A critical time of year for property investors, and it’s imperative that you’re ready for the tax man.
Being prepared for the tax man can be relatively easy, and it doesn’t take much time. I’ve been refining my record-keeping for years!
I used to keep all my receipts in a box, just the way I was taught to. I’d even write the details of the purchase on the receipt to make it easy for my future reference. At tax time, I’d take a day or two to compile my receipts and prepare my tax return.
Now my tax return is ready to go as soon as I get my group certificates, and it’s easy! At the start of every tax year, I create a spreadsheet for entering my property expense details. This spreadsheet has the following information:
- Income (from rent)
- Depreciation (from your depreciation schedule)
- Expenses (categorised into body corporate fees, loan/interest fees, management fees, postage/stationery, repairs/maintenance, water & rates, insurance, etc.)
As soon as I have a property-related transaction, I enter it into the spreadsheet immediately.
This way I have very little stress at tax time and I can keep my finger on the pulse of how each of my properties is performing. I also don’t forget those little expenses that can add up.
The lesson to be learned here is that it’s not only easier to set up your tax spreadsheets and enter your information immediately, but it gives you a great idea of how your properties are performing. All this with very little effort. And you save your accountant time, which in turn will save you money!
So take half an hour and set up your spreadsheet(s).
Keep them up to date. It’s easy. It’s useful. And it’s the most powerful tool you can develop to track your investments.