5 tax tips to maximize cashback on your real estate investment

MCG Quantity Surveyors managing director Mike Mortlock said with rising interest rates, rising construction costs and rising cost of living pressures becoming a bigger burden on the pockets hip, investors should take steps to “educate themselves” about the state of their finances. .

“Our research shows that investors are becoming more cautious about their financial arrangements, and their level of engagement will only increase as fiscal pressures force us all to look for ways to maximize our bank balances,” a- he declared.

He also urged property investors to adopt a sooner rather than later approach when dealing with their property investments in these “difficult economic times”.

“If real estate investors intended to take some of these actions on their investment, but hadn’t taken the time to do them yet, my suggestion is that they address them immediately,” said said the tax expert.

“Doing these easy steps now will maximize your tax returns – a much-needed boost given the challenges of the rising cost of living,” Mortlock added.

Below are five ways investors can increase the tax yield of their properties while increasing their overall value:

1. Take care of minor repairs and maintenance

Mr Mortlock said tackling trivial repairs and maintenance means immediate cash in investors’ pockets, as work done now is instantly claimable.

He explained that most investors put off small maintenance jobs because they focus more on big renovation projects.

Quoting the latest MCG quantity surveyors 1000 assets report, Mr. Mortlock said about 30% of all investment properties undergo renovations, with an average cost of about $25,000 to $30,000 per property.

But the expert said that even small jobs could provide an advantage. “I’m talking about those minor jobs you’ve been postponing. Any repair – no matter how small – entitles you to claim the cost of the materials used to fix it,” he said.

Additionally, Mortlock explained that labor costs can also be claimed if you are working with a contractor.

“Works may include landscaping – something landlords may be able to do themselves with permission from the tenant. You can also claim expenses incurred for pruning, cleaning, gardening and lawn mowing,” he said.

He reiterated his appeal to investors to undertake this work immediately. “Now is the time to act because any expenses you incur in June are 100% deductible in July. Miss this window of opportunity and you will wait another year to benefit,” he explained.

2. Repay the interest on your loan early

Investors who can afford to pay their annual interest charges up front should consider doing so.

“Australians have managed to increase their savings throughout the pandemic with increases in their clearing accounts and savings,” he explained.

“I would suggest devoting some of that treasure chest to prepaying your interest bill for the coming year. The amount you pay is immediately deductible from your 2020-21 tax return,” the expert advised.

He said that while prepayments won’t insulate your pockets from impending rate hikes, they will give you a head start come tax time.

“Interest rate hikes seem inevitable this year. However, if you can afford it, prepaying a larger portion now will give you flexibility to accommodate increases as the year progresses, while immediately increasing your tax return,” he said.

Mr Mortlock also advised investors who also took equity out of their mortgage on an investment property to ensure the funds were used for investment purposes to avoid getting into trouble with the Australian Taxation Office (ATO).

3. Set an amortization plan

If you haven’t arranged an amortization plan yet, Mortlock suggests you pick up your phone and schedule one today.

He explained that depreciation schedules prepared by duly qualified professionals give extremely advantageous tax-deductible depreciation for the fixtures, fittings and finishes of your property.

And while there are still investors who are still unfamiliar with this strategy of increasing cash back rewards, he said more and more are becoming aware of this tax advantage.

“Fortunately, investors are increasingly aware of their benefits. Our newest 1000 assets report revealed that the time between settlement and ordering a calendar has dropped to around eight months in 2022 – more than half the time it was in 2016,” he revealed.

Some investors might frown at the high depreciation schedule costs that could run into the hundreds of dollars, but Mr Mortlock said it could ‘return owners thousands of dollars’, making it a worthwhile investment .

4. Buy items for your property

Mr Mortlock said while getting items fully installed before the end of the year could be a challenge, landlords should instead focus on buying stand-alone items that contribute to the rental return.

He advised buying items that can be installed quickly, such as light fixtures, rugs, tiles and carpeting. Other items he listed included potted plants and other garden ornaments, floor lamps and appliances such as a new chest freezer.

“All things that will be used by the tenant, contribute to increase the rent and can be deductible,” he said.

For items valued at $300 or less, investors can claim the full cost on the tax return.

For those with more money to spend (and time permitting), he advised considering installing equipment priced under $1,000. “[Deduction] the rules make this type of year-end spending extremely tax-efficient,” he explained.

5. Work with your advisors

Finally, Mortlock advised investors to seek advice from their respective property advisers and to do so before the end of June.

Mr Mortlock said property managers keep a tally of deductible repairs and upgrades as part of their annual rent statement, and this will be mandatory for your accountant.

“In addition, your property manager will provide advice on work they can coordinate in the coming week to help you improve your deductions by the end of the year,” he said.

The expert also reminded investors that advisors’ fees are tax deductible and that they should include professional fees as part of their tax return this year.



An investment is an asset or item purchased with the expectation that it will generate income or increase in value in the future.


Property refers to something tangible or intangible over which an individual or business has legal rights or ownership, such as houses, cars, stocks, or bond certificates.

5 tax tips to maximize cashback on your real estate investment

spinnaker logo

Last update: June 23, 2022

Posted: June 24, 2022