- YoungInvestor wrote:What if it was used to pay stamp duty and other costs associated with acquiring the property?
yes, you can claim the interest on borrowings used for business or investment purposes. This would include anything bought for the property so if you were to borrow to pay for stamp duty or rates etc then interest would be deductible and this frees up the cash you would have used to pay off your home loan soon. This is an important concept to grasp.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry is right about the interest on the Stamp Duty cost but the Stamp Duty itself is a Capital cost and adjusted to the purchase price when selling the property.
Other loan related costs i.e application fees, Solicitor costs for mortgage preparation etc etc are deducted over 5 years or the term of the loan whichever is the lesser.
Richard Taylor | Australia's leading private lender
Just on that, I don't believe I have ever claimed my conveyancing costs.
Is it possible to now 'back-claim' those costs in this financial year? or are they gone once that financial year passes.
YI
You cannot claim conveyancing costs against income – only against the CG when you sell. They are a capital cost. Richard was talking about loan costs.
Of course if you borrowed to pay the conveyancing costs you could claim the interest.
And if there is something you have missed you can amend a tax return for up to 4 years previous.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Can I just interrupt the proceedings to say thank you to Richard and Terry for giving valuable and helpful information? I never cease to be amazed at their generosity in sharing their knowledge and really appreciate it.
No worries Singer.
It is a good community we have hear and both Terry and I have been part of it for some time.
Pleasure to throw in the ring ideas and comments especially if they help other investors.
Richard Taylor | Australia's leading private lender
I try to say thankyou a lot as well, but for past, present and future assistance….THANKS!
I am sure you guys have saved me countless hours of researching, as well as thousands of dollars with solicitors/accountants regarding structure and tax implcations etc.
Richard: On your point regarding how you have been part of the community for some time, what news of the others that used to be here in the early days? To name a few:
– Melbear
– AusProp (I think that was the name)
– Chan$
– MortgageHunter
– Yack…and any others you know about.
Every now and then I see a post from wealth4life and dazzling…althought I am sure those guys have their multimillion dollar portfolios to look after.
As a side note, I only discovered a couple of weeks ago that S.I.S is no longer with us – he was a brilliant mind and would have no doubt done many amazing things in life.
Yes SIS lived only a few minutes from me and that was a trajedy.
Mortgage Hunter – long story probably not for the forum but dont know what happened to the others.
I assure you the bigger portfolio you have you dont manage it yourself that's what efficient young ladies (or gents) are for.
Richard Taylor | Australia's leading private lender
Yes sad about SIS. It must be about 4 years since he died. I never met him, but knew a friend of his and heard all about his investing stories did see a picture of an amazing tattoo he got on his shoulder.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry i think you are right would be around 4 years.
Not nice circumstances either.
Be grateful for what you have in this world not what you havent.
Richard Taylor | Australia's leading private lender
Would love to hear the stories re: Simon or Jeff if either of you have time to drop me a PM…which you dont… but I might give one of you a call one day for some advice and then just slip it in
Hi Dave
I am in a very similiar situation to yourself in i have just moved out of my first property and am currently looking at my second.
Talk to your MB about a Family fledge loan or limited guarantee loan as sometimes called. This is how we are purchasing our next property. It works by your parents guaranteeing 20% of your purchase against their property so you avoid LMI. If your income is good you can borrow up to 100%. Check st George and CBA lending products.
Good Luck.
Hi Richard and Terry,
yes thank you very much for all the really interesting comments, you can learn so much from throwing ideas around and soaking up others knowledge. your time is much appreciated
ta michelleTerry,
When you say that you can 'amend' a tax return for up to 4 years, would you put through the 'amendments' in the current year, or would you actually submit an old return again?
For instance, I forgot to include a share information service that I pay about $10 per month for. I have had it since 2008, but didnt claim it in 2008 or 2009.
Can I claim the full 3 years worth when I do my 10 return, or do I need to amend the previous returns?
Thanks mate.
YoungInvestor wrote:Terry,When you say that you can 'amend' a tax return for up to 4 years, would you put through the 'amendments' in the current year, or would you actually submit an old return again?
For instance, I forgot to include a share information service that I pay about $10 per month for. I have had it since 2008, but didnt claim it in 2008 or 2009.
Can I claim the full 3 years worth when I do my 10 return, or do I need to amend the previous returns?
Thanks mate.
No you would have to go back and amend the year in which you forgot to declare. There is a special form you need to fill out which you can get on the ATO site.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I'll have a snoop around… For a deduction of $120 p.a it may not be worth my time.
(That comment will come back to haunt me, won't it…)
YoungInvestor wrote:I'll have a snoop around… For a deduction of $120 p.a it may not be worth my time.(That comment will come back to haunt me, won't it…)
Think of the ROI $120 for a 50c investment (stamp) = 240%
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Come now Terry… someone in your line of work surely understands that time = money!
Although that could just be my lazy side rationalizing why not to do additional work.
The oldies keep telling me that the pennies make the pounds… I keep wondering what currency they are referring to
WOW!
Been away for a week and look what happens!! HIJACKED POSTS!
Terry, Richard and YI….thanks for you time and effort, im sure one day myself and others will take over the reigns from you guys and help the next up and comings.I havent had an inspection yet as this area is 3hrs away from Syd metro, but i will be planning once my holidays cease to exist and back to making an "active" income.
YI, thanks for some "creative" suggestions into securing the IP. If my DD (due dilligence) turns out to be worthwhile i might use some of those suggestions. much appreciated
another thing i would like to share:
spoke to a friend who was accountant specialising in property (now in commercial tax), she said that there are 2 main types of costs1. Capital costs:these are most commonly called improvements costs, and there are two ways in which to handle them in the tax system:
i) If its a PPOR, any improvements/additions/items that are going to be left with the property can be deducted from the capital gains. You must have the original signed front page of the sale contract to establish/prove the base cost of the property (she said many people don’t have this at hand when selling/seeing the accountant and are in a made rush trying to find out where to get it, so she suggested to have it filed ready when selling) and receipts/invoices of all the improvements etc, what helps if these were on a spreadsheet and that the invoices were in order as displayed in the spreadsheet. This will save accountant costs sifting through all the invoices and creating a spreadsheet.
ii) If its an IP, any improvements/additions/items that are going to be left with the property can be deducted against the income over a period of time which is called depreciation, one should engage a quantity surveyor to deliver a ‘schedule of depreciable assets’ to give to your accountant.2. Investment costs These are costs associated with securing the IP eg. Stamp duty, LMI, conveyance, solicitors, application fees, valuation fees, building inspections and interest on the loan. These are tricky and i don’t know how they are handled in the tax system, from what Terry and Richard are saying that some are considered capital costs and others are deductions similar to those depreciable assets, i suggest see your account to establish which costs go where, but remember to keep invoices.
Leave comments or amend if i have got it wrong, but hope it helps out there.
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