I'm doing something wrong

I have 4 properties, I owe the bank 950k and prob have around 400k equity . I have paid 18 k income tax last financial year from my gov job. Tax agent says I must pay another 3 k because properties pos geared now. I just took a TVSP from my gov job. My accountant says work less?? I need good financial planner and /or accountant SA .. confused.
 
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Isn't earning income on your investments a good thing?

I don't quite see what is wrong with this scenario - what's your end goal? Why are you investing in property? If it's to be financially free then I think you're doing the right thing, but if it's to keep working and pay less tax then maybe buy more NG houses.
 
Not earning now TVSP only 50 k . Studying now till end of year. Worried think my accountant not very good. I am not a savvy investor. Need good lead for financial advice.
 
Do you have depreciation schedules for your properties?

simple solution rent less management fees less repairs and maintenance less rates less insurance less depreciation les applicable borrowing fees less whatever else is deductible

have you had any travel expenses for indpections
 
NRC thanks no I haven't . Hence asking for advice on good financial advisor. Foxy Moron. Most unhelpful and insulting. How you get your kicks?
 
Jasa,
It sounds as if you could benefit from sound advice from a professional who understands property investments, what can be claimed and give an estimate on what your tax position will be now your income (presumably) will be lower in this financial year.

Depending on age of properties, building allowance may apply and certainly depreciation of fittings and fixtures should. These from a tax perspective can change a cash flow positive property to a negatively geared one for tax purposes. By all means get a quantity surveyor report for your properties and if applicable, you can put in amended assessments for the last 4 years.

From my perspective, it is generally preferable to have a investments returning a positive benefit than one that is running at a loss, tax is simply a consequence. We structure our affairs to minimise tax within the law but if we are earning a taxable income, we pay the tax accordingly. Tax should be regarded as a cost of running a successful business or investment portfolio.
 
Go along to the next property investment meeting in Adelaide. They post the time and place regularly in the 'Meeting Point' part of the forum, just keep your eyes open for it.

You'll meet a few people there who might be able to help with some useful ideas and contacts.


Realistically though, you're making money from your investments (which is a good thing) which is why you have to pay tax.
1. Find a better accountant that appreciates that paying tax is actually a good problem to have.
2. Regularly set aside some money from those profits to pay the tax bill.
 
You need to get yourself an accountant who specialises in property.

Making income and paying more tax is a good sign. Now you just need to come up with a strategy to lower your tax (use it to pay for your investment properties).

One option would be to use equity from your properties to purchase a new investment property. This will increase your interest, which you will pay using your rental incomes. The result will be lower tax and a new investment property.

There is more to it than that so it's important you find yourself an accountant that specialises in property and can do the numbers for you. If you tell this simple strategy to a general accountant, they won't understand it.

Cheers

Andrew
 
Broadly speaking, if your paying 3k in tax on your properties last year, the properties should have put around $200 in your pocket every week.

Does that sound right to you?

There are a number of ways to reduce your taxes legally. A good accountant should be able to explain those out to you. If your unsure about whether your accountant is right, ask him to explain to you how he got to that figure and whether his done everything possible to reduce your tax bill legally. An explanation should be part of the service that they offer you.

Perhaps have a chat to another accountant and get a second opinion if your worried.
 
I agree with getting a good accountant on board - it makes a world of difference.

Do you know if your maximising your deductions? Do you have depreciation schedules for each IP?

If you can't find a decent accountant locally - you could always use an interstate one if you're happy with using email/phone. Plenty of good ones on this forum.

Cheers

Jamie
 
Making income and paying more tax is a good sign. Now you just need to come up with a strategy to lower your tax (use it to pay for your investment properties).

One option would be to use equity from your properties to purchase a new investment property. This will increase your interest, which you will pay using your rental incomes. The result will be lower tax and a new investment property.

Unless of course you purchase another positive geared property....which will increase your tax liability.....but you knew that already right?

OP, Sounds more like an enviable position...where you are paying tax on your obvious cashflow. Remember investing to lower tax should be a distant 3rd behind growth and cashflow.

You aren't looking at this in the right perspective.

pinkboy
 
Unless of course you purchase another positive geared property....which will increase your tax liability.....but you knew that already right?

OP, Sounds more like an enviable position...where you are paying tax on your obvious cashflow. Remember investing to lower tax should be a distant 3rd behind growth and cashflow.

You aren't looking at this in the right perspective.

pinkboy

No. My strategy would still be to purchase neutral/positively geared properties with potential for capital growth.

The goal is to buy more IPs that will grow in value and produce income not just lower your tax.

Cheers

Andrew
 
No. My strategy would still be to purchase neutral/positively geared properties with potential for capital growth.

Did you miss the part where she say's she's not working ATM?

Jasa, it sounds like your accountant isn't claiming enough for you. We have to pay tax too, BUT it's a lot less than what you've just been asked to cough up. I think some of the difference could be in depreciation. Have you claimed this? What about car expenses? You can claim for all your running around (to your properties & Agents, of course), stationary, phone, internet, etc.....all the small things add up over the course of a year.
 
Did you miss the part where she say's she's not working ATM?

Jasa has 400K in equity and is still getting 50k p.a.

How old are you Jasa and do you plan to continue working after the end of the year when you finish your studies?

It's important to plan ahead.

Cheers

Andrew
 
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