Year-End Tax Risks and Opportunities for Investment Property Owners

Worldwide Advisory
1 day ago
3 min read

As the financial year draws to a close, savvy property investors—especially Aussie expats and offshore businesses—should review their portfolios with a strategic eye. The ATO has ramped up scrutiny on property-related deductions and capital gains, making now the perfect time to optimise your position and avoid costly tax traps.

Whether you own one rental property or manage a cross-border real estate portfolio, taking action before June 30 can deliver significant tax savings—and ensure compliance with complex Australian tax laws.

🏠 Key Year-End Risks for Investment Property Owners

❗ 1. Overclaiming Deductions

The ATO continues to crack down on incorrect rental property deductions—particularly:

Repairs vs capital improvements

Travel expenses (now largely non-deductible)

Interest on redraws or mixed-purpose loans

If you’re living overseas, you must be especially cautious. Claims can easily become invalid if:

You’re not actively managing the property

There’s inadequate documentation for expenses

You’re using the property for personal stays during visits to Australia

Tip: Ensure all deductions relate strictly to income-producing use and maintain thorough documentation.

❗ 2. Capital Gains Tax (CGT) on Sales

Selling a property at year-end? Timing can significantly affect your CGT outcome:

Contract date determines the tax year—not settlement.

Expats may lose the CGT main residence exemption if they’ve ceased residency, even if the property was once their home.

Foreign residents may face higher withholding rates and limited deductions.

Risk Alert: If you're planning to sell after ceasing Australian tax residency, you may be liable for full CGT on your former home.

❗ 3. Non-Resident Tax Changes

Recent tax law changes have impacted:

Depreciation claims on second-hand assets

Land tax surcharges in certain states for foreign owners

CGT exemptions for non-residents

Offshore investors must stay current with evolving state and federal rules to avoid unexpected liabilities.

✅ Year-End Opportunities to Maximise Returns

💡 1. Prepay Interest or Expenses

Bringing forward deductible expenses such as loan interest, insurance, or maintenance can reduce this year’s taxable income—especially useful for high-income earners or those preparing to exit Australia.

💡 2. Review Depreciation Schedules

Engaging a qualified quantity surveyor for a tax depreciation report can unlock substantial deductions, particularly for newer builds or significant renovations.

Expat Insight: Even if you’ve been away for years, your Australian property may still generate valuable depreciation claims.

💡 3. Time Capital Gains Strategically

Selling before year-end could make sense if:

You expect lower income this year

You can offset the gain with carried-forward capital losses

You’ve recently re-entered Australian tax residency and qualify for a partial exemption

Conversely, delaying a sale to next financial year may help you better manage your income and tax position—especially for expats with fluctuating overseas income streams.

💡 4. Plan for Foreign Income Reporting

If you earn rental income while living overseas, it must be reported—even if it’s managed through a local agent. Make sure your reporting aligns with ATO foreign income disclosure rules and double-tax agreements (DTAs), particularly if you're claiming tax offsets in another country.

🌍 Unique Considerations for Aussie Expats & Offshore Businesses

Expats returning to Australia must plan their re-entry carefully to avoid being caught out by tax on unrealised capital gains.

Offshore businesses investing in Australian property should assess whether their structure triggers a Permanent Establishment, exposing them to broader tax obligations.

Foreign Investment Review Board (FIRB) rules can also affect your holding and investment strategies, particularly for property developers or high-value acquisitions.

📞 Make the Most of Your Year-End Strategy

At World Wide Advisory, we help Aussie expats and global investors navigate the complex Australian property tax landscape. Whether you’re exiting the market, restructuring assets, or planning your return to Australia, we can help you: