Guide for property investment

Is a townhouse investment property, a good investment in property? Absolutely they can be in. I try to argue with everybody, diversification in your portfolio. So houses, townhouses, maybe even apartments, heaven forbid, if we want to go down that pathway. They all have a purpose. The great advantage with a townhouse is the limited land size. And the bigger the building, therefore more depreciation. So it’s a great tax minimization tool. So the normal way is to look at it. We’ve got a house on a bigger block of land, right? So we’re paying for a larger land component compared to the house. So we can say $200,000 for the land and we’re going to say $220,000 for the standards for your four bed house. You know, nothing elaborate. So that’s a house on land.

How does the townhouse compare? Well you have a smaller block of land. But then that whole block is generally maximized with house. So therefore, the land might only be 100K but in this instance the house may be 200K, because it’s always more expensive building a multistory development. The other thing that’s important about townhouses to take into account, they usually now are newer subdivided with more estates. The cosmopolitan lifestyle. People are attracted to them for the limitations of output they need to do with relation to maintenance compared to this sort of block and system.

The newer suburbs also have more infrastructure around them. So it’s easier to live with the restaurants, the cafes, the supermarkets, the accessibility to parks all in a 1.5, 2 kilometer radius. So therefore people don’t need that yard lifestyle. So there is a niche market that is growing through the simplification of the minimalist lifestyle, so to speak. So what you find is this is great, because the tax savings through depreciation is usually about 130% to a house and land package. So for your tax dollar and bang for buck, townhouses can be a great investment option if that’s your strategy. Tax minimization.

The post Is A Townhouse A Good Investment Property? appeared first on Nieuvision.

Can I Claim Painting On My Investment Property? – Investment Property Tax Deductions

Can I claim painting on my investment property? Of course, you can claim painting on your investment property. You can claim any expense which is relatable to producing assessable income, except for travel, which I’ll get to shortly, which isn’t on my list that I’m reading from. So, but with painting, yes, it’s natural that you need to touch up the paint when you have a changeover of tenants. So, whatever the cost of the paint, you can claim it. If you get a painter to paint, you can claim the labor costs. The one thing you can’t do is you cannot claim your own labor costs in relation to any work on the property, let alone painting.

Can I Claim Interest On My Investment Property?

Can I claim interest paid on my investment property? Of course, you can, interest is one of the main investment property tax deduction and it’s one of the biggest expenses related to producing assessable income on your investment property. So any interest that you have incurred on your investor loan, you can claim on your investment property. Let’s remember anything that’s personal related, so you can’t put a car on to your investment property and you’ll find that you can’t put your part of the house loan onto the investor line and claim that as well. It’s claiming the deck that relates to the investment property.

Can I Claim A New Kitchen On My Investment Property?

Can I claim a new kitchen on my investment property? Yes, you can. What we need to be careful between repairs and improvements because it’s two different treatments. So, if you repair something in your kitchen, yes, you can claim that the whole cost outright. However, if you decide to rip out the old kitchen and put a new $5,000 kitchen in, well then you have to depreciate it. Every year, the rental guide is released by the ATO. At the end of that guide is a depreciation schedule for all depreciable items. So you can get the yearly depreciation amount on that, or if you have a lot of different items that you’d want to depreciate, you can go to a property surveyor, such as Washington Brown, BMT, and they can do a whole inclusive report for you.

Can I Claim New Carpet, Tiles Or Flooring on My Investment Property?

Can I claim new tiles or flooring on my investment property? Yes, you can. But we need to be careful in what we’re claiming because if we’re doing a repair on any of those items, we can claim the whole lot. So, if I spill a whole lot of paint, you know, on the three-square meters of carpet, I tear it up and I get a new carpet which matches and put that down. That’s a repair, I can claim that. However, if I decide to rip up the whole lounge room carpet and put in floorboards because I want to change the aesthetic, yes I can claim it on the investment property but, I have to do it over a depreciable period of time. You still get to claim the whole lot, just over a longer period of time.

Can I Claim Bathroom Renovations on My Investment Property?

Can I claim a bathroom renovation for my investment property? Yes, you can, but you need to be careful. Is it a repair or was it a complete renovation? If it was a complete renovation. Well then you have to depreciate the items that you were putting in that bathroom. If it’s a repair and water damage in the ceilings or in the floor or even tiles, that’s different. You can just plan that out a lot in that actual year so you can claim both figures at the site time, but one is going to be over a longer period of time if it’s depreciated.

Can I Claim Solar Panels On My Investment Property?

Can I claim solar panels on my investment property? Great question. Yes, you can now some older systems or plans used to generate a feeding tariff that produced income. Technically on investment property, you’d have to pay tax on it if you’re in that situation. However, most of the time now, solar panels installed are just offsetting a credit, uh, for expenses in relation to the power that you don’t have to pay tax on. This is reducing how much power has to be paid by the tenant so it’s an act of goodwill. But the one thing you do have to remember, if you spent $10,000 on a system, you just can’t claim the whole 10 grand. We have to go to the rental guide issued by the ATO, check out all the yearly claim is and do that.

