Forum Replies Created
Celie, Welcome to the forum
If the first property is slightly positively geared then your tax is going to be slight on the small amount that is positively geared.
Now what you really need to think about is what is your husbands marginal tax rate
is it
30% for income between $30,000 to $80,000
or is it
40% for income $80,000 to $180,000
You will have a tax rate on your split of the net property income (after subtracting expenses from the rent income) of up to $6,000 on your share that is not going to be taxed as you only get half of this if you are not working. (tax free threshold)
What you will need to also be careful of is if you are negative gearing and trying to claim parenting payments from Centrelink a Negative Geared Loss is considered as income by Centrelink for calculating entitlements.
(This defies all accounting standards or logic but we are talking about Centrelink)
(plus if you are not working you aint getting a tax refund anyway and your working spouse is claiming 30% to 40% of this loss)Also your property income may affect your family B payment depending on how much your spouse earns.
As your real estate person said you can pay a small amount in tax on a net property income profit.
or
lose as an example $10,000 a year so that you can claim back $3000 based on a 30% tax rate.
That is a $7000 loss so that you can get $3000 back. So you are throwing away $7000 a year.
UNLESS you can more than $7000 in capital gain you are losing wealth.Yes when we used to get taxed at 58.5% a year it was a different story but the tax rates have reduced making negative gearing not as much of a tax deduction.
see
http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htmIf you do not have private health insurance then you have to consider the medicare surcharge threshold.
If your combined assessable income exceeds $100,000 then you incur a 1.5% surcharge in tax. So $100,000 * 1.5% = $1500 in additional tax. If you have children then the threshold is greater.
http://www.ato.gov.au/individuals/content.asp?doc=/content/34462.htm&page=4#P28_4333
This amount reflects a proposed change to the law for 2007–08 which at the time of publishing had not become lawThere was a proposal to increase the threshold amount to $200,000 for families but I am not sure if this has been passed into law.
(Hopefully this is understandable and you can relate to your circumstances)
What happens is that your share of the net property income is added to your wage assessable income to come up with a new total taxable assessable income.
So if as an example say you earned $60,000 from your wage and your property made a profit of $6000 your share is $3000 so your assessable income is $63,000.This extra $3000 has not had tax already paid on it as it is not PAYE (pay as you earn) so when you file your tax return a higher tax amount is calculated being 30% so $1000 in tax has to be paid on your tax return.
This can also effect rebates and offsets you may have been entitled to depending on their thresholds.A good tax accountant will know these thresholds and what the likely hood is that you will miss out on an offset or family B payment or get hit with an extra medicare surcharge.
Usually paying off the principle is of a concern if you want multiple investment properties and maximum cash flow is needed for other loans. The difference in repayments will be small in the short term. So most of the payment will be interest at the start of the loan.
As far as the loan being residential you may have problems with the bank sending statements to the investment property also under the UCCC regulations there is a different treatment of the loan as far as consumer protection being less for investment properties if you fail to pay off the loan.So you may need to notify the bank that the purpose of the loan has changed but I am not sure on this as I never did let my bank know in the 15 years I had my home loan that I changed the purpose after buying my house and renting it out.As for tax deductions the main thing is that your house is being marketed as available for rental and getting someone renting it out.
So the proof of record is on you to prove that you are receiving rental income from the property.
The connection between the loan and the property's income has to be proven. This is called a nexus in the tax law legislation.I would suggest beefing up the home insurance to cover loss of rent, malicious damage by tenants, public liability –
look for landlords insurance to cover this.Also a tax deduction is only at your marginal rate so as an example if you lose $100 you get $30 back if your margin tax rate was 30% and lose $70
I haven't done this on a real estate web site but I train people how to use their computers as a part time business in Melbourne..
Make sure you press refresh on your browser after you upload the pictures as you may be looking at a Cached copy of the web site from your hard drive.
Also your browser may be set to not display pictures as a security feature.
If internet explorer
Click on Tools from menu at top of screen
Internet options – Advanced tab -Multimedia – show pictures must be ticked.if using firefox browser
click on tools and click on content and select load images automatically.Other reason might be file format you are uploading
JPEG is most common file format for web sites
If you have the format different I suggest you use the save as option to save picture as JPEG file type in your picture viewer.Another reason may be that the photo file size is too large. You may need to reduce the file size. I know that size reduction can be done in photoshop. Jpeg .JPG also reduces file size as compared to bit map picture format .BMP
Another possible cause could be a firewall in your real estate office preventing you from uploading FTP
Additional information may be helpful to solving this problem.
How are you uploading the photos is it done by an option from the Real Estate Web site
and what file format are your pictures.
You may need to change the folder option – view tab in Windows Explorer to display file types by un clicking hide file extensions.When you say you want to create an e-Flyer are you referring to the real estate web site uploading the photos and organising the information or are you trying to write a web page in HTML and upload a whole web page.
Another option is to ring up a friend and ask them if they can see the photos on their browser from the real estate web site.
Another reason may be that the picture file was open in another program like photo shop and couldn't access the file when you asked the web site to upload the same file.
Another cause may be a slow connection like dial up modem. A the upload has timed out.
What is the web site direct link to your real estate advert on the real estate web site so others can take a look at your page and help you.
Another option ask the real estate web site for help as well. Look for an email contact on the web page.
I am thankful to have a roof over my head and my family.
After reading and seeing on TV how quickly a bush fire can wipe such things out that I use to take for granted.Here is an idea. Your Mate buys a house worth 400k and you rent it from him. Your mate moves into your house and rents it from you. You will lose the PPOR exemption (after six years if you use the 6 year rule) but you can claim negative gearing if the interest payments is more than the market rent you will receive from one another. But you must charge market rent to each other for tax office reasons.
