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Investment property Tax Benefit

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Ipswich Investor, Investment properties, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, Ipswich Rental Properties, interest rates, interest rate cut, Tax benefit

The Investment Property Tax benefit many people don’t receive.

Ipswich Investor, Investment properties, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, Ipswich Rental Properties, interest rates, interest rate cut, Tax benefit

One of the big mistakes that we see with Property Investors is people not utilising the full range of investment property tax benefits.

The Taxation Variation Authority is a massively under-utilised strategy. Sometimes the expenses associated with holding a rental property (eg Interest, repairs, insurances, rates, depreciation etc) are greater than the rental income received from the property. This scenario generates a tax loss and is called negative gearing.

When you incur a negative gearing loss you are entitled to apply to have your PAYG instalments reduced, so the amount of tax collected from your pay-packet is reduced.  Effectively this means that your out-of-pocket costs of holding the property are reduced.  It is a bit like having another tenant paying you each pay day.

The big mistake many investors make is that they do not collect this payment until the end of the year when they come to do their tax.  The tax refund cheque they get back is nice but for 12 months of the year they have been denying themselves of this money.  It is a bit like allowing your tenant to pay the rent on the property in one payment at the end of the year.  You just would not do it, so why allow the tax man to get away with it.

The other opportunity that people in this situation miss, is one when if they were receiving that tax refund on a regular basis, they may be in a position to purchase another property investment.  Allowing them to grow their wealth at a faster rate.

So how do you take advantage of these rules.

  • firstly calculating your projected annual assessable income from all sources, wages, interest, dividends, rental property rent etc, and
  • calculating your projected annual allowable deductions for work related expenses, interest and dividend expenses, rental property expenses including borrowing costs and depreciation claims and any other allowable deduction, and
  • reporting the above to the Australian Taxation Office.

It is very important that the calculation of the projected taxable income reduction be accurate, otherwise the Australian Taxation Office will penalise the taxpayer for lodging an incorrect variation. Similarly, it is very important that the Australian Taxation Office be advised of any change of taxpayer income or expenses which may have occurred after lodging the Application for Variation of PAYG Withholding so that penalties do not apply. It is for these reasons that we recommend you speak with your accountant to assist in the preparation of the Application for Variation of PAYG Withholding and to take a conservative approach to the calculations.

This process is required to be done each year and can be a little slow as the ATO will often take up to 28 days to process your application.  The first time that you complete the form, arrange to have it completed as early in the year as possible.  In the following years it is prudent to start the process around late May so that the variation can be effective from the start of the financial year.

The ATO will advise your employer how much tax to take out of your salary and therefore creating the benefit.  If you change employers you will be required to apply again, so keep this in mind.

So the Taxation Variation Authority can be used to ease your cash flow burdens during the financial year, very important for property investors.  The tax variation varies the amount of tax withheld from your wages by way of estimating your total end of financial year tax position in advance.  Therefore, rather than getting a lump sum refund at the end of the year you receive it evenly throughout the financial year.

This is just one of the Investment Property tax benefits that wise property investors take advantage of and part of the Success In Property strategy for our clients.

If you are ready to discuss getting started in Property Investment or simply just wanting to review your property investment portfolio then call us on 1300 858665.

 

Original article published at www.successinproperty.com.au/blog by +Geoff Doyle 12/11/2013

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Investment Advice

Superannuation property fund ISPT invests in Brisbane malls

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Property

On behalf of its ISPT Retail Property Trust (IRAPT), ISPT is buy a 3741sq m property in Springfield and a 4889sq m neighbourhood centre in Ipswich.

Both were growing areas supported by strong residential catchments, said IRAPT fund manager Cameron Gregson.

“Obviously the quality of the anchor tenants in both centres also was a drawcard for IRAPT,” he said.

The Springfield property comprises of a 3200sq m supermarket leased to Woolworths on a 20-year lease, along with eight specialty retail outlets.

The Ipswich centre, located just 2km from the Ipswich CBD, has a 15-year lease commitment from Coles to open a 4200sq m supermarket in June 2017.

