with an insurance adviser to address any gaps in your cover to mitigate potential risks.
Navigating EOFY with confidence
EOFY can be an overwhelming time for property investors and business owners alike, but it doesn’t have to be. With expert guidance and advice from professionals, it’s possible to navigate tax season with confidence.
For more financial advice or guidance around mortgages for investment properties, contact Mortgage Express today to connect with a branded mortgage adviser near you.