Do not know about the company
but
Do not sign anything until you have an independent solicitor look over the contract.
If you sign before this step your solicitor is not much use to youAlso.
Get an independent valuation so you know the property is selling at market value or below.
Do not rely on a solicitor or valuation provide by
Adayoun Capital Markets
Get an independent solicitor and valuation.
apparently the nearer you are to a crossing is bad also.
I recently spoke with someone who lives near to a busy train line crossing and the boom gates ringing each time a train comes plus the blast of the train's air horns are annoying every three minutes in peak times.
Instead of getting a hand out we could actually get the simplified tax cuts promised when the GST was introduced to replace other forms of taxes. Like Fuel excise,State stamp duty, State Land Tax and Payroll Tax.
Interesting that the GST legislation states GST cannot be charged on top of a Tax.
Oh that's right Excise on Petrol doesn't seem to be seen as a Tax by our treasurer.You have to have a web site and also have lots of people looking at your web site (traffic)
Now the hard part – How do you get lots of people to click onto your web site and then click on one of your Google adverts.You have to optimise your web site code to have search engines put your web site high up on their list ranking.
how about using cameron bird see http://www.cameronbird.com.au/
They have a huge email list that promotes developments to investors for sale.
Apparently it depends on when prior to 1 July 2008
deductible expenses on an overseas property can only be deducted against foreign rental income or other foreign modified passive income such as royalties and dividends.After 1 July 2008
http://www.ato.gov.au/individuals/content.asp?doc=/Content/00107951.htm&page=5&H5
It can be claimed against domestic incomeI do not know what the term domestic income means,
an accountant would know what this actually refers to.Property two as it is costing you money of $140 a week in cash flow .
When you move into IP2 it you will have to find $421 a week, any interest will be no tax deductible when you move into it.Selling property one will incur capital gains tax on $80,000 to $100,000 being after 50% discount a sum of minimum of $40,000 being added to your yearly income for tax.
Property one is making you money !
I went to Sydney and stayed at Bondi 15 years ago and I found that a boarding house is a lot cheaper to stay in than a posh hotel/ motel. You also get to meet interesting people.
You will have no need for a car in Sydney. So if you take your car up there you need to have somewhere to park it as parking in Sydney is a nightmare and extremely expensive plus the traffic is also a nightmare.
Most people in Sydney use Taxi, Bus, Ferry or Train to get around . You may wish to try out the mono rail while in Sydney it is a tourist attraction.
Get an everywhere transport ticket if you are holidaying as the ticket system is a lot different to Melbourne and the rail staff are less than pleased to help you.
The sky tower is an interesting place to visit as well as the aquarium. Tooronga Zoo may be a good place also to take the family.
With the everywhere transport ticket you can go on a ferry ride across the habour. (You need to confirm this when buying ticket)Do not take family to Kings Cross as it is not suitable for minors at night.
When I was at Sydney I found the bus service was excellent and ran 23 hours a day.
Be aware that some bus stops are integrated with the train station that is not visible because it will be underground.Hope this is of some help to you.
From my experience.
Do not let your rental property turn into a dive. Keep up with maintenance to maximise rent.
Do not be afraid to regularly increase the rent every year or you will fall behind and then tenants will have trouble coping with a sudden massive rental increase from the landlord trying to catch up suddenly.
Thoughts on the Government home saving account
It restricts access to your savings for four years.
and the funds are only released if you meet the first home owner elligibility.
I do not like any savings scheme that restricts access to my money that's right my money
same with non compulsory super contributions its my money I should be able to access it when I want to.Hence I have no non compulsory super savings.Hi,
I myself am not doing this and also I do not like the idea of living off equity.
You borrow money to live on and it is not tax deductible as it is not an expense incurred for the purpose of producing income.
However if you had no other income but had say a 2 million dollar portfolio and borrowed say $40,000 a year to live on then this is 2% of the total value. So on average property grows by 7% p/a a year.
This is the reason banks lend for reverse mortgages.
What are the problems in future borrowings if the bank wants to know if you have a job or not to service the loans.
People with large portfolios with huge equity would get a pre approved line of credit against the equity and borrow from it to buy the next property.
I will not say low doc as the lending rules have been tightened recently.
Banks are a problem when you do not have a job and will look at rent as income but some reduce it to 70% when working out the lending. Banks will not look at borrowed money as income.
I am curious as to why people say they would never sell if they needed cash to retire on.
When you sell you incur capital gains tax, sales commission and lose a cash producing asset. You also lose any future capital growth in the asset.Mind you this is exactly what our government does!
However I would sell an asset with a large equity if I needed a way of reducing the overall debt so that the remaining assets produce income as the debt has been reduced and also your lending power in the future increases as the remaining assets grow.
Vendor finance is another way.
You know about claiming building write off depreciation to increase your cash flow while reducing your cost base and increasing future capital gains tax.
Not sure on capital growth in the area you mentioned.Land tax is state based. So by purchasing in another State you minimise land tax.
Transfer to wife or DFT will incur capital gains tax and Stamp Duty.Possibility .
Rent a house in new state of Australia and hold on to PPOR exemption on Syd for 6 years. Use rent income from SYD to pay rent in other state.
Buy another house in new State as an investment property and pay it off ASAP.
(You can borrow against expensive PPOR as a line of credit for the deposit on the next investment property)It depends on your strategy
Are you after negative gearing tax reduction or positive gearing.
You could buy a cheaper PPOR and use the rent from Syd to help pay off the loan quickly. It is really a personal choice as to what your plan should be.
If they have over painted say a light fitting you could get an electrician to remove it and you could take it to the paint shop and get a colour match.
