End of Financial Year: What Every Aussie Homeowner Should Know

End Of Financial Year

As another End of Financial Year (EOFY) approaches on the 30th of June, Aussie homeowners should consider some key points to get their finances in order. That’s where we’ve put together a guide to help you maximise your EOFY and tax benefits, as you prepare for the next financial year. It is also crucial for homeowners to understand how to leverage this period to maximise their financial benefits.

Whether you are looking to refinance, optimise your tax deductions, or strengthen your financial strategy, below is a guide on the key opportunities for you to consider.

Increased Financial Activity for Aussie Homeowners

End of Financial Year (EOFY) is a prime time for you to reevaluate your financial standing. It is a time that many homeowners seek to refinance their mortgages to consolidate debt, secure better interest rates, or tap into their home equity. This period could be an optimal opportunity for exploring your options and potentially saving you money on your mortgage.

Working with a mortgage broker can help you secure more favourable home loan conditions, ensuring you get the best deal possible.

Tax Planning and Benefits

End of Financial Year (EOFY) is also a time when homeowners may look to maximise their tax savings. So how can you do that? All you need to do is understand your tax deductions:

  • Home Office Expenses: Do you work from home? You can claim for each hour you work from home during the relevant income year.
  • Interest on Investment Loans: Did you know you can claim a deduction on your investment property being genuinely available for rent, such as the interest on the loan?
  • Work Travel: Traveling from your normal place of work to perform work duties? Well, you can claim on this travel. Trips including traveling from your regular place to collaborate with a client, attending work-related conferences and meetings, and delivering items or collecting supplies.
  • Gifts and Donations: Make any donations in the previous income year? These are deductible.

There are many other tax deductions available, from an array of different areas. The best place to look for these is on the Australian Taxation Office website.

Optimise Your Mortgage at End of Financial Year (EOFY)

For homeowners and mortgagees, the EOFY period is a great time to engage your broker and discuss ways of reassessing or optimising your mortgage. When you seek Vision’s expert brokers, here are a few things we could discuss with you:

  • Refinancing: Refinancing involves reevaluating your current needs against your current home loan, to see if there is another home loan product offered by another lender with a better interest rate or better loan terms. It involves scouring the market to be able to secure you a lower interest rate, change in loan terms to help you pay off the mortgage faster, to consolidate your debts, to access equity in your home, or to find more suitable features such as flexible repayments, redraw facilities or an offset account.
  • Extra Mortgage Repayments: Your capacity to make extra repayments can significantly reduce your mortgage’s principal and interest. Most of the home loan payments you make during the first five to eight years go towards paying off the interest. So, anything extra you put in during that time will reduce the amount of interest you pay and can shorten the life of your loan significantly.
  • Offset Accounts: Do you currently have an offset account linked to your home loan? An offset account is a transaction account that is linked to your home loan, and you make deposits or withdraw from it as you would with any regular transaction account. The major difference is that the money in the account ‘offsets’ the balance of your loan, in turn reducing the amount of interest you pay every month. The higher the balance and the longer the period of time, the less interest you pay.

EOFY Tips for Property Investors

As a property investor, EOFY can be an excellent opportunity for tax savings. But following these essential tips will definitely help you prepare for tax time and maximise your deductions.

  1. Keep Thorough Records: Keep detailed records of all property-related expenses and documentation of any damage and repairs. Being well-organised is crucial, so maintain both physical and digital copies of receipts and documents will simplify the EOFY process.
  2. Plan for the Next Financial Year: Think ahead about any renovations or repairs your investment property or properties may need. Completing repairs before 30th June allows you to claim these costs in your tax return.
  3. Get Your Capital Gains Tax Accurate: If you have sold an investment property in the past financial year, you will need to pay capital gains tax (CGT) on the profit. With house prices sky rocketing, it is important to record your capital gains correctly in your tax return. The CGT rate matches your income tax rate, but if you have held the property for over a year, you may qualify for a 50% discount.

Top Tax Deductions for Property Investors

If you are a property investor, you can also claim tax deductions on your investment properties. Let us break it down:

  1. Negative Gearing Losses: If your rental income is less than your property expenses, resulting in a loss, you can claim these losses as a tax deduction.
  2. Capital Gains Tax Discount: For properties held for over a year, you can apply for a 50% discount on the capital gains tax when you sell.
  3. Home Loan Interest and Fees: Interest paid on your mortgage and certain home loan fees (e.g., offset account fees) can be claimed.
  4. Property Maintenance and Repairs: Most repairs and general maintenance costs for your investment property are deductible.
  5. Depreciation: You can claim depreciation over time but cannot claim the full cost of renovations and new appliances immediately.
  6. Property Management Fees: If you employ a property manager, these fees are tax-deductible.
  7. Additional Deductions: other common deductions include strata fees, insurance premiums, council, and water rates (if not paid by your tenant), advertising costs for finding tenants, real estate agent fees, and cleaning and pest control.

Seek Vision this EOFY!

Tax matters can be complex for both homeowners and property investors. If you wish to review your home loan, or want assistance with any investment related deductions, Vision are here to help. By contacting Vision, we can help you explore your mortgage or investment options and ensure you’re getting the best deal.