Thanks for earlier replies on commercial. This one seems to more than pass all test and should make me $600.00 a month. Owner actually wants to lease for five years + and area is good. Now here’s the sticky one; If I earn 600 a month it will effect my taxwhile I continue to work. Does any one know if I put money if an offset account is it seen as income?
I was thinking of putting it there to reduce interest (only) then when accumulated a decent amount, refinance taking off what has accrued, from the initial loan, therebye reducing the loan each year. Is this possible. Sorry my head just does spinny things when I try to think in figures!Income is classed as income regardless of which account is goes into. Offset makes no diffeence but will reduce your interest bill – will actually raise your income!
Isn’t the aim of this forum to create cashflow?
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks mortgage hunter, you always come up with the goods. Yes, it is to get + income, but I’m just not sure what I do with the tax problamos when my income goes over the 50,000 as it seems there is no tax relief on commercial, that I know of. Then again, I suppose it is not unheard of (is it?) to give the tax man some money back? Just remember I’m getting creaky and want to lose the full time job in two years time, and then maybe some part time, plus my cash flow props, so need to be helped along a little. what about my paying the savings off the principal at the end of the year. Any thoughts on that?? Thanks from the ‘older woman’.[:0)]
Patricia,
You will have deductions from commercial property. I suggest you use a Quantity Surveyor to draw you up a dep[reciation schedule and if the property is reasonable modern it might be quite good.
Remember to record all your expenses and mileage incurred as these will also help reduce the tax bill.
Perhaps a quick visit to your accountant might be in order.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks, Simon you are a gem! I now have a nice little list of ‘to do’ and now I won’t look like such a twit when I go to view this depot. Looking for an accountant that gives better advice than the one I used last time. Her answer to most questions was ‘ring the tax department, they’ll know.’ I’m not sure of what the GST is you mention, as I’ve not heard of this in relation to properties before. I shall now check it out. Will post how I get on. Thanks. [
]Patricia,
I didn’t mention GST……..
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Mia culpa!
Sorry, Simon. I just got so excited at getting answers I mixed up the names. It was on the reply I recieved from my mail on the 13th of this month!
(I think) now I’ll go and check that post.The lease agreement is very important with commercial properties. It’s going to have to be part of your due diligence. It should deal with stuff like who’s responsible for maintaining which parts of the property, default procedures, etc.
There are also additional risk factors with commercial property, some of which may be unique to the particular use of that property.
For example, what are the potential problems with a truck depot? Excessive loading or wear and tear of vehicle driveways and parking/loading areas? Contamination of the ground by leaking/spilled oil and fuel? These things could cost a lot of money to fix up (or “make good”, in lease-speak). Part of your due diligence will need to involve checking whether these could be a problem in the future. Also, does the lease impose any responsibility on the tenant to fix any of these problems?
You also need to work out the GST issue. For example, if you’re registered for GST, you may be able to claim the going concern exemption when you buy the property, and don’t have to pay GST on the purchase price. If you’re not registered for GST, you’ll have to pay 10% GST on the purchase price – I don’t know if you can claim that as an expense – it may go towards the cost base of the property. Also, if you’re not registered for GST and collect GST on your rent payments, that’s illegal. Tricky eh?
What it boils down to is: Know what you’re getting into.
Cheers
I’m going to try and paste Elysium’s post from 16th here so you can comment on this GST for me.Posted – 16/09/2003 : 12:54:15 AM
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Hmmm, Well I think I need a lesson on how to cut and copy. Never mind it got there. So, Simon, any light you can shine on that will be appreciated.
Bye and thanks. [?]
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