All Topics / Legal & Accounting / Tax implication for +ive cahflow

Viewing 13 posts - 1 through 13 (of 13 total)
  • Profile photo of murph38murph38
    Member
    @murph38
    Join Date: 2004
    Post Count: 7

    I am very new into the IP game and still trying to purchase first IP. My question is this, if I receive positive cahflow, what are the implications at tax time??? Will I have to pay back tax because of received income???
    Help from someone in the know would be greatly appreciated.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi

    Yes, any profit (after all costs decuted) will be added to your taxable income and you will have to pay extra tax at the end of the year.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of JuliaJulia
    Member
    @julia
    Join Date: 2004
    Post Count: 217

    Murph 33,
    A positive cashflow property does not always result in a tax bill because it may not be positive for tax purposes. This can happen if you are able to claim building depreciation as a tax deduction. This is a tax return entry and does not effect your cash flow.

    julia
    http://www.bantacs.com.au

    If you can’t BAN TACS at least minimise it legally

    Profile photo of FFCommFFComm
    Member
    @ffcomm
    Join Date: 2004
    Post Count: 627

    Just a quick tip, there are lots of ways to reduce any tax you have to pay from RE. First you can use depreciation, any repairs, traveling to and from the property, meetings with advisors (accountant), seminar and books (on property), etc.

    So as you can see you can reduce any taxes you have to pay quite significantly. You just need a good accountant.
    I’m sure Julia from Bantacs would be able to help!

    Rgds.
    Lucifer_au

    Profile photo of The DIY Dog WashThe DIY Dog Wash
    Member
    @the-diy-dog-wash
    Join Date: 2003
    Post Count: 696

    Be careful relying on depreciation as sometimes you may have to pay that back too!

    Cheers
    Leigh K[biggrin]

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Leigh,

    If you have bought an IP after 13th May 1997 the ATO will deduct any eligible depreciation claims/costs from the cost price of the property when calculating CGT irrespective of whether or not you claim them.

    Might as well get today’s dollars today rather than waiting to get them tomorrow when they are worth less.

    Derek
    [email protected]

    Property Investment Support Available. Ongoing and never stopping. PM welcome.

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    Derek..with that comment in mind..do you use the 15-15 tax variation form…

    PS- Hope all is going well with you, guess with school still on your as busy as ever..

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Redwing,

    Absolutely – but keep some claims up my sleeve for the end of the financial year so that I don’t upset the ATO.

    Staying very busy at the moment – which the wife thinks is a good thing. Just got back from a SMSF workshop that may interest you – check out http://www.onlinesuper.com.au – there is an office in Perth.

    Derek
    [email protected]

    Property Investment Support Available. Ongoing and never stopping. PM welcome.

    Profile photo of kay henrykay henry
    Member
    @kay-henry
    Join Date: 2003
    Post Count: 2,737

    Leigh,

    A Depreciation Schedule done by a Quantity Surveyor can’t be knocked back from the ATO.

    kay henry

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Kay

    Yes it can – if not done correctly.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of YCYC
    Participant
    @yc
    Join Date: 2004
    Post Count: 29

    Hi Lucifer_au,

    I notice you mentioned Travelling to and from the property. I’m considering to go to NZ for my 1st IP. Can I claim the travelling expenses in the trip as my lose in business thus claim tax return? And do I HAVE to set up a trust/company for this? This brings up another question of mine: is a trust or a company more appropriate for individual property investers like us? – well it may be the topic for another post…

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I don’t think you can claim a trip before you own the property. But maybe if you set up a trust/company you could???

    Trusts are usually more appropriate for owning appreciating assets.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of mummum
    Member
    @mum
    Join Date: 2004
    Post Count: 104

    Hi YC

    My understanding is that travelling to investigate the purchase of a property is only claimable if you are already established as a property investor.

    However, once you have bought the property, then travelling to inspect and/or do repairs is claimable. You may have to apportion travelling and accomodation costs between the business part and personal/holiday part. ATO can get quite upset about people travelling interstate or overseas for what they consider is a working holiday.

Viewing 13 posts - 1 through 13 (of 13 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.