Investment tax tips to boost your refund by thousands

June 30 arrives next week, so investors wanting to boost this year’s tax refund should act fast if they want bigger deductions.

Investors have more on their minds than tax right now, as property and share prices sink simultaneously, but failing to act in the next fortnight could be costly.

Thousands of dollars can be generated through some late June tax tactics to help deliver a bigger refund. Once July 1 arrives, it’s too late.

Whether it’s shares, property or the cryptocurrency rollercoaster, it’s wise to understand strategies to potentially multiply your 2022 tax refund.

SHARES

Sharp falls in share prices in recent weeks may leave some stockmarket investors sitting on capital losses, which can be used to offset capital gains elsewhere – but only if they sell before June 30.

H&R Block director of tax communications Mark Chapman says selling loss-making shares can help investors pay less tax.

“You have got to sell the asset to crystallise the loss, and you can use it to offset any capital gains in the year,” he says.

“But you can’t use it against wages income.”

Extra contributions to superannuation can also deliver handy tax deductions – potentially more than $15,000 for a worker on an average wage, so check with your super fund.

“You can pay some super as a deductible contribution,” Chapman says.

He says investors should spend time organising their records: “the ATO has a particular focus

Property investor Ben Adams looks for ways to reduce tax. Picture: Darren Leigh Roberts

this year on record keeping”.

PROPERTY

LCI Partners managing director Gerry Incollingo says prepaying interest on investment loans can be an option to increase current year rental deductions.

And property investors will find that a depreciation report is “definitely worth it”, he says.

“By engaging a tax depreciation quantity surveyor, you may be able claim the maximum deduction as an investor and remain compliant with the ATO – annual deductions can be in the thousands each year for up to 40 years,” Incollingo says.

Finspo chief executive officer Angus Gilfillan also recommends depreciation schedules, and suggests investors consider paying interest in advance – such as a 12-month fixed investment loan option.

“We would always advise our clients to seek professional tax advice,” he says.

Spending money before June 30 on repairs and maintenance means the deduction can be recorded in tax returns from July 1, rather than waiting another year to make the claim.

RentBetter founder Jeremy Goldschmidt says while mortgage repayments are the biggest deduction for many investors, there are several other opportunities to drive tax efficiency.

He says a depreciation schedule “applies to both new and old properties and is a great way to maximise the return on your investment”.

“Keep accurate records,” Goldschmidt says.

“There is nothing worse than reaching the end of the financial year and sifting through a shoebox full of receipts trying to remember what income was received or expense was incurred.”

CRYPTOCURRENCY

Like other assets, loss-making cryptocurrency investments can be sold to reduce capital gains tax.

H&R Block’s Chapman says any selling, gifting or swapping of crypto – even within the same digital wallet – gives rise to a capital gain or capital loss event that should be recorded on an investor’s tax return.

“The problem is a lot of cryptocurrency investors don’t even think about tax, and they don’t think it needs to go on their tax return,” he says.

“That’s why the ATO is really going after it – they’re finding a lot of cryptocurrency investors aren’t declaring it at all on tax returns.

RentBetter’s Jeremy Goldschmidt says depreciation schedules maximise investment returns.

“It’s not necessarily tax avoidance. People just do not think about it.”

Investor Ben Adams says tax deductions play an important role in his three-property portfolio.

“Each of the properties are positively geared so I look elsewhere to reduce the on-paper earnings -this can come on the form of renovations, upgrades and supplies for the properties,” Adams says.

“I do feel I need to get more savvy. It’s pretty disheartening knowing we pay so much tax while big corporations pay nothing.”

TOP TAX DEDUCTIONS FOR LANDLORDS

• Mortgage interest

• Depreciation

• Water rates

• Cleaning

• Advertising and management fees

• Pest control

• Gardening

• Landlord insurance

• Maintenance and repairs

Source: RentBetter