Reduce tax down to 2% - Aye?

From: Marc Krisjanous


Hi all,
I have been reading a book by Rory J. O'Rourke. This guy has stated that he can reduce your tax down to 2% of gross earnings. I can't understand all of the process as he does not mention it in detail but he uses tax variation and prepayment of interest for IP. Plus he loves negative gearing!!

Is this guy for real? I am a beginner at investment but this seems to good to be true. Does this strategy work? If so is there any book or link which provides info in detail? He does not mention when you need to get this into place, and what exactly you need to do.

What about this guy? Any comments?

Best Regards

Marc
 
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Reply: 1
From: Glenn Mott


Be very careful...

Glenn

-----Original Message-----
From: propertyforum Listmanager
[mailto:listmanager@bne003w.webcentral.com.au]
Sent: Monday, 12 August 2002 7:36 AM
Subject: Reduce tax down to 2% - Aye?


From: "Marc Krisjanous" <marckris@au1.ibm.com>

Hi all,
I have been reading a book by Rory J. O'Rourke. This guy has stated that he
can reduce your tax down to 2% of gross earnings. I can't understand all of
the process as he does not mention it in detail but he uses tax variation
and prepayment of interest for IP. Plus he loves negative gearing!!

Is this guy for real? I am a beginner at investment but this seems to good
to be true. Does this strategy work? If so is there any book or link which
provides info in detail? He does not mention when you need to get this into
place, and what exactly you need to do.

What about this guy? Any comments?

Best Regards

Marc


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Reply: 2
From: Tony Dixon


Hi Marc,

Yes it is very real. You can reduce your tax to 2% of gross earnings.

I have a property I can sell you in Dudsville for an inflated price. The area is going to take off so it's best to get in now. The interest on your mortgage will be tax deductable! Not only that, but for a not-so-small fee I can show you how to set up your finances through my solicitor and broker. Better yet, I will even manage the property for you, so you can claim the mgmt fees as a tax deduction too!
And for a small referral fee, I'll put you onto a reputable accounting company who specialise in property investing and can show you how to vary your tax. That's tax deductable too!!

I will make it personal mission to lower your tax!!!

:)

I'm only joking of course Marc, but be very careful.


The ONLY reason one should negatively gear is if you expect strong capital growth, or are going to get a big payoff somehow in the future.

Without a large future gain, the IRR (internal rate of return) for a negatively geared property is very poor (assuming you are just using a buy-and-hold approach to investing).

Money has a time value. A dollar today is worth more than a dollar next year. So if you are paying out a dollar now, you want to get much more than a dollar next year. And this holds even more so when there is risk involved (all investment has some level of risk).

cheers, Tony

Disclaimer: I have not read the book you mention by Rory J. O'Rourke, nor have I had any dealings with him or 'the son'.
 
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Reply: 2.1
From: Marc Krisjanous


HaHa!
Yeah it does sound like that! But is there anyway to reduce your tax down to that level?

My number one focus is using IP to gain wealth NOT for avoiding or reducing tax. However, if I can use my IP's to reduce my tax - why is that a bad idea?

Maybe this can't be done? Maybe he is just selling him and his mates? Or maybe you can get your personal tax % down to this level! I am very untrusting when it comes to schemes and get rich approaches. All I want is to know if it can be done and if so what the risk is.

Best Regards

Marc
 
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Reply: 2.1.1
From: Paul Zagoridis


Hey Marc

There are Australians who get their personal tax rates down that low or even lower.

However none of them work for IBM ;-)

That's not really a joke. In order to practically reduce you personal tax you need a significant unearned income (via investments or business).

That way you can afford to live without having to slash your lifestyle.

You could reduce your tax rate to 0% by negative gearing. Keeping your servicablity gets tricky. And you are likely to go broke the minute prices stop growing.

Most successful investors focus on making profits first, then paying the $400 - $1200 per hour the tax experts charge for aggressive tax work.

PaulZag
Dreamspinner
WealthEsteem :: Psychology of the Deal
http://www.wealthesteem.org/
 
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Reply: 2.1.1.1
From: Dale Gatherum-Goss


Hi

At the risk of bragging, or setting myself up for a fall . . . my tax level is abt 2% and so yes, it is a very real possibility.

You will need the right circumstances and as an employee, you will have great trouble doing much at all to legally reduce your tax without being very negatively geared to a point where you might not survive.

Be careful and good luck

Dale
 
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Reply: 2.1.1.1.1
From: Paul Zagoridis


Shhh Dale!

When will you learn to keep secrets?

Nothing wrong with a legally low rate, but the ATO likes auditing them and that's a PITA!

PaulZag
Dreamspinner
WealthEsteem :: Psychology of the Deal
http://www.wealthesteem.org/
 
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W

WebBoard

Guest
Reply: 3
From: S W


You could easily get your tax rate down that low without getting into wierd strategies. Buy half a dozen new properties (in a decent area to still get capital gain), get a good QS to max the depreciation, borrow to pay all your interest upfront, blah blah blah.

It doesn't have to be super risky. It just depends on what your priorities are...for me its always about capital gain and maximising equity. Positive cash flow...I'm all for it, as long as I'm also getting good capital gain.
 
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A

Anonymous

Guest
Reply: 3.1
From: Anonymous


I have my tax rate down to almost nothing as well, 9 properties, maximum depreciation, I collect every single receipt and then work out how I can deduct the expense.

The NICE thing is that with my Income now so low, I get a Health Care Card which gives me entitlements for Concessional Discounts at the Cinema, cheaper prescriptions, travel etc etc. Then on top of that the Government insists on giving my Wife the maximum Family Tax Benefit of $9000pa (2 kids).. All on top of a significant PAYE income from my job..

And all completely legitimate.

Hubert.
 
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Reply: 3.1.1
From: Albena B


Anonymous,
Are you aware that ATO adds the net loss from property investments on the top of your PAYE figure when assessing for Family Benefit payment? I got stung this financial year by having to pay back in excess of $1000.
 
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A

Anonymous

Guest
Reply: 3.1.1.1
From: Anonymous


On 8/13/02 11:41:00 AM, Albena B wrote:

>Anonymous,
>Are you aware that ATO adds
>the net loss from property
>investments on the top of your
>PAYE figure when assessing for
>Family Benefit payment? I got

Ahh, there-in lies a small point I missed.

Only those losses from Properties held personally are included..

Losses from Properties that are held within a Trust or Partnership are specifically not added back on.

Hubert.
 
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Reply: 3.1.1.1.1
From: Steve Mcleod


People of the forum,I for one have read the book. The bit about tax credits and how they can be held and bought into play in the future is really what pricked my ears.I am quite new to all this, this was about the tenth book I have read,i've been in the building industry 21 years and learn something every day.The day I close my ears without the facts will be a sad day.Weather your a -tive,+tive,wrapper,a buy and hold or a flipper I can't see that it would ever hurt to be aware of what is out there.Starting with the end in mind is one of the best bits of advice i've ever heard,get rich quick scams aren't for me, but I found this book informative and enjoyable.

steve
 
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Reply: 4
From: Geoff Whitfield


Sorry to come in late on this- but do you have more details on the book?
 
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Reply: 4.1
From: Steve Mcleod


Geoff,
It's meant to be in the bookshops,although I have not seen any yet.I'm in Sydney and O'rourke reality investment manage a property for us.Call them on (08)93416611,they will post a copy out.

steve
 
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Reply: 4.1.1.1
From: Geoff Whitfield


Thanks Dave & Steve, I'll check it out

Geoff
 
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