The two properties will be developed by Brisbane private property group Citimark, which has $1.5 billion of diversified development book focused on southeast Queensland.

“IRAPT’s decision to acquire both the Silkstone and Springfield retail centres is a huge show of confidence in these projects and the southwest corridor (of Brisbane),” said Citimark’s director of commercial and retail Jonathan King.

McNab Constructions has been appointed to build the Springfield centre, with completion expected in May 2017, while Hutchinson Builder will build the Ipswich Centre.

Sam Hatcher from JLL and Craig O’Donnell from CBRE managed the sale.

 

Originally Published On: http://www.theaustralian.com.au/

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Investment Advice

Low interest rates cuts negative gearing ATO investor claims in 2012-13

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Low interest rates cuts negative gearing ATO investor claims in 2012-13

Low interest rates cuts negative gearing ATO investor claims in 2012-13

Record low interest rates have shown up in new statistics from the Australian Taxation Office, in a sizable drop in negative gearing tax claims by property investors.

Claim for rental properties fell from around $13.8 billion to $12 billion between the 2011-12 and 2012-13 financial years.

The latest statistics for 2012-13 show that 1.26 million people deducted losses made on investments (including mortgage interest) from their overall income, from the 12.7 million lodged individual tax returns.

The overall cost of negatively-geared rental properties has fallen by $2.4 billion, or 31 per cent, in 2012-13, due to record low interest rates and higher rents.

The Tax Office’s latest statistics shows 1.9 million landlords.

The value of rent returned was up 8.6 per cent to $36 billion but the value of interest claimed was down 6.7 per cent to $22 billion.

While the number of landlords with negatively-geared properties increased by almost 60,000, their tax deductions fell 13 per cent.

​The highest number of property investors claiming tax deductions had a taxable income – after tax deductions – of between $37,000 to $80,000 a year.

By JONATHAN CHANCELLOR

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Investment Advice

How investor Nautilus nearly doubled money on property in 18 months

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How investor Nautilus nearly doubled money on property in 18 months
How investor Nautilus nearly doubled money on property in 18 months

Nautilus purchased this complex of 10 industrial buildings at 93 Burnside Road, Yatala, Brisbane, 18 months ago. Photo: Supplied

 

Nautilus Investments Corporation has made a 75 per cent gain on the value of an industrial property in less than 18 months after fully leasing half empty buildings and selling them off to Sydney-based fund manager Ringmer Pacific.

The Melbourne-based Nautilus purchased the complex of 10 industrial buildings at 93 Burnside Road Yatala, south of Brisbane from receivers in mid 2013 for $10 million.

It has now sold the asset for $17.45 million reflecting a yield of 8.94 per cent.

Savills’ Callum Stenson and Myles Clentsmith negotiated the deal following an expressions of interest campaign that attracted over 50 buyer enquiries and five offers to purchase.

“This was about being prepared to take on the risk profile,” Mr Stenson said. “When they first bought they were looking for something high return, high risk.”

“The complex was in disarray when Nautilus bought it. It had 57 per cent vacancy, there was outstanding infrastructure charges and no certificate of completion,” he said.

“At the time there was plenty of money but limited confidence – people were sitting on their hands, but those who stepped up have reaped the benefits.”

NEW TENANTS

Nautilus spent 18 months fixing the issues, securing new tenants and presenting the 14,500 square metres property back to the market fully leased.

A similar strategy is now being actively taken up by commercial real estate groups such as Lend Lease’s Australian Prime Property Fund.

That fund snapped up an empty ­Bunnings Warehouse in Brisbane in July last year for $21.27 million and Hills Limited’s headquarters for $15.6 million which is to be vacated next year.

Sydney-based fund manager Ringmer Pacific, which purchased the Nautilus asset, said the property has a prime location.

Ringmer Pacific’s Giles Austin said: “The 93 Burnside Road property provides extremely flexible accommodation for local businesses that will be able to adapt to changing tenant needs in this key growth corridor linking the Gold Coast and Brisbane.”

by Matthew Cranston

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