Top tax tips of landlord with 78 homes

Self-made millionaire Eddie Dilleen makes $125,000 a month in rent from his 78-strong property portfolio, and shares his top tips to stay ahead at tax time.

Eddie Dilleen earns over $125,000 a month in rent from his 78 investment properties. Picture: David Swift

Self-made millionaire Eddie Dilleen, who makes $125,000 a month in rent from his 78-strong property portfolio, shares his top tips to stay ahead at tax time.

Mr Dilleen, 31 – who scrimped and saved his way out of council housing in his teens to now own multiple rental properties across almost every Australian state – said tax returns were an important priority for him, and not just because the Australian Taxation Office is cracking down on rental deductions this year.

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A large portion of Eddie Dilleen’s portfolio is in Queensland including this five bedroom duplex rented out in Brassall, bought for $410,000 in March 2020.

“It’s important and the sooner it’s done, the easier it generally is to obtain finance for another investment property,” he said. “I’ve seen hundreds of landlords not be able to buy further properties because they haven’t got their tax return done.”

That is one of the top three tax tips he stands by to build his portfolio: “Act with urgency”.

“I always tried to get my tax return done as soon as possible. The sooner it’s done the better as many banks and finance lenders often ask for the last year’s tax return and not having them done can slow down your property investing journey and stop you from getting further finance.”

The tax bill for his 78 properties, he said, was helped by “a lot of the properties” having depreciation tax benefits which lowers tax payable.

A six bedroom rental property that Eddie Dilleen bought in Waterford, Qld, for $565,000 in January 2021.

Eddie Dilleen’s portfolio includes this three bedroom house in Waterford West, Qld, bought for $810,000 in October 2021.

The one thing the millennial millionaire definitely does not do is his own tax returns – a mistake he said many landlords made over the years – and his second tip.

“A common mistake would be trying to do their own tax return to save money, but in actual fact they would likely be costing themself more time and money in the long run by not outsourcing it to a professional who would likely get them a better outcome.”

“Make sure you use an accountant,” he said. “Don’t try to do your tax refund yourself if you have one to more than two investment properties.”

“Find the right accountant, preferably one that has investment properties themself that can speak from actual experience. They will have more knowledge on getting the landlord the best tax outcome.”

Eddie Dilleen grew up in housing commission in Sydney where he worked multiple jobs to save up a deposit on his first property. Picture: Sam Ruttyn

His main practical measure throughout the year though was to “get your property manager to pay the council rates and expenses on your behalf” – his third tip.

“All my properties, the council rates and water rates get automatically sent directly to the property manager. This ensure that the end of year statement from the property manager has all expenses on that statement itself, so it makes it easier to give that directly to the accountant at tax time and saves having to email them all the individual council rate notices.”

Despite the past year being characterised by higher interest rates, Mr Dilleen said it was no different to any other year tax-wise.

This three bedroom house in Marsden was added to Mr Dilleen’s portfolio for $309,000 in September 2020.

The comments come as the Australian Taxation Office forewarned all landlords that rental property deductions would be one of its top three priority areas to crack down on in 2023 – alongside work-related expenses and capital gains tax.

ATO Assistant Commissioner Tim Loh said nine out of 10 rental property owners were getting their returns wrong, which often saw rental income being left out or mistakes made on property related deductions.

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‘We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return,’ Mr Loh said.

‘You can only claim interest on a loan used to purchase a rental property to earn rental income – don’t forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income.”

Around 87 per cent of individual rental owners now use a registered tax agent for their income tax returns, with the ATO warning it would use matching programs this year to track rental property-related data and residential investment property loans data.

‘This is just one example of the work we are doing to help you get your return right and make sure people are claiming expenses correctly,’ Mr Loh said.

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Originally published as Top tax tips of landlord with 78 homes