Sounds a bit high for what you got.
We pay about the same – $1500
But in that, he is doing returns for 3 companies, 2 individuals, 4 IP’s.
To us he is worth every penny, very consultative when it comes to our property plans, and most creative when it comes to strategic money handling. This fin year alone, he has helped us achieve a 1% income tax rate.

There are real cheap accountants out there that do returns for $40, but they are really stock standard income tax processing.
Most accountants that play advisory role charge by the hour, but it sounds like you did most of the work for him already.
Either he is very slow or very expensive.

Best way to find out is to take your previous return to other accountants as if you were doing it new, and see what they quote you.

Just shared experiences sir.

1) One name is always simpler than 2. For us anyway.
2) CGT is applicable on all things sold, but CGT is calculated on the basis profit. With transfers, market value is difficult to ascertain, unless an official audit takes place with a standalone valuer. It is equally as easy to shop around for a valuer that values items as lower in this day and age.
3) Spouse to spouse transfer – I checked with 2 convenyancers.
NSW – http://www.lpma.nsw.gov.au/about_us/faqs/paying_stamp_duty_on_a_transfer

VIC – http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-98E8944DC5A0C753CA2575D100047764-62AE8FFFC6A03A7ECA2575D100049B29-D9EB851E6C3D0A65CA2575D1002B2AEB/$file/DutiesForm09.pdf

This is VIC application form for transfer of land between spouses. Nothing suggesting PPOR ONLY

No Offence Richard, but I would tend to take the advice of a legal conveyancer over a financial advisor on this matter, and by all means check with your conveyancer Legal yourself. I would dearly like to know the outcome..

4) Dropping money PPOR vs IP Mortgage Offest.
I would agree with you that dropping money into Mortgage Offset would be the way to go ONLY if my PPOR was unencumbered and owed nothing, and my income needed to go somewhere to offset interest payments. Unfortunately most of us still have mortgages on PPOR. In this common scenario, why would I opt to put money into an offset account for IP, that reduces my ability to negatively gear the variance as a tax deduction over and above the interest payable on my PPOR where the interest paid has no income tax deduction benefit to me?

I do get where your coming from, in the IF scenario of renting out the PPOR in the future, and I guess the best strategy boils down to whether the investor has this intention to rent out PPOR in the future. But in the meantime of coming to this decision, the interest paid on PPOR is dead money with no practical use other than paying the bank.

I find this advices like this tactical for mortgage brokers breeding fear and confusion so that the mortgages remain high, and commissions continue to be paid.

I apologize for reacting negatively, I am speaking only from our experience only. And I have had some negative experiences with Brokers.

– When we started investing Feb March 2009. 2 Mortgage Brokers told us that our serviceability could not extend beyond 2 IP’s
> We have 4 now. (not including PPOR) I have just gotten approval on the last one last month. Ready for settlement.
> And have planned our next 2 for the end of next year.

– We were also told to put extra income into mortgage offset over PPOR
> We ignored that, and put all money into PPOR
> Last Fin Year, I did the math. We saved much more money in PPOR interest savings, than reducing IP via Offsets.
> The Mortgage broker called us furious, that we had paid down our PPOR below $200K because he stopped getting paid commissions.

– Every Time we went for a new property, the broker gave me a bleak outlook on serviceability and told me it was going to be tough. e
> It took a while to realize that I was being frightened, confused and guided to the bank in thier product range.
> Amusingly the banks were far more upbeat about financing and we always pulled it off.

This is not to say that I hate mortgage brokers. There is a time and place to use these services, and I am sure your wonderful at it.
I am simply sharing experiences as to why advice from this one discipline source has not worked for us.
On the flip side, our first 2 properties, my broker was wonderfully helpful. Beyond 2 however advice became counter productive.

Thanks for the input.

Hey There,

We went through this choice when we started also. These are the reasons we did what we did.

1) All IP Properties are in one of our names.
– Simplifies Loans and Tax Time.
– Person that earns the most has it in their name.
– As an IP. If you ever sold it, it would incur CGT.
– In the event we decided to sell an IP. We could move the property into the others name
> Spouse to Spouse Transfer of IP is Stamp Duty exempt (In VIC anyway)
> Therein we could transfer it, live in it for a few months and sell as PPOR to avoid CGT.
> There are other rules of course, but nothing your accountant cannot advise you on.

