Are any of you doing a strategy where u have a few positive properties to support a negative gearing one? And what do u do with the rental income, do u put it in an account just for rental incomes and direct debit to the loans?
I am wondering i should use my own personal bank account to receive the rental income and paying the interetst only loan..
any tips?Personally I have a separate bank account set up specifically to handle all the incoming and outgoing dollars for our properties and it has “investment account” in the title which appears on the cheques and the statements. This way it keeps all the funds relating to the properties in one place and provides a CLEAN record and paper trail for the ATO.
I also have a credit card linked to the account for property expenditure, such as paying rates, insurance and so on. Again, this keeps everything tidy for the ATO and makes my accountant very happy.
Your bank shouldn’t have any problems doing this for you, and I really recommend it.
Dianne
I did start doing that also Dianne, but found the book-keeping very frustrating because I was forever transferring money between accounts.
There is a better way!
I strongly recommend a good book-keeping software, eg quickbooks, is the one I use and am familiar with. You can also get Myob.
it is well worth the outlay as your investments/assetts/share empire stars to grow.
We have only 4 accounts: husband’s business, called Continental Appliance Service (european appliance repairs), my small business- I only use my credit card for this, a separate super account (self-managed fund, this is a must, to keep separate).
The main account is our home equity account, or CBA viridian line of credit, absolutely every bit of income goes into this, be it personal income or wages, rentals etc.
Similarly every expense, personal or rental or investment comes out of this, including loan repayments.
The good thing is, all income helps reduce your debt and tracking is much easier.
In using Quick books, you can track absolutely every cent in or out. Be it in a trust, invest co. or personal.eg, each property can be set up in its own sub account, each loan is made up separately, the accountant really likes it and you have a degree of overview.
At the end of the financial year it almost gives you a dream run with the accountant, if there is such a thing!
I have set up a separate credit card account just for the property expenses now ( we are up to no 7), because tracking expenses to your personal or other credit card is difficult.
The rental manager pays a few property bills for me straight out of the rent, eg landlords insurance.
The water service bill has been set up as a direct debit and cominsurance takes out monthly insurance premiums directly from my account.
I have since this year gone part-time, just to handle the pile of mail that comes in, do the book-keeping, and monitor properties, phone calls etc.)
Like Regina, I use quickbooks, and the important thing to remember is you should be reducing your non tax-deductable loans first. So your positive cashflow ideally should be going to pay of your house or into further investing rather than paying off your investment loan. [
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