I had a mortgage broker come around yesterday for some personal advice and off on a tangent we talked about some of his activities which were property investing. A statement he made which bugged me was ‘The last thing you want to do is make a profit from property’.
Now this bloke has been a landlord for 30 years, has numerous properties but then proceeded to admit that some nights he wouldn’t get home from work until after 10 pm.
What’s going on??? Please tell me that everyone on this forum is actually trying to do the opposite! Please. I couldn’t bare the thought otherwise.[ohno2]
Tridean34 Developments
Perhaps he is overly focussed on the taxation implications.
If his views are contrary to yours then perhaps you need to speak to some more folks.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
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.
tridean.
Perhaps he’s talking about profit from rental income. Given that the guy has “numerous properties” then it is likely he has made a *fortune* of CG over the past few years. So he HAS made a profit- just not one which the taxation office will look at unless he sells.
Perhaps he likes his job and that’s why he comes home from work at 10pm- it’s still possible to like one’s job, even in these days of early retirement
kay henry
Ok, so what you are saying is that the tax you pay on your rental income is different to your CG[blush2]
Tridean34 Developments
Tridean34,
The actual tax you pay (for an individual) is the same.
If you make any profit on your IP, you will add that to your assessable income and pay the going PAYG tax rates.
When you sell your IP (and assuming capital gain), this will also added to your assesable income and then pay the PAYG tax rates on the combined income.
The only difference being that you only pay CGT when you sell. If you make a positive income from your rental, then you pay each year.
James
Actually, a lot of people out there get obsessed about tax minimisation, without realising the fact that if you are making enough profit to be taxed highly, you are obviously doing something right
EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comWhat time does he start work ??
He may in fact have quiet a liesurely morning, as a broker i’d expect he’d be busy in the afternoon’s and early evenings, when he can catch up with his clients..
Maybe he was infering that you shouldn’t sell ( and realise a profit , as you’d lose some in CGT )but rather buy n hold..
My interpretation anyway ………..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
A lot of people (including Steve McK) advocate buying through a trust. That minimizes your taxes to 30 cents in the $. Tax deductions further minimize taxes paid.
Sounds like your guy is saying what many of us say- work out your entitlements, reduce taxable income, and buy and hold. Realising CG by selling means your mortgage broker might have to pay $1 million taxes on his IP’s. A lot of profit there to give back.
Tridean, invite him around a second time and ask him what he meant
)))kay henry
Hi Tridean,
I agree with Kay – ask him around again and ask him as many questions as you can possible. then read as many discussions on the issue as you can on this site and do a few searches on the topic. then finally make your own decisions to which best suits your lifestyle. However, from reading your issue. I strongly believe he is looking at investment properties with taxation purposes in mind.
Tridean,
I suspect that he and his clients have probably made a lot of money over the past few years this way. Usually we advise and recommend the things we know well or that have worked well for us personally. Whether it is right thing for you today, don’t know.As the others have said, keep asking more questions, get a better idea of where he is coming from and make up your own mind if that is right for you.
James
No doubt he is talking about negative gearing. I even heard this line from my accountant once. (I’m reviewing whether he is STILL my accountant).
Hi there, I guess he is focussed on the tax component, nothing wrong with that.
But have you worked out whether he can provide the service you require, that is the point.
Everyone has their own thoughts and strategies at the end of the day I do wants suits your situation.
Cheers
Hi tridean34,
its a definite tax issue. [headphone]
Cheers,
sisChook,
Your accountant is just doing his job. He wants you to get $10k back because of all your “losses”. If he didn’t “find” those losses, then you would have to end up paying a tax bill due to your “profits”. I guess our accountants’ job is to make us all look like big losers who make bad investments. [laughing]
kay henry
Kay,
Yeah, I see what you’re saying.
But it just demonstrates the difference between a pro-active accountant (adding value) and a number cruncher. (Which is, I guess, why every third day there’s a post asking whether anyone knows a good accountant!).
Hi Guys,
does anyone know a good accountant in inner western sydney? [baaa]
Cheers,
sisps… sorry, i just had to do that…
Thanks guys, it’s amazing how much response you get to certain subjects.
Firstly, I must thank Ez-rent. That is a philosophy I agree with and will always maintain, and you have led me to some free software, Thankyou
Secondly, to Redwing, he actually saw me at 10:30 AM, but that doesn’t mean anything I suppose. I now remember what I had said to him that triggered his response. In discussing why my house wasn’t selling I made the suggestion to him that maybe the rent that I was offering wasn’t going to cover the loan repayments if someone borrowed say 90%. He then punched in a whole lot of numbers on his calculater like a man possessed, and I did hear him mutter the word, depreciation, and said “That wouldn’t be the problem, besides why would you want to make a profit anyway”. Maybe he was being sarcastic, but I will take the advice of the other responses (Thankyou guys) and when he rings me back I shall ask him.[cowboy2]
Tridean34 Developments
)))
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