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It is worth setting up an Excel Spreadsheet that contains all the income and expenses for your property, with the expenses set out exactly the same as in the e-tax screens, or Tax Pack. Make sure (on a separate worksheet) you set up a depreciation schedule as well, and import the results to your main page. Definitely engage a Quantity Surveyor to complete the Schedule for you. Their fees themselves are deductible.
Then set out underneath that a few simple sums that show your normal salary, plus the loss from the investment property, any other deductions applicable (union, car, gifts, etc), Income Tax Withheld, and then apply the tax rate (including the Medicare Levy, etc) – then all the various rebates if they apply to you – and you will have an accurate estimate of your financial position for the year.
I have been using essentially the same Excel spreadsheet since about 1995 (updated where necessary of course), and it remains extremely accurate indeed. I just transfer the amounts over to e-tax each year. Note that you can only claim the interest on your loan, not the principal as well. This is calculated using the IPMT() function in Excel.
The Excel sheet has an additional useful function – if you wish to reduce your fortnightly tax to improve your cashflow and take-home pay, using the S221D Withholding Variation provisions, then doing the calculation above allows you to do that pretty accurately, 12 months ahead
Angela asked: I was wondering what BWO is?
Building Write Off – a depreciation allowance of the capital cost of the building itself and some prime-cost items (not related to furniture and fittings), and either 2.5% pa for 40 years, or 4.0% pa for 25 years, depending on the type of building it is. You need a Quantity Surveyor to complete a Depreciation Schedule for you. If the house cost was say $200,000 to build, that is a $5,000 deduction per annum.
Applicable to buildings built since 1987 (I think). Coupled with the high depreciation amounts on much else over the first five years, a new building makes cashflow much more in your favour over the year rather than an old one, assuming you have your S221D Variation in place.
Having said that, I am not clear as to what Qld007 means by this: i would have been suprised that in the current low interest rate climate that too many cash flow properties would result in a considerable cash flow shortfall especially the older style properties with less Depreciation or BWO.
Older builds have less depreciation, and possibly no BWO.
Three posts in a row is at least one too many, Eric. Please don't thank me for my reply!
She might do better to resolve it with the de facto (like kick him out) rather than give up her share of the property. Apart from the stamp duty that will be incurred (some thousands), she gives up her interest in it. How can she trust you and the brother?
You say you would prefer the south or southeast of Melbourne. Can you say why? Virtually all of the resources of the city are north+west of the Yarra River – commerce, entertainment, transport, hospitals, education, shopping, arts, etc – very few of these are out south or southeast. There isn't really a commercial hub out there (Frankston, Ringwood, Dandenong don't really cut it).
We live in the Inner Northwest and we really like it (Ascot Vale / Moonee Ponds), but you will obviously not find anything for $300K around here, and you will need to go further out – either towards the Airport / Keilor, or towards Footscray. And remember – the further out you are, the more you will pay for transport and commuting (like $100 taxi fares to the Airport).
Good luck with it – it is a much more dynamic city than Perth.
