All Topics / Help Needed! / Just Purchased Positive Geared Rental, Adcice on tax benifits and what to do with extra $$

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of Warren_tWarren_t
    Member
    @warren_t
    Join Date: 2009
    Post Count: 2
    July 16, 2009 - 6:03 am

    HI,

    I have just purchased a property for $725,000. Repayments are approx $4k and rent i will eb recieving is $6k monthly (Karratha).

    Positivly Geared this leaves me with $2k a month, i also can afford another $5K a month.

    *Do i purchase a negative geared property and put the extra 2k plus the 5k into it??

    **Do I put the 2k  plus the 5k into this property?

    What are the tax ramifications?

    Is there an accountancy company who if i give my whole situation to figures of income who will point me in the best direction through email?? (obviously at a cost)

    Any help or wonderfull ideas would be awesome, this is my first property.

    Cheers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    July 16, 2009 - 6:14 am

    If you had purchased the property using a Discretionary Family Trust and have a wife and children on a lower marginal tax rate than you this would have not have been a problem.

    I think I would go back to the drawing board with your financier and get things put right for the next deal.

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    July 16, 2009 - 12:13 pm

    There is no use in buying a negative geared property just to save tax. You should only consider property with profit in mind.

    Do you have any non-deductible debt? if so you should probably pay this off first. If not, you could pay into the loan, or you could just save up (ideally in a 100% offset account) and use the money for the next one.

    As you pay off the loan quicker the profits will increase faster – which is good, but this will result in more tax.

    If you consider a discretionary trust for the next one you could use your spare cash to pay this one off faster which would be a better result tax wise, and for asset protection too.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

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

    Profile photo of keikokeiko
    Participant
    @keiko
    Join Date: 2008
    Post Count: 513
    July 17, 2009 - 6:06 am

    ile sell u a negatively geared prpoerty if you want, and i can go as negative as you would like

    Profile photo of Badger101Badger101
    Participant
    @badger101
    Join Date: 2009
    Post Count: 8
    July 19, 2009 - 9:11 pm

    Hi All,
    My wife and I are just starting out and looking for advice please:
    1. Being new to the Sydney area we are looking for a top accountant to help us build, then grow our investment portfolio, any suggestions?
    2. We've been searching for +ve cash flow properties- with regard to tax, do I apply a 30% tax fee (on the rental income) when calculating the annual cash flow?

    Thanks for your help.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    July 20, 2009 - 12:20 am

    Badger you have confused me on your 2nd point.

    The gross rental income is added to your other taxable income and then any expenses deducted both cash and no cash items.

    If the property is held as Joint Tenants then you would apply 50% of both expenses and income to each party.
    Obviously this will vary depending on the holding entity.

    For cash flow positive properties and there are quiet a few of those around you would nomrally consider a Discretionary Family Trust structure.

    Richard Taylor | Australia's leading private lender

    Profile photo of Badger101Badger101
    Participant
    @badger101
    Join Date: 2009
    Post Count: 8
    July 21, 2009 - 9:54 am

    Thanks Richard,
    As you can tell I'm a newby and posed in the wrong place and actually lost my post for a bit. 
    Yes, the first step for us will be to set up a trust structure as indicated in Steve's book.  In general terms, what does this involve and how much should we expect to pay to set this up.

    With regard to the second point, I don't want to kid myself into thinking I am investing into a positively geared property only to find out I have missed some hidden fees and costs – and is the tax that baffles me a lot.

    Thanks
    * interested in residex – what's all that about?   

Viewing 7 posts - 1 through 7 (of 7 total)

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