Tax implication for +ive cahflow

Viewing 13 posts - 1 through 13 (of 13 total)

murph38
Member
@murph38
Join Date: 2004
Post Count: 7
August 18, 2004 - 12:01 am
I am very new into the IP game and still trying to purchase first IP. My question is this, if I receive positive cahflow, what are the implications at tax time??? Will I have to pay back tax because of received income???
Help from someone in the know would be greatly appreciated.
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
August 18, 2004 - 1:27 am
Hi
Yes, any profit (after all costs decuted) will be added to your taxable income and you will have to pay extra tax at the end of the year.
Terryw
Discover Home Loans
North Sydney
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Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Julia
Member
@julia
Join Date: 2004
Post Count: 217
August 22, 2004 - 12:59 pm
Murph 33,
A positive cashflow property does not always result in a tax bill because it may not be positive for tax purposes. This can happen if you are able to claim building depreciation as a tax deduction. This is a tax return entry and does not effect your cash flow.
julia
http://www.bantacs.com.au
If you can’t BAN TACS at least minimise it legally
FFComm
Member
@ffcomm
Join Date: 2004
Post Count: 627
August 24, 2004 - 3:05 pm
Just a quick tip, there are lots of ways to reduce any tax you have to pay from RE. First you can use depreciation, any repairs, traveling to and from the property, meetings with advisors (accountant), seminar and books (on property), etc.
So as you can see you can reduce any taxes you have to pay quite significantly. You just need a good accountant.
I’m sure Julia from Bantacs would be able to help!
Rgds.
Lucifer_au
The DIY Dog Wash
Member
@the-diy-dog-wash
Join Date: 2003
Post Count: 696
August 25, 2004 - 1:00 am
Be careful relying on depreciation as sometimes you may have to pay that back too!
Cheers
Leigh K[biggrin]
Derek
Member
@derek
Join Date: 2004
Post Count: 3,544
August 25, 2004 - 10:56 am
Hi Leigh,
If you have bought an IP after 13th May 1997 the ATO will deduct any eligible depreciation claims/costs from the cost price of the property when calculating CGT irrespective of whether or not you claim them.
Might as well get today’s dollars today rather than waiting to get them tomorrow when they are worth less.
Derek
[email protected]
Property Investment Support Available. Ongoing and never stopping. PM welcome.
redwing
Participant
@redwing
Join Date: 2003
Post Count: 2,733
August 25, 2004 - 12:41 pm
Derek..with that comment in mind..do you use the 15-15 tax variation form…
PS- Hope all is going well with you, guess with school still on your as busy as ever..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
Derek
Member
@derek
Join Date: 2004
Post Count: 3,544
August 25, 2004 - 2:02 pm
Hi Redwing,
Absolutely – but keep some claims up my sleeve for the end of the financial year so that I don’t upset the ATO.
Staying very busy at the moment – which the wife thinks is a good thing. Just got back from a SMSF workshop that may interest you – check out http://www.onlinesuper.com.au – there is an office in Perth.
Derek
[email protected]
Property Investment Support Available. Ongoing and never stopping. PM welcome.
kay henry
Member
@kay-henry
Join Date: 2003
Post Count: 2,737
August 26, 2004 - 12:24 am
Leigh,
A Depreciation Schedule done by a Quantity Surveyor can’t be knocked back from the ATO.
kay henry
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 1, 2004 - 12:41 pm
Kay
Yes it can – if not done correctly.
Terryw
Discover Home Loans
North Sydney
[email protected]
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
YC
Participant
@yc
Join Date: 2004
Post Count: 29
September 13, 2004 - 6:12 am
Hi Lucifer_au,
I notice you mentioned Travelling to and from the property. I’m considering to go to NZ for my 1st IP. Can I claim the travelling expenses in the trip as my lose in business thus claim tax return? And do I HAVE to set up a trust/company for this? This brings up another question of mine: is a trust or a company more appropriate for individual property investers like us? – well it may be the topic for another post…
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
September 14, 2004 - 2:55 am
I don’t think you can claim a trip before you own the property. But maybe if you set up a trust/company you could???
Trusts are usually more appropriate for owning appreciating assets.
Terryw
Discover Home Loans
North Sydney
[email protected]
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
mum
Member
@mum
Join Date: 2004
Post Count: 104
September 16, 2004 - 4:49 am
Hi YC
My understanding is that travelling to investigate the purchase of a property is only claimable if you are already established as a property investor.
However, once you have bought the property, then travelling to inspect and/or do repairs is claimable. You may have to apportion travelling and accomodation costs between the business part and personal/holiday part. ATO can get quite upset about people travelling interstate or overseas for what they consider is a working holiday.