5 Smart Ways for Investors to Use the Extra Cash from Depreciation
Do you know that you can improve your cash flow with estimate tax returns? This happens because depreciation essentially lowers taxable income which means you can foresee more precisely and put more money in your pocket at tax time. When people get this extra cash in their pocket, they tend to put this money into savings, buying a property, car, going on a holiday, or even put it towards the daily living expenses. But if you are an investor and want to use this extra cash in smarter ways, here are few options for you:
1. Pay Your Debts:
It is always best to do the necessary things rather than buying a new car etc. If you have any major debts, this is a very good chance for you to reduce or eliminate them.
2. Expand Your Portfolio:
Your financial advisor will tell you that modifying or diversifying is a great way to reduce risk and is important for your long-term financial success. When you have a modified portfolio, different investments are likely to react differently to the same event; which means, if one of your areas is suffering, you will still have another area growing. This will save you from a significant financial loss.
3. Invest in a Renovation in Your Properties:
It is always a good idea to keep your investment property prim and proper. Try to invest in high quality appliances and change the overall look with a fresh coat of paint. Using this extra cash from property depreciation tax deduction to improve your current investment property is a nice idea. Renovations obviously also boost rental returns and increase the overall property value.
4. Expand Your Business:
When you are a commercial property investor or in a business of a tenant, extra cash never goes in vain. Depending on how your business is travelling, you can use that extra cash to expand the horizon. It means expanding the business or investing in other properties for business. For example, you can buy new properties and equipment for new properties.
5. Grow Your Portfolio:
As an investor, you should never stop at one property. You will experience greater success and returns by growing your property portfolio. But you have to consider this only if this works for you and your financial situation and fits you right with your investment goals. It is always a good idea to do some research to make sure you are investing in the right area to maximize capital growth and rental returns.
Consult an Advisor
It is important to note that these are only generalized ways to invest your money in better ways. It is always best to consult Deppro quantity surveyors to determine the best course of action for your circumstances.
Bottom Line:
There are many other ways in which you can boost your cash returns from the tax return you get in your pocket. However, you need to go through the ATO tax depreciation schedule for a detailed picture.
