Business, Property, SMSF & Tax Advisors
HOW TO LEGALLY MINIMISE YOUR TAXAND MAXIMISE YOUR PROFITS
2014
Tony Lee
Business, Property, SMSF & Tax Advisors
liable
principal and
WHERE YOU HAVE NEGATIVELY GEARED RENTAL
INVESTMENTS, THE NEGATIVE PART OFFSETS
AGAINST YOUR OTHER INCOME E.G. SALARY,
REDUCING YOUR TAX PAYABLE AND RESULTING
IN A LARGE REFUND WHEN YOUR TAX RETURN
IS LODGED.
This refund can be used to reduce your loan, pay
your interest expense or help finance another
investment property.
To help with cash flow, would it not be great if you
were able to access this refund throughout the
year instead of waiting till the end of the year? This
can help finance that extra property which has
potential to pick up some capital growth between
the beginning and end of year.
This can be done by lodging an application to
vary the 'PAYG Withholding’ using a form
from ATO. This can be done electronically on
line or you can download the form, prepare and
lodge it manually.
Depending on your personal
circumstances the additional refund from
negative gearing may not be substantial. If the
savings are small, you should consider saving the
cost of preparation
To get the maximum benefits out of the cash flow
savings, late May/early June is the best time to
prepare and lodge the Application for PAYG
Withholding Variation because then you can get
the full effect of lower tax
When lodging electronically ensure you
keep a copy of the electronic receipt or make a
record of receipt reference number. It helps when
chasing up ATO.
and Maintenance
A tax deduction is available, where you
pay for this before 30 June 201 ... useful
where you purchased a new property & interest
expense was lower than expected.
Depreciation is the wear and tear on building and
equipment. Claiming a tax de-duction for this
expense does not require any cash payment. You get
a tax saving without paying any additional cash
money.
To maximise your deductions it is prudent to get a
Quantity Surveyor to produce a report for you as
they are skilled cost estimators. You get a nice report
which minimises your accountants time and cost in
preparing your tax return.
Prepaying expenses up to 12 months ahead are
allowed as a deduction in the earlier year. In this
case 201 . Prepaying expenses increases your
deductions, reducing your tax.
Most people prepay the following types of expenses
Rates – Council & water
interest
-
-
- Strata Levies
Before prepaying deductible property expenses, it
is prudent to check on how your tax return may
look for that financial year. Do a bit of forecasting.
If you have investment properties – which are
negatively geared (the interest and expenses
are larger than the rental income) the negative
component will be offset against other income
such as salary, reducing your taxable income –
reducing your marginal rate of tax and your tax
liability.
One of my clients ha about $13k taxable income. If
he were to prepay expenses – bringing the deduction
forward to 201 year instead of leaving them for 201
– he would lose money. Because at $13k
taxable income – no tax is payable.
rom 1/7/201 the tax
increase from to
Deductions for
contributions to super
are capped at
$25,000
This amount includes the
SGC payments made
by the employer
Additional contribution
to a Self Managed Super
Fund (SMSF) maybe
necessary to make
up for any losses in a
property owned by the
fund and is negatively
geared.
With the aging
population, more older
Due to the non-recourse
loans which are forced
on super funds by
the legislation banks
are only willing lend
between 65-70% of
the value of a property.
Where a fund wants to
buy larger property
or propert in
the
then a non-concessio
nal contribution (non-
deductible) may be
required. The caps on
these is $150k per
year
.
Tax Tip – If you
are able to make
non-concessional
contributions to your
SMSF and you want
a larger deposit for a
purchase the time to
make these contributions
is:
- $150k before 30 June
- $150k immediately
after 1 July
Within days you can
have $300k in cash in
the fund to use for an
additional purchase.
Tax Tip – using
spare cash available
outside Super to lend
to an SMSF to acquire
property inside an
SMSF. The profits will
be retained in the fund
being taxed at the
concessional rates.
propriately authorised, financial
adviser.
Review your current property
& tax situation ... maybe the
next deal or
hether or not to sell
a property which one in
the portfo
Tax planning should ideally form
part of your overall financial
planning, as it may well have an
impact on your overall financial
situation.
You should be proactive with your
tax planning – and discuss it as
part of your broader financial
situation with a licensed, or ap-
our asset protection
strategy. What is your risk
profile? High ..medium ..low
Structuring your next
investment property. In
whose name should it be?
lanning to legally
minimise your tax position or
just to explore the possibilities
your Self Managed
Super Fund ready to
acquire a property
Prepare your next tax return
or application to reduce your
PAYG
Why We Choose Lee & Lee Accountants
Tony with Sam Saggers, CEO of Positive Real Estate. Together, we will help you to find the right path and provide you with the right tools to navigate it.
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For over 10 years, Positive Real Estate have
helped thousands of every day people, just like
you, navigate the minefield of property invest-
ing. We aim to equip you with the knowledge
and skills necessary for buying an investment
property, so that we can help you achieve
financial freedom.
Like us, Lee & Lee Accountants believe your true
wealth is tied up in your values, vision and dreams.
Through planning, they get to understand the
financial, emotional, and charitable aspects of
your business, family and personality.
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