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Investment property Tax Benefit

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Moreton Investor, Property Management, Investment properties, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, Moreton property prices, rental properties, Tax Benefit, Tax Benefits, Investment property tax benefit

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

Moreton Investor, Property Management, Investment properties, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, Moreton property prices, rental properties, Tax Benefit, Tax Benefits, Investment property 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

Investment Advice

SEQ Population Growth needs 12 Springfield-style mega cities to cope: Planner

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Southeast Queensland needs a dozen mega-developments like Springfield if it is to cope with the extra 2.2 million people over the next three decades, a respected urban geographer has told Fairfax Media.

Springfield is expected to be home to 80,000 people by 2030. Photo: Glenn Hunt

Springfield is expected to be home to 80,000 people by 2030. Photo: Glenn Hunt

Professor Bob Stimson, Emeritus Professor in Geographical Sciences and Planning at the University of Queensland, told Fairfax Media there would be 5.5 million living between Noosa and Tweed Heads within three decades.

Professor Stimson – an analytical human geographer and regional scientist for 49 years – said Southeast Queensland could no longer rely on increasing densification with the existing area.

Population growth will require up to a dozen mega-planned communities to cope with an extra 2.2 million people. Photo: Glenn Hunt  Read more: http://www.brisbanetimes.com.au/queensland/seq-population-growth-needs-12-springfieldstyle-mega-cities-to-cope-planner-20150626-ghyxzb.html#ixzz3fdZRqltR

Population growth will require up to a dozen mega-planned communities to cope with an extra 2.2 million people.Photo: Glenn Hunt

Professor Stimson said between “10 and 12” large master-planned communities like Springfield or North Lakes – on Brisbane’s northern-edge – would be needed for the extra 2.2 million people.

“There is no way that all of the growth that is going to occur can be accommodated through urban infill,” Professor Stimson said.

“You are still going to need greenfield growth, fringe growth,” he said.

“So the big issue for Southeast Queensland over the coming decades is that you are probably going to need 10 or 12 of those types of developments to be occurring.”

Greater Springfield is a privately-owned 2680 hectare master-planned community south of Ipswich that has around 20,000 residents in two suburbs; Springfield and Springfield Lakes.

It started around 1995 and is planned to have 80,000 residents by 2030.

Professor Stimson said “green belts” between the Gold Coast, Brisbane and the Sunshine Coast were under pressure, but he believed would be protected because of the state government’s Southeast Queensland Regional Plan.

He said there was land near Beaudesert and Ipswich and between Brisbane and the Gold Coast for residential development.

“There is plenty of land that is not prime agricultural land, that is not ecologically important land, national park or high conservation-value land that could be taken up for that sort of growth.”

On Friday Australand launched a $400 million master-planned community for 25,000 people over 25 years called The Rise at Park Ridge in the Logan City Council area.

Australand’s Queensland general manger of  residential growth Cameron Leggatt said the development targeted low-cost home and land packages ($280,000) and provide 13,000 local jobs over 25 years as part of 2450-hectare project.

“With housing affordability throughout Brisbane and South East Queensland out of reach for many Australians, The Rise is keeping the dream of home ownership alive,” Mr Leggatt said.

Professor Stimson warned that jobs growth needed to accompany residential growth if it pushed further west than Ipswich.

He said jobs growth remained concentrated in the Sunshine Coast to Brisbane to Gold Coast line.

“Over the years I have been quite a critic of the Southeast Queensland planning process, which has tried to force growth into that western corridor because all the economic data demonstrates all the jobs growth is along the linear corridor that stretch to the north and south of Brisbane.”

Unemployment figures show Ipswich’s unemployment rate marginally higher in May 2015 than Brisbane’s western suburbs.

Unemployment – May 2015

Brisbane’s southside – 5 per cent

Brisbane’s inner-city – 5.5 per cent

Brisbane northside – 5.6 per cent

Gold Coast – 6.1 per cent

Brisbane West – 6.3 per cent

Moreton Bay – 6.3 per cent

Sunshine Coast – 6.8 per cent

Ipswich – 7 per cent.

However Ipswich Mayor Paul Pisasale said Professor Stimson appeared to be unaware of new job developments in Ipswich.

Ipswich’s labour market statistics show unemployment beginning to fall from 9 per cent to 7.4 per cent, with 2600 jobs created since March.

“We have a massive amount of industrial, commercial and retail development including the largest concentration of transport and logistics companies in Australia with DB Schenker, Northline and TNT at Redbank,” he said.

Cr Pisasale said jobs were being created at the new HOLCIM project underway at Swanbank, the new GE Electrical building at Springfield Central and with the Orion Shopping Centre doubling in size.

“RAAF Base Amberley is also continuing to expand with a workforce of more than 5000,” he said.

“Ipswich and the western corridor has a major role to play in satisfying growth in Southeast Queensland.

“We can’t continue to simply concentrate growth within Brisbane and the coastal fringe if we think we will maintain the same quality of life.”

In May 2010 former premier Anna Bligh announced plans for three mega-cities in Southeast Queensland to provide homes for 250,000 people.

Those three cities – at Ripley (near Ipswich), Yarrabilba (south of Logan) and Bromelton – about six kilometres south of Beaudesert – are all underway

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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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Nearly two milllion negative gearing investors across Australia: ATO

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Nearly two milllion negative gearing investors across Australia: ATO

Nearly two milllion negative gearing investors across Australia: ATO

Negative gearing property investors now total 1,967,260 across Australia, according to the ATO latest data.

That’s up from the 1,895,775 in the previous tax year, 2011-12.

There were 1,811,175 investors claiming rental income in the 2010-11 year.

The ATO has a investor rental video series on working out your tax correctly.

The statistics for the 2012–13 income year were sourced from 2013 individual income tax returns processed by 31 October 2014. The statistics are not necessarily complete.

This data is not representative of the total number of properties.

By JONATHAN CHANCELLOR

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