Investing In Property

Put not your trust in money, but put your money in trust.

Things You Should Know When Investing In Property:
When you buy an investment property one of the most important things to keep in mind is that you get a return on your money over a period of time.

Reasons for not buying
A major reason why people don’t buy an investment property is the thought of having another mortgage over their head for the next 20 years. They worry about making extra monthly mortgage payments over and above their current repayments. They have always been told to pay off their original home loan first and then buy the investment property.

Then there are friends telling them a variety of things. You should always have money in the bank for a rainy day. You don’t want the hassles of bad tenants. What happens if the place gets trashed? It’s the wrong time to buy.

There are many different opinions. But when you take away the emotions––get down to serious evaluations and do the number crunching––you’ll discover some profound possibilities.

Recent calculations have shown that most people can invest in property from as little as $20 per week and get some serious capital growth with little or no effort.

Do your homework
The key to successful investment in rental property is to base your decisions on general trend for demand, supply for property and the “after tax numbers” for each property. This process takes away the emotional reasons for buying.

Find out all you need to know about what is around, what the demographics are and trends for the area, how you will structure the investment purchase, how you can manage the cash flow so other people are paying for your investment and how you can keep your costs to a bare minimum.

Learn to build wealth with property. Let us show you how to own an investment property for as little as $20 per week.

Buying with no money down
Many people think they can’t get involved in an investment property because they have a mortgage on their home and no savings for a deposit. But this isn’t always the case. In fact you can structure your investment property to reduce your current home loan even faster and then you’ll own both properties sooner rather than later.

10 golden rules
When you invest in property you should follow some very basic rules to reduce the risk of not meeting your expectations:

• Work out your maximum borrowing capacity
• Structure your investment correctly
• Make sure that you take advantage of the investment tax breaks, taxable income and cash benefits
• Buy in growth areas and use the equity as it grows
• Keep your ingoing costs low
• Keep your outgoing costs low
• Keep your capital expenditure to a minimum
• Make sure the property appeals to the right tenants
• Purchase a property that gives you non-cash tax deductions
• Use cash to reduce other non-deductible debt.

Free property preview
We have designed a special software program that prepares a detailed property report for you. In this report you will see how you can own a property for as little as $20 per week. For your free preview and a look at the strategies available to help build your wealth please contact us.

Rental Property Expenses
What you can claim
You are able to claim a deduction for certain expenses you incur for the period your property is rented or is available to rent. The exception to this rule is if the expense is of a capital or private nature. Although you may be able to claim depreciation of capital works deductions for certain capital expenditure or include certain capital costs in the cost base of the property.

There are three types of rental expenses:

1. Expenses you can’t claim
2. Expenses for which you are entitled an immediate deduction in the year you incur the expense
3. Expenses which are deductible over a number of income years.

Expenses you are not able to claim include:

• Cost of acquiring and disposing of your rental property. For example, the purchase cost of the property, conveyancing costs, advertising expenses, and stamp duty on the transfer of the property. However, if you acquired the property after 19 September 1985, these costs may form part of the cost base of the property for capital gains tax purposes
• Expenses not actually incurred by you, such as water or electricity charges borne by your tenants
• Expenses that are not related to the rental of a property, such as expenses connected to your own use of a holiday home that you rent out for part of the year.

Expenses you can claim immediately
The following expenses can generally be claimed in the year the expense is incurred:

• Advertising for tenants
• Bank charges
• Body corporate fees
• Cleaning
• Council rates
• Electricity and gas
• Gardening and lawn mowing
• In-house audio/video service charges
• Insurance – building, contents, public liability
• Interest on loans
• Land tax
• Legal expenses
• Lease costs – preparation, registration, stamp duty
• Mortgage discharge expenses
• Pest control
• Property agent’s fees and commissions
• Quantity surveyor’s fees
• Repairs and maintenance
• Secretarial and bookkeeping fees
• Security patrol fees
• Servicing costs, eg: servicing a water system
• Stationery and postage
• Telephone calls and rental
• Tax-related expenses
• Travel and car expenses – rent collection, inspection of property, maintenance of property
• Water charges.

Expenses deductible over a number of income years
There are three types of expenses you may incur for your rental property that may be claimed over a number of income years:

1. Borrowing expenses
2. Amounts for decline in value of depreciating assets
3. Capital works deductions.

Pre-payment of expenses

If you pre-pay a rental property expense, such as insurance, that covers a period of 12 months or less and the period ends on or before June 30, you can claim an immediate deduction.

A pre-payment that does not meet this criteria and is $1,000 or more may have to be spread out over two or more years.