Being tax-smart when investing in property means more than making the right property choices.

If you use your property to earn income at any time, you need to:

• keep records right from the start

• work out what expenses you can claim as deductions

• work out if you need to pay tax instalments throughout the year

• declare all rental-related income in your tax return

• consider the capital gains tax implications if you sell.

Capital gains tax (CGT) is the tax you pay on profits from disposing assets, such as a rental property, vacant land or a holiday home. When you dispose of a property, such as by selling it, you may make a capital gain or loss. You report capital gains or capital losses in your tax return and pay tax on your capital gains. Although it is referred to as 'capital gains tax', it is part of your income tax. It's not a separate tax.