Step 2 - Building Your Team
CORE TEAM MEMBER - Accountant
Now first things first, the role of your accountant is not to give you advice regarding what properties to buy, where to buy them or anything else related to this (i.e. don't buy the new off the plan house / unit because your accountant said it's good for your tax returns). Your accountant is there to assist you with minimising your tax and ensuring you are building out your property portfolio in a tax optimised manner.
Remember, tax benefits are just a bonus to property investing, it is not a strategy.
With that being said I don't think I've ever met anyone that enjoys paying tax and tax itself is by no means a bad thing because you only pay tax when you are making money which means you have been doing something right, but we should all be aiming to minimise our tax as must as possible because as Kerry Packer famously said:
"……..if anybody in this country doesn't minimise their tax, they want their heads read. Because as a government, I can tell you, you're not spending it that well that we should be donating extra."
Your accountant will be able to explain to you:
the current tax implications of the property purchase you are about to make (including any impact on your existing property portfolio) and any potential future tax impacts should you consider selling at some point in time;
the strategies and structures you can considering implementing / taking advantage of to minimise your tax (i.e. negative gearing, trust structures and depreciation benefits); and
they should also be able to assist you with modelling your cash flow position to ensure the property you are about to purchase aligns with your financial goals (however you should also be doing this yourself - I have mentioned this before but there are many free property investment cash flow calculators online if you give it a quick Google).
Unlike your mortgage broker, you may get away with not consulting an accountant before you make a property purchase if your situation is a very simple one - i.e. you are buying your first property, you’re an Australian citizen / tax resident and you are purchasing in your own name.
But in my opinion it doesn't hurt to just speak to an accountant beforehand anyway to establish that relationship and ensure you haven't overlooked anything about your personal circumstances which could create a negative tax implication upon the purchase of your investment property. However, in any event, you should definitely speak to an accountant after your purchase.
Similar to when choosing your mortgage broker, please do not just go with an accountant that your friends or family recommends or feel the need to choose an accountant who is located locally to you. You need an accountant who is experienced in property investing and most importantly, has built a property portfolio themselves. Again, you can give them a Google but check-out some popular property forums and YouTube to see if you can find a suitable accountant.
In terms of tax optimisation strategies / concepts you should discuss with your accountant here are a few of the main ones (but there are many others which is why you should talk to an accountant…):
Tax Optimisation Strategy / Concept
Depreciation Deductions
Negative Gearing
Tax Deductible Property Expenses
CGT Strategies
Different Ownership Structures
Explanation
Depreciation is a way for property investors to offset the cost of wear and tear on their investment property by claiming it as a tax deduction against your income. There are two main types of claims available:
Capital works deductions, which apply to long-lasting structural components such as walls, roofs, and foundations. Note the property generally must built after 18 July 1985 to claim these deductions.
Plant and equipment depreciation, which covers removable items like carpets, appliances, and window coverings. Note that this generally only applies to new items you have purchased and installed yourself during your time of owning the property.
To ensure you claim the maximum deductions available, a professional quantity surveyor can prepare a tailored tax depreciation schedule for your property.
If you have purchased a property in your personal name you could also take advantage of negative gearing.
Negative gearing happens when the costs of owning your investment property (like loan interest, maintenance, insurance, and depreciation) are higher than the rental income you earn from it. You can usually use that loss to reduce your taxable income.
For example:
Your rental income = $20,000 per year
Your expenses = $25,000 per year
You make a $5,000 loss
That $5,000 loss can be offset against your salary or other income, which lowers the amount of tax you pay.
It is important to note that you can't do this if you purchased in a trust / company but there are other tax benefits related to this - ask your accountant.
You should also remember that stategies like this are subject to potential change in the future - with the Government having raised the possibility of removing negative gearing many times. I have linked this video before but watch the below if you are interested on a perspective on what would happen to the property market if it was removed.
Most of the expenses related to your property will be tax deductible, including:
Interest on your investment loan
Repair / maintenance costs
Property management fees
Council fees and rates
Accounting / legal fees
Building and landlord insurance costs
You should check out the video I linked with Jeremy Iannuzzelli on the Pizza and Property Podcast - he offers some great insight into this topic.
When you sell an investment property, you may need to pay Capital Gains Tax (CGT) on the profit from the sale.
Some common strategies to help minimise CGT include:
Owning the property for more than 12 months, which makes you eligible for a 50% CGT discount.*
Choosing to sell in a year when your personal income is lower and / or not selling multiple properties in the same year, so the tax impact is minimised.
Please remember that these strategies might not always be available / beneficial in your circumstances, for example if you buy in a company structure, so make sure you discuss with an accountant.
*Similiar to negative gearing, there has been a lot of talk recently about reducing / removing the CGT discount mentioned above (in fact, it may be gone or has been reduced by the time you are reading this). I have linked a few videos if you are interested on a perspective of what might happent to the property market if this does in fact happen.
General speaking there are three structures people use to hold property in Australia:
Personal ownership (i.e. in your own name) – by far the most straight-forward option; however, all profits on your rental income will be taxed at your personal marginal tax rate.
Trust ownership – this provides the most flexibility as it can potentially facilitate the distribution of income to beneficiaries who may be on lower tax rates than you (very important you get professional advice on this point…). They also have an added benefit regarding preserving borrowing capacity with some banks which we mentioned earlier.
Company ownership – any gains are taxed at the corporate tax rate; however, this structure comes with other restrictions, such as not getting access to the CGT discount (a lot of house flippers will use this structure if they plan on selling the home within 12 months of buying it as it is generally more tax effective… but speak to an accountant).
One thing to note is that land tax can often be very different in each of the above structures depending on what state you are purchasing in, so make sure you take this into consideration.
This stuff is quite complicated and highly dependent on your personal situation so please speak to you accountant. Here are some videos with more details. For reference, I have only recently discovered the creator Davie Mach on Youtube, you should go check his channel out for tax related items like structuring etc. he seems greats.
The ATO also has a lot of great resources for landlords so feel to check out the following for more information and as always this is not financial or tax advice… talk to your accountant.
https://www.ato.gov.au/forms-and-instructions/rental-properties-2024
https://www.ato.gov.au/forms-and-instructions/guide-to-capital-gains-tax-2025