2) We put ALL extra money into the house we live in, and only leave enough money in savings to cover the Mortgage payments and general living. It saves us a heap in non tax deductible interest. in 2008 we had our money in savings and term deposits. The trouble is that the interest gained acts as income, so you end up paying more tax. Putting all money into mortgage is dollar wise more advantageous.

3) I don’t think there is a simple matrix as such. Bunch of stuff floating on the net. I have also created a bunch of spreadsheets that forecast the tax return based on the sum of all properties. Once you understand the math, it isn’t so hard to do. It does however get a little tricky if you want to play with numbers as static spreadsheets are painful and confusing to change frequently. It is particularly not simple because it is dependant on the types of IP you purchase in the first place (for depreciation anyways) for maximum tax deductability.

Things to be aware of for max tax advantages

– Log all tax deductible expenses no matter how out there they are. Your accountant figures out the rest.
> Failing to do this, will see you lose tax deductible dollars, however this number is usually quite low and insignificant.

– Learn about Depreciation, and get a depreciation report done on the house.
> e.g. We have 2 new build townhouse IP’s. Each has depreciation of 12K+ for at least the next 3-4 years.
> Depreciation is money you can deduct without actually spending much.
> In this example. 24K is tax deductible every year without spending a cent.

– Keep detailed track of the money spent on mortgage and the gross income made on the IP. the difference in $ in tax deductible.

– Learn or ask your accountant about the ATO PAYG Variation – All of the above rolled into 1 strategy. this is where if you can forecast the expenses on your IP’s and they are high enough. You can apply for a variation on the witholding tax your employer holds for your pay at work, in which case the ATO forbids your employer from witholding your income tax at payday for that financial year. Great Cashflow strategy.

Hope this helps.

Yeah, I found it. Called Unisity in Footscray Melbourne. i think it sits near a campus for Vic Uni.
I also looked at getting one of these, but when I saw how many were being advertised it scared me off.

Only 5 listings these days. When i checked a few months ago there were 9.

One of my colleagues has Student accommodation in Melbourne.
He paid 138k for it 2-3 years ago.
Today he can pick-up the same sized unit in the same building for $130K – 135K
It got cashflow positive fairly quick though, and he has no intention of selling it as yet, but its certainly not growing in value real quick.

Actually should clarify the previous reponse in quiet reflection.
Whilst we always aim for 5% down & interest only loans. Thats not actually how we did it in the last round of purchases.
In that last round, we deliberately paid our 1 bedroom unit off outright at just over $150K So that this property wuz unencumbered.
I called this the ‘Sacrificial lamb’ in place deliberately to act as security for other properties + supplement cashflow for other properties.

With the sacrificial lamb acting as deliberate security. We secured 2 new townhouses @ just over $500K each.
We did put a 5% deposit down
But on settlement required zero money down, because the LVR between the new properties + the lamb got us to 80%

At the time, It made sense to me, that putting $150K down to buy a place outright, to create a portfolio of 1Mill+ in new aquisitions that still met the 80% LVR seemed like a win win situation all round.

This strategy worked out for us, because our properties have gone up in the last 16months.
If my calculations are correct, within 6 months or so, we will be able to partially discharge the sacrificial lamb to use it as security on next purchases because the value of the other two are almost at 80% LVR on thier own.

If you can forecast the expenses on your investment property portfolio then you can apply to the ATO for a PAYG variation.
For instance on our properties i listed all expenses, forecasted all negative gearing numbers + all depreciation for this financial year.
All numbers were given to my accountant to apply to ATO for PAYG Variation.
It took about 2-3 weeks to process.
Thereafter my employer recieved a letter from the ATO forbidding them to withhold any more than 1% of my income tax.

This is completely legal. At the end of the next financial year, we still have to do a tax return of course.
If the official tax return of deductibles (expenses, negative gear, depreciation & work related expenses) comes up short, then obviously I will owe the tax department the difference.

But in the meantime the extra cashflow per month has been really helpful.

Hello Hendrick2,
Replying a bit late, but I hope I can help. We were in your position in Feb of 2009. We had a whole bunch of money tucked away with the intention of doing something, but could never work out how because everything was all too hard. Below is our process:

0) Initially found Internet Listings & went to see properties for a month, and realized this was way too time consuming.
1) Formulated rules for investing for myself based on what I concieved as common sense.
> identified 5 Suburbs that I would live in, and I considered undervalued (Inner city west of Melbourne was what I selected)
> Decided that I wanted to invest no more than 10-15KM from the City. Because rental was less of an issue than rural areas.
> Decided that off the plan purchases were best for max depreciation & a general preference for new + stamp Duty savings.
> Decided max spend for any single property was $600K with a preference for 3 bedroom townhouses.
> Decided I was a cashflow investor over and above a capital growth investor. With the 10K rule in place I assumed things would grow.

