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Some good basic legal documents can be purchased from http://www.lawcentral.com.au. Cleardocs also provides good documents.
According to the Australian Bureau of Statistics the average male weekly wage was $133 in 1974 meaning that the average yearly income was $6,916. Disposable income for the same period was $2,912 per annum.
This certainly does put things into a different light.
I agree with residentialwealth. I can only laugh at people who have bought into these McMansions. I mean by 2011 the population will be moving out of these huge properties (as they will be too large too maintain – as if they aren’t already) and moving into smaller accomodation.
Older people want a few things.
1. Security. Over 55s developments that younger people or groups of young people cannot move into will be attractive.
2. Close to transport, shops and hospitals. Give them a sense of mobility.
3. Space yet easy to clean. The feeling of space will be important but actual square metreage will be hard for them to maintain.
I really see places like Kellyville, etc., and the people who bought in those areas, going through a very tough period. They have bought huge homes at huge prices and it could be 10 years before they ever see a return on their investment. In fact over 10 years with interest and inflation they will have lost huge amounts of money.
Just my opinion but health and aged care is the future trend. I agree with the saying that when the bellhops are buying start selling.
Not sure how you came up with a value of $65k for it to be positively geared. Ok the variables will differ but lets assume :
1. You are on the top marginal tax rate paying 48.5%
2. The property was constructed prior to 1985 and therefore not eligible for the Division 10D capital allowance.
3. Assume depreciation on fixtures and fittings at say 2,000 per annum.
4. Interest rate of 7% per annum.So the rental income will be $ 6,760
Interest will be $ 5,600
Depreciation $ 2,000
NET LOSS $ 840
TAX EFFECT $ 395
TAX REFUND $ 445So the property will result in a refund of $445 per annum. This is a good investment. Without taking into account the depreciation the property is positively geared.
If the capital growth is there as well then this sounds like a good investment to me.
Well I can provide some questions you should ask of your accountant but someone else will need to provide you with information on lawyers. Firstly you need to determine the purpose your using the accountant in order to determine which questions to ask. Since this is a property investing forum I will therefore assume you want an accountant knowledgable in that area. Some accountants will have a good general knowledge of property investing and the taxation implications but there experience is limited to one state, while others will have knowledge of other states and some will have knowledge of international taxation issues, particularly relevant if you want to invest overseas. Ok on to the questions:-
1. Are you a member of a recognised accounting body ? (only ones are CPA Australia, Institute of Chartered Accountants in Australia and National Institute of Accountants).
2. What is your experience with advising people on taxation structures ? (particularly relevant for asset protection, structures such as discretionary trusts, companies, individuals, etc)
3. What are the latest issues that I should be aware of as a property investor ? (if they don’t know much about the recent changes announced in the 2004 state and federal budget go elsewhere)
4. How long have you been providing property taxation advice ?
5. What is your charge basis and who will be doing my work ? (For a good accountant expect around $200 per hour in the capital cities – yes you can find cheaper and some will be good but its like a doctor you don’t spend all those years of training to become a H&R Block representative. Also make sure that either the principal or a knowledgeable staff member will be doing your work. I have seen examples of people with IP’s who didn’t get there 2.5% deduction and the property construction was completed in 1991).
6. What are your quality control procedures ? (You want to make sure that someone else checks the other persons work. Critical for detecting errors and is lax in most small accounting practices)
7. Do you have any experience in interstate and international taxation issues ? (will be critical if you want to invest in NZ)
This should cover most of it. Get a feel for the office, are the desk clear and tidy, does the office look professional (doesn’t have to look expensive but I would be concerned if I saw files all around the floor – real risk of losing things and missing out on deductions – and believe me it happens), do you feel comfortable with this person (that is extremely important). And make sure that they have professional indemnity insurance and make sure everything is in writing. Don’t accept verbal information (too difficult to sue if something goes wrong based on incorrect advice). Always ask for it in writing but also expect to be charged for it. The days of free advice are gone so don’t expect to ring your accountant (talk for 10 mins) and not get a bill. If you want it in writing then expect a bill with it. Good Luck
A deduction is available for the decline in value of a ”depreciating asset’ that is held by the taxpayer at any time during the year. The deduction is reduced to reflect the extent to which the asset was used during the income year for a purpose other than a ”taxable purpose” (eg private or domestic purposes or to produce exempt income) under the (ITAA97 sec 40-25)
The question is whether the asset is installed and ready for used in producing assessable income. In your case the carpet is installed and ready for use. The fact that you have an interest free loan over the carpet is not the determining factor for tax purposes.
You will be able to claim a depreciation deduction from the date the carpet installation was completed.
Be careful with interest free periods, particularly AGC. Just make sure you repay the entire amount of the loan before the inetrest free period expires otherwise an interest rate of around 20-30% will apply and it is BACKDATED to the date of the original transaction. NASTY !!
