Just wondering if anybody “pays” themselves when doing renovation work or any other type of work on an IP?
I guess this question would more so be aimed at Part -Time Investors rather than Full-Time or developers..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculatorwould this make any sense, since what you can claim by paying yourself, you get taxed on by declaring income?????
We buy properties in Adelaide. Immediate Cash Settlements, No Agent Fees.
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phone 0412 437 582You also increase income-add to that costs such as vehicles, tools + deductions etc etc?
viable?
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorYour expenses are deductable anyway. Sounds like what your asking is, for example, can I have a vehicle as tool of trade, claim full cost/expense, etc aginst income of work done on your own property.
Theoretically you could do this but with little advantage or significant increased risk of claiming unjustifyable expenses – could be dangerous.
I am far from an advisor in such matters, and only my opinion and what I have learnt, however you could operate in one business/tax entity and have properties in another, but the net result could probably be the same with more complex affairs. It could also depend on what else you do for income, other entities you may have or operate.
This ones for the experts, and dependant on your own situation.
Remember, you can minimize tax, but is not cricket to avoid tax. The key I suppose is to learn or be advised within the rules.
Good luck.Hello all,
You may be able to pay a young (13-16) family member if they were helping with the reno and if they earn less than 6k for the year they pay no tax. Just a thought. Certainly not advice.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Originally posted by Dr.X:would this make any sense, since what you can claim by paying yourself, you get taxed on by declaring income?????
We buy properties in Adelaide. Immediate Cash Settlements, No Agent Fees.
[email protected]
phone 0412 437 582Hi DrX..how do you do Property Investing full time and not draw a wage.. aren’t you worried about the ATO or do you organise your investing in some other manner?
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorRedwing, not sure if I understand what you are getting at…but anyway…
The wife and I renovated a 3×1 house back in ’97, only our 2nd IP. 6 weeks of back breaking work, with lots of tiring 10 to 12 hours days on your feet and sweating your things off, trying not to harm the two toddlers around your ankles with nails and exposed boards and holes and lots of poisonous paints etc. Next door neighbours used to lean over the fence and joke that they could never do what we were doing.
Came up looking fantastic – but then – who cares ??
After crunching some numbers, we found if we paid ourselves $ 20 / hr the entire exercise cost us money. Knocking that back to only $ 13 / hr meant that we went nowhere.
Lovely residential tenants were signed up and proceeded to trash it – just for a change.
We decided to sell…headaches weren’t worth it. Next door neighbours tricked us with a “nominee” offer to buy and got it for a song. Drove past the other day and it’s back to an overgrown hovel.
We learnt alot of lessons with that house, the most important of which we stick to religiously…don’t buy houses…or anything else where people have a tendency to live.
hi dazzling, just out of interest, whats an overgrown hovel worth in 2005 as opposed to the sale price in 1997 (or whenever)?
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneOriginally posted by Dazzling:Redwing, not sure if I understand what you are getting at…but anyway…
The wife and I renovated a 3×1 house back in ’97, only our 2nd IP. 6 weeks of back breaking work, with lots of tiring 10 to 12 hours days on your feet and sweating your things off, trying not to harm the two toddlers around your ankles with nails and exposed boards and holes and lots of poisonous paints etc. Next door neighbours used to lean over the fence and joke that they could never do what we were doing.
Came up looking fantastic – but then – who cares ??
After crunching some numbers, we found if we paid ourselves $ 20 / hr the entire exercise cost us money. Knocking that back to only $ 13 / hr meant that we went nowhere.
Lovely residential tenants were signed up and proceeded to trash it – just for a change.
We decided to sell…headaches weren’t worth it. Next door neighbours tricked us with a “nominee” offer to buy and got it for a song. Drove past the other day and it’s back to an overgrown hovel.
We learnt alot of lessons with that house, the most important of which we stick to religiously…don’t buy houses…or anything else where people have a tendency to live.
Sorry Dazzling..
I’m trying to work out the tax implications of paying yourself a wage when working on your IP’s..pro’s, con’s etc an extra wage means additional income onto your yearly wages, I’m sure that adds in some way to serviceability as with buying an IP doing a reno job and selling it..you realise a profit and this boosts your income for the year?
How about paying your partner to do the books for your IP’s if she is not working..at the end of the day, is it worth it.
If i’m going off tangent..tell me, I may have to speak to an accountant [blink]..or a shrink?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculatorwhats an overgrown hovel worth in 2005 as opposed to the sale price in 1997Why do you ask brahms ?? Are you a purveyor of fine hovels as well ??
I’d have to answer what it’s worth in a multi-faceted way ;
Capital…it’s grown by 11% p.a., so 2.3 x what we sold it for.
Income…it ain’t worth squat right now, not even $ 20 p.w.
Costs…what with shire rates / water rates / land tax and insurances, it costs heaps.
Good bits…like say imputation credits…nothing.
Headaches…it’s worth absolutely heaps in this department.
Imposition on your time…once again worth heaps.Not sure if you find the one and only good thing about the IP, the 2.3x over 8 years CG attractive or not ?? We certainly don’t, especially when all of the other baggage needs to be hung off it.
Each to their own.
redwing
I don`t think you can pay yourself. Even if youcould, it would work out the same. If you were using a company or a trust, then you could. Dependning how you do it, it may or may not be worth it from a tax angle. Same with borrowing capacity. If you pay yourself, your company will have less profit, but overall it would be the same between both of you.
Terryw
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hi redwing
In answer to your question the answer is yes.
If you have purchased in a company with a trust (As I do) each project pays me as any other who would work for a company.
reno’s I don’t do put yes harrington waters Four pty ltd when it starts pays me for the time and effort done and that comes out of the cost of the project just because I am the major share holder from a profit point of view, my time is not cheap and its billed as any other expense in petrol and phone.
dazzling any chance of having you looking after some of my resi properties you seem too like tennants.
just wondering have you never had a good tennant I hand a house in marrickville (princess street) the tennant was in there for 5 years they painted the house, sanded the floors, I bought a new oven he paid to get it fitted as he thought he should pay for some of it,
great family, 10 townhouses sit on the site now but they were very good.here to help
Originally posted by Dazzling:whats an overgrown hovel worth in 2005 as opposed to the sale price in 1997Why do you ask brahms ?? Are you a purveyor of fine hovels as well ??
I’d have to answer what it’s worth in a multi-faceted way ;
Capital…it’s grown by 11% p.a., so 2.3 x what we sold it for.
Income…it ain’t worth squat right now, not even $ 20 p.w.
Costs…what with shire rates / water rates / land tax and insurances, it costs heaps.
Good bits…like say imputation credits…nothing.
Headaches…it’s worth absolutely heaps in this department.
Imposition on your time…once again worth heaps.Not sure if you find the one and only good thing about the IP, the 2.3x over 8 years CG attractive or not ?? We certainly don’t, especially when all of the other baggage needs to be hung off it.
Each to their own.
goodness, thanks for that. got a couple of burrs under your saddle blanket today have we dazzling?
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker Brisbanehi brahms
I think dazzling was playing on the.
Purveyor of Fine Finances with his post.
I like a strong post.
what I can’t understand is why you don’t stop beating around the bush dazzling and really say whats on your mind. don’t hold back that wasn;t that strong on brahms, toni and spi will tell you that it was if I might say so myself a little soft come come give a bit of bite to the nextone.
things like, well I don’t know I will ask badger he’ll give us a few clues.
back soon off for a scotchhere to help
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