Forum Replies Created
Thanks for your reply, Hellman.
Will post on to Developing Forum as you suggest…MIKALA
Tax wise the higher the interest amount paid the higher the amount of tax relief you get however remember that the tax relief is only as good as the rate of your tax liability so you will still be out of pocket by the difference between your expenses paid out and the tax refund you receive back.
If you do not need the cash for other purposes you are probably better to use some of it for the deposit – this will have the effect of giving you a higher positive cash flow or a less negative cash flow position.
You should probably sit down and work out your cash in hand position using both scenarios – if you do not know how to do this see an accountant or financial advisor(if you know a decent one) and have them work out these out for you.
The other consideration should be the purpose of your investment.Remember that the higher your income from salary or rents the higher your tax liability howver you are still going to end up with more in hand with a good positive cash flow property.
Personally I would use some of the cash for the deposit and get on with finding the second IP !!!MIKALA
Hi Billray,
We have used BMT twice and found them very good.
Usual fee is $600 and they have a office in Townsville.
Reports seem to be very thoroughMIKALA
Hi there,
If I were you I would stay home, keep saving as much as you can – in the meantime find out as much as you can about investing in property (or the stock market if you are inclined that way – personally I like property!) – practise look for good positive cah flow properties and educate yourself on all aspects of financing and accounting then when you have the equivalent of 20% plus cost sitting in the bank buy !
If you have a great savings record and the 20% plus costs sitting in the bank any of the banks will lend to you.The reason I say save this amount is that you want to keep away from mortgage insurance – very expensive.
Alternatively if you do not want to wait this long and you have any good friends who are in similar positions you could buy earlier if you buy together pooling your resources. At one time I considered doing this with one of my family – what about your parents?? Also I’ve heard there are people around who are money rich time poor who (if you find an great investment opportunity) would buy with you – this would get you stated – don’t know where you find them however other forumites may know more about this ?? as I have never looked seriously at this option.
Hope this assists – good luckMIKALA
Hello,
Yes – you can definitely claim the building inspection as a deduction as it is a expense in the earning of your income on an investment property – it does not matter that you have earned no income yet – it is the intent which is important according to the taxation department…..see my earlier post…NO ICOME EARNED DEDUCTIONS YOU CAN CLAIM…
MIKALA
Hi Wake,
We are in exactly the same position – about to build no. 3 so couldn’t stick with someone who not only did not know what he was doing but was not willing to find out !
It just goes to show that even though we are paying for someone else’s experience we really need to keep our own knowledge of the tax situation up to dateRegards
MIKALA
Regrow,
Most definitely – that is our situation and why I rang the taxtion department to find out – I spoke to a taxation dept IP specialist there.
I also asked the question regarding time involved ( for future reference) and they said that they did not have a definitive time as each case is individual, They did mention that they had allowed deductions for one situation of 6 years where the individual could prove that he had full intent to build eventually (he had house plans drawn up and various correspondence to prove that he was actively intending to build on the vacant land even though it took so long) !!Marsden,
The taxation department are the ones who are doing your assessment so they are in a better situation to decide what and what will not be allowed – my postings all started with the post “I SACKED MY ACCOUNTANT” because he did not know these could be claimed and even after I told him did not make any attempt to contact the taxtion department to get a ruling (he even had the audacity to tell me he had checked and that they were not allowed – he had actually contacted a mate at H & R Block who did not know themselves !!!)
Regards
Judy Cooke
Originally posted by Regrow:Mikala
Is this also the case with an IP under construction ?
Regrow
You are a fool for 5 seconds if you ask a question, but a fool for life if you don’t.
Judy Cooke
Thanks the Hound,
What you have said makes sense to me so I will talk to a consultant – hopefully the discussion on these issues has enlightened some other investors on this area of deductions…..Judy
Judy Cooke
Hi Michael,
Thanks for your reply – on my first IP the taxation department has allowed for borrowing costs claimable over 5 years so wouldn’t it be the same for this one as long as the intent is for investment only even though no income has been earned yet it should be able to be claimed against other income such as wages or other rental income for other investment properties? Also they have allowed in the past for inspection visit expenses (such as petrol to travel there)so that is why I was thinking that the expenses such as flight fares, accomodation and meals would all be legitimate deductions providing that the property is intended for investment purposes only despite the fact that no imcome has yet been earned….your thoughts ???….Judy
Judy Cooke
Originally posted by MichaelYardney:Most of the expenses you mentioned are capital costs – ocsts of setting up your business as a property investor and are unlikely to be deductible.
Interestingly the interst is deductible – there have been a number of test cases that have come down in favour of the investor for this.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auJudy Cooke
Originally posted by MichaelYardney:Most of the expenses you mentioned are capital costs – ocsts of setting up your business as a property investor and are unlikely to be deductible.
Interestingly the interst is deductible – there have been a number of test cases that have come down in favour of the investor for this.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auJudy Cooke
