If you are in the market to buy a home or are currently a property owner, it is important to understand how maximising your tax benefits can help you attain your financial goals. By taking some simple steps now, you will be able to get the most from your refund with these property tax tips.
When it comes time to lodge your tax return, you should know each deduction that you are eligible to claim, in order to maximise the amount of your refund. For property investors, this is the best time to organise any receipts and statements related to your properties. There are many deductions that investors may be eligible to claim including agents’ fees, home loan fees, cleaning, insurance, and even travel to and from the property for inspections. Most residential homes will also be eligible for depreciation deductions. It is important to check with the Australian Taxation office or a depreciation specialist first, though, to make sure your property would qualify.
Many property owners will qualify for a variety of deductions or credits, but the only way to be sure is to consult with a financial adviser to make sure that you are getting the most from your refund.
Now that we know the importance of getting the largest refund possible, the question becomes: How will this help me with my property goals?
By having a lump sum of money available to you, you have the option to make a payment directly into your mortgage. This “extra” payment would decrease the overall amount you would have paid in interest and even reduce the number of payments you would have on your mortgage. For example, if you made a $500 payment to your $300,000 mortgage on your property with a 7% interest rate, in the long run you would save approximately $2,359 in interest and remove one monthly payment from the loan. This is based on being 5 years into the loan with a 30 year loan term. If you were able to apply your tax refund every year to your mortgage you would see huge savings and be that much closer to paying off your mortgage.
If are still working to buy a home, you can still get the most from your tax refund, by saving that money for part of your deposit on a future purchase. The refund amount could also be used to pay down current debt which will increase your chances of qualifying for a home loan much faster.
Mortgage Masters are expert mortgage brokers in Newcastle, Maitland and Hunter Valley. Get the best mortgage advice on how to start working towards your property dreams, please contact us today!