2) Talked to a bunch of people in various industries that touched properties to get a feel pricing & and property buying process.
> Real Estate Agents, Mortgage Brokers, Builders, Conveyancers, Accountants, Property advisors, Web Reading.
> That took 2 -3 months, and I ended up more confused than when i started.
> Realized that everyone has opinions slanted towards self agendas and that nobody CAN give solid advice until wants are defined.

3) Took what I knew, and decided to formulate my own way of clear decisions based on math
> Find Properties over the internet that looked OK on face value.
> Understand the desired sell price. Whack 15% of that. Workout the mortgage payments on 1.5% higher than todays rate.
> Do the same internet searches for properties of similiar profile. Take the minimum rent advertised.
> Work out the variance between Rent vs Mortgage. If the variance didn’t scare me. Then I could go see the property.
> Upon seeing the property. Look at it purely as a tenant, and ask myself whether I would live there. If yes, then put offer in.
> There are exceptions to the above comment. less about the house itself. More about the st, access to transport, schools etc.
> I also built a software program that helped with the calculations and data so I spent less time doing it.

4) Started religiously reading property magazines for general property information & case studies.

All in all that took about 4 months. Overall realization is that the personal fear of parting with X dollars had me internalizing reasons NOT to buy anything. Information learned + working the math, assisted in the fear going subsiding a lot.

Long story short. Last year. After all this was done.
We bought 4 investment properties
2 Townhouses off the plan. (small 3 & 4 bed)
1 established Unit (1 bed unit)
1 House (4 bed house built)

I have no idea if what I did is normal or not. I just knew that I couldn’t commit to that much risk without knowing both knowledge and experience from other people. Reality was the biggest missing component was faith in the objective.

Believe you me, there were many many many sleepness nights working out how to get finance on all of them, and wanting to give up entirely, cuz it was all too hard. However today I don’t regret doing it. I have finally worked out that given the choice I do nothing. If I dive in one something, then I have a way to do it. No choice. Far more productive.

On all of the new, off the plan houses, I also knew I could sell them if I couldn’t get finance on them, so that bought some solace.

Since then, all investments have gone up. I have only recently had them re-valued.

Since then I applied for PAYG variation – Paying 1% tax is simply awesome.

Now we are working towards a strategy to buy our next 2 IP. We have hit the serviceability wall already, but I have a few ideas on how to make it happen.

Hope this helped.

3321. I guess thats quite good.
Don’t believe it in the slightest though. With that much liquidity, i’m sure we would spend stupidly and squander it in a few years

Is the house owned in both names or just one of you?

Financially speaking, if you both earn 40-50K per annum, that would be approx $90K PA, you should be able to afford another property.

We were in your position not so long ago. We have about the same income as you guys do, and are settling on our 4th property next month ish.. (Whenever it finishes getting built)

If I were you, I would do the following (These are based on assumptions that you meet the banks criteria for income)
– Switch the existing property to an Interest Only Loan (if it isn’t already)
– Do your numbers on the current house that you own from Internet agent appraisels
> Verify what the minimum rent for your current house is.
> Verify what your mortgage repayments are per month
> Work out if the Variance between rent vs mortgage payments is viable.
> Based on guestimates. I would be surprised if your payment variance wasn’t less than $1000 per month
Assuming all the numbers stack up. You should have more than enough money to service a new place.

Next is the nasty side of things = The Deposit. If you have no savings, then use your current house as the security for the new one.
Shop around for mortgages until the valuation comes back in your favour.
e.g. With my recent purchase. The Big 4 Banks valued @ $520K, I went to RAMS Home Loans Instead. They valued @ $625K
The differences can be quite scary, but shop around with non banks aswell, and you should be fine.

With whoever gives you the best valuation. Apply for a pre-approval with them, based on the scenario, that house A is security for New House B. Whatever the pre-approval number happens to be is what you shop for. You obviously need to find a new place that still keeps you financially secure, but at least half the equation is sorted.

Long story short. You should be able to afford a new place. There are ways of bypassing deposits.
Assuming you are not nutty spenders, or aim for a property beyond your means. It is achievable.
Getting a guarantor like a parent would also help the loan process a lot.

Hope this helps. This is my first time on this forum also.
Good luck.