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Positive gearing into property

Positive gearing is the opposite of negative gearing. It is jargon for borrowing to buy an investment where the expected assessable income is more than the expected deductible interest cost (and other costs), with a resultant increase in assessable income. In the context of housing prices, this means buying on a rental yield of at least 5% or more. This is a very unusual phenomenon. Most residential property will not…  Read more

What makes debt deductible?

Financial planners divide debt into two types: deductible debt and non-deductible debt. Deductible debt lets the borrower claim a tax deduction for the interest incurred on the debt. Non-deductible debt does not. Whether interest is deductible or not can have a massive impact on how expensive that debt actually is. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with…  Read more

Not all debts are the same. Even if the interest rate is.

Not all debt is the same. Even if the interest rate is. One of the main differentiators between debt is whether or not you can claim a deduction for the interest. If interest is not deductible, then the interest rate paid is much higher than you might think. When interest is not deductible, you have to pay tax before you pay the interest. You can see this with an example:…  Read more

Helping your kids and grandkids into a property

It is well known that property affordability, particularly for the younger generation (25 – 34 year olds) has become a major challenge.  This topic has increasingly become a part of conversation with clients over the past twelve months so figured it would be a good idea to share some of our thoughts and possible solutions on this issue. Read more  Read more

Property market update

Property is a hot topic so for all of you that keenly follow the property market, whether as an investor, developer or simply as an owner-occupier, here is our update on the property market.   Read more  Read more

Making the most of negative gearing

Negative gearing is a common strategy adopted by persons wishing to build their long term wealth in a tax effective manner.  In recent years, negative gearing has become more prevalent through the advent of record low interest rates and in some parts of the country, increasing values of property. Whilst it can be an excellent wealth building tool, it does have restrictions and risks if not used properly.  In our…  Read more

Positive Gearing. What is it, how does it happen and do you want it anyway

You have probably heard the term ‘positive gearing.’ It is a similar concept to negative gearing, which is certainly in the news a lot these days. We use the term ‘gearing’ whenever debt is used to fully or partly finance an investment. If you have $90,000 of your own and borrow $10,000 to buy an investment asset worth $100,000, you have ‘geared’ the investment. Similarly, if you borrow $100,000 to…  Read more

Avoiding rental claim errors

The ATO is targeting those who rent out their property for a few weeks during the year but claim a full year’s worth of tax deductions. The tax office will be paying close attention to rental property owners, especially those who own a holiday home and those who incorrectly claim for initial repairs to recently acquired properties. Last year, the ATO sent out letters across Australia reminding people to only…  Read more

Action plan for low interest rates

Borrowing at a time of low interest rates to invest can yield high returns in the long run. Although borrowing to grow a portfolio of shares or a managed fund is risky, if investors have a secure income stream and extra funds, the results can be very favourable.  Diversifying the investment may be a way of lowering potential risk. Negative gearing Taking a loan out can help reduce an individual’s…  Read more

Capital gain tax on inherited property

There is often some confusion relating to the treatment and operation of capital gains taxes in the case of deceased estates. Generally speaking, CGT events are considered to take place when an asset changes ownership.  In the case of deceased estates, the CGT event is considered to have taken place on the day that the person passed away. There are special regulations in place that allow capital losses and gains…  Read more

Four common mistakes with rental property deductions

  While it is not uncommon to make some mistakes when claiming rental property deductions, it is important for investors to get their expense claims right to avoid facing potentially harsh penalties.   In our experience, there are four problems areas where investment property owners are incorrectly (whether inadvertently or deliberately) claiming deductions that don’t necessarily reflect their circumstances. 1.  Claiming excessive deductions This is a common issue, particularly involving…  Read more

Is Now the Right Time to Buy a Home?

If you’ve frequently been asking yourself if it’s the right time to buy a home, there are several things to first consider. Three things to think about are the current market conditions, the interest rates, and the amount of available housing. Current Market The current market conditions may help you determine if it is the right time to buy a home. If prices are starting to increase, you may want…  Read more

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