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Hi Paul,
Thanks for your help, I shall give Richard a call.
Buying property is one thing but making sure contracts are worded in ones favour and purposes is another. My accountant is due back from his holiday next week so i'lI talk to him as well then.Thanks again
Hi again,
If you haven't checked out this website it is a wealth of information, go to the top of the page and click on site info – press room – this is about Steve McKnight, go to the bottom of this page and open his questionaire, it puts a whole different thinking process to positively geared property which is how he makes his success in invest property, v's negatively geared property. Very interesting.It's amazing how kids are taught about money these days. You see young kids with eftpos cards that their parents top up, so the kids spend it, ps some kids this may be their work money so that's cool. But I know I am old school and the old bank book system is pretty much out the door and going to the bank to withdraw money, now it's too convenient to get and spend, I can see why young teenagers and young adults are the highest in debt. Because they haven't been taught how to treat money and make it work for them, to save for something big, even it is their first car, or overseas trip or deposit towards a home. I know not all kids/young adults are like this, some have a good sense of finances and guidance.
Good on you for realising your spending has to change that's a good start.
You could either hand write or spread sheet to see where you are putting your money each week/month/yearly. Start by writing down all your income, then think of all your expenses and write them down, to find your profit or loss each week. Or if you are curious to see how you spend your money weekly, you could take a money diary for maybe a month or less and write down everything you are spending your money on, this might show areas which you can improve on and also where your money is going, and enter your money income and expenses into categories to see where you are spending it on eg; columns rent/mortgage, phone, electricity, grocery, takeaways, alcohol, outings, gifts, health, insurances, etc. i know this can sound a bit of a pain, but it could be interesting.
Change is always difficult but the rewards are endless, all the best.
Budget is a very important class they should place in the school economic system.
Budget, I don't write down a budget of such I just use common sense when I use my money, I ask myself ,"do I need this or want this', 'can I afford it', and not to be an impulsive buyer as usually it will be on special the next week or so. But i know everyone isn't like that. Make money work for you not the other way round, eg,check different bank accounts and fees, pay your credit card in full every time, have a rewards systems set up against it to benefit from. If you are in debt always pay the higher debt off first. If you have a mortgage make sure it is in an off-set account, so this reduces your principal (more so your home) you want this paid off faster than your investment first.
From your income – bank it first so you can't touch it, pay your bills on time, keep a small percentage of it as "pocket money" you could start at 10% for pocket money(if you are able), but you need to have change mentally to save and spend wisely.
This works well for me.
Books in library written by Jan Somers, you need to read books especially for Australia Property Investments as other countries their policy and ways for investment property may differ slighty than ours.
I fixed our home loan for one year only, sitting in an offset account still reducing our principal.
HI,
I agree with Sonya, research number one, I started by getting books out of the library on investment property , eg Jan Somers, 'Building Wealth story by story', very informative of everyday peoples good and bad investments in propertys, plus other books.Secondly I went to our accountant who gave a free investment consultation in regards to tax benefits, how to word contracts etc.
Thirdly I went to the bank to see if and what our borrowing capacity was for an investment property.And also spoke to an insurance broker in regards to different insurances especially Income Protection as this is tax deductible as well.
All this cost nothing but time, and research, Now all I have to do is act on all I have learnt and become a First time Property Investor as well.HI, Upon reading your question again, and Mr5o1 answer. He can only claim mortgage interest (only the interest) which was on the original purchase loan of their first house which they are now renting out, if he has taken personal loans against this property for anything he can not claim these as mortgage interest expenses against his rental property. He would only be able to claim any extra mortgage interest if the money borrowed against this house is used for this house, renovations, upgrade etc, but he would have to have written statements to prove the money borrowed was to pay for work done on rental property and not for personal use. Again tell them to see an accountant, some accountants offer free consultations.
If you friend is negatively gearing their first home they will not be hit with ATO taxes in fact he will be able to make tax claims against his own income he is producing now, meaning less tax to pay and more to gain for himself. eg. Income from rent pa is say $15,000 and his expenses are $20,000 he has already made a loss of $5,000, once the accountant works other expenses into the equation they will make more of a loss and make more money from the taxes, which means the tax people will owe him back. I would highly recommend them seeing an accountant who would lead them in the right direction which they can claim as an investment expense, also to get a depreciation schedule on their property cost $400-$500 which again they can claim in their expenses plus the extra depreciation on their property from the schedule written.
Hope this helps.