Can I Claim Property Management Fees on My Investment Property?

Can I claim property management fees on my investment property? Yes, definitely. That is a pure cost for you to produce the assessable income on your investment property. So, any admin fees, report fees, leasing fees, inspection fees and the property management fee itself, you can claim on your tax.

Can I Claim Agent Fees When I Sell My Investment Property?

Can I claim agent fees when I’m selling an investment property? That’s a great question. You claim agent fees, but it doesn’t form part of your normal tax breaks on investment properties and tax deductions in your rental property schedule or tax. Agent fees are actually claimable on the capital gains calculation. So when you’re working at capital gains and all go check out another capital gains video, I’ll go through it there. But when you calculate any capital gains, that’s where you can add in the agent fee. So you don’t miss out, you do get to claim it, but you just have to use it in a different process.

Can I Claim Stamp Duty On My Investment Property?

Can I claim stamp duty that I pay for buying an investment property? Yes, you can but you can’t claim it in the normal rental schedule year to year in your tax, it forms part of your capital cost base for when you sell the property. So, if you don’t sell it, you never claim them. But most people end up selling their investment property at some stage. So, when you sell out, it forms part of the cost base and that’s where you can claim. So, you do get the same tax benefit but you just have to wait.

Get in touch with us to know more about investment property tax benefits.

The post The Essential Guide To Common Investment Property Tax Deductions (2020 Edition) appeared first on Nieuvision.

Hi. I’m here to talk about capital gain tax on investment property, and how it affects you as a property holder. So when is capital gains tax paid is question number one, and do you have to pay it on investment property? Well, yes you do have to pay it on an investment property unfortunately, there’s no ifs, buts, maybes about it. And how do we calculate what capital gains is?

Let me just write it up on the board for you. It’s basically the purchase price plus purchase costs, and those costs could be like the stamp duty, the land titles registration, any government charges, bank fees that you haven’t claimed in the processing of your investment property taxes, minus any depreciation over the journey, which equals your cost base. Now we get the sales price. And I’ll give some dollar examples, of $400,000 less the cost base, which was all of this here, and let’s say that works out to $300,000. Well then our capital gains equals $100,000.

How does that affect us? We’ve got a capital gains of $100,000. There’s a thing called the discounting method. So we get a 50% discount if we’ve held the asset for greater than a year. So we’re talking about investment properties. So if I were to use shares as an example, you got to pay capital gains on shares. A lot of people trade their shares in and out of a year, which means there’s no discount, if this was shares they’d have to pay tax on $100,000.

But for us with this investment property, we’ve held it for multiple years, we only have to pay 50%. So that means out capital gain that was taxable is now reduced to $50,000. Okay. And if our income from our wages is $100,000 we have to add in that $50,000 and pay tax at the marginal rate, most likely around 34%, around there, on that $50,000. Which would be equivalent to about $15,000-ish. Now, if we’ve got a partner, and they are also on the title for this, we would actually be dividing this again by another 50%, and it all depends on the ratio you set up with the purchase of that investment property with your partner.

The post Capital Gains Tax On Investment Property (Updated 2020 Rulings) appeared first on Nieuvision.

I’m here to talk today about trust structure and why you would do it around an investment property. So trusts are a separate legal entity by law, and so why would we be looking at trust structures is to isolate our assets, or even if it’s not investment property, any asset. But isolate our assets from being sued, for example, and therefore, being taken away from us. So that’s the reason why we would look at trusts.

I see other people, property people, really promote trust structures and try to argue that’s what the rich and famous do. If you were in an occupation or a job position or a business where there’s high risk of being sued and all your assets taken from you, well, then I would say, look at a trust. However, as it’s a separate entity, you need to look at what you’re putting into a trust as well, because you can’t claim in your own name the same losses as a trust, and it’s a very complicated system. You can add beneficiaries even to split income, but it’s very cumbersome. So the most investors that are employees, and they’re looking to negative gear to try and minimize their tax. I think going into a trust structure in the beginning might be over-complicating the structure. The one advantage of a trust, however, is you still get access to the capital gains discounting method, whereas if we put our asset into a company, companies don’t get access to the capital gains discounting method.

So that is one strong advantage of a trust over a company. And usually what we find is, subdivision investors might put their assets into a company, because they’re not going to get the discounting method anyway, whereas people holding an asset might put it into a trust. If we’re going to get a loan on a trust, it can be more difficult dealing with the banks to get a loan, and the loan-to-value ratio may be less, compared to what we can get in our own name. Some people may consider moving an asset. So you start with that asset in your own name, and then as you begin to own it and have less debt on it, you might migrate it into a trust structure, which you can do. We just need to be prepared that there will be a financial cost with stamp duty being charged on that transfer again.

The post Trust Structure For Investment Property Explained appeared first on Nieuvision.

The post Tax Variation For Investment Property appeared first on Nieuvision.

The post Can You Claim Travel For Investment Property? appeared first on Nieuvision.