too many properties

[rollyt]

I am looking at borrowing $400000 and purchasing my 5th IP.

My main concern is this takes me over the $50000 Rental income per year.

if you earn more than $50000 per year i start to pay GST. How does this work?

and also i will be paying about $2300 in land tax for the new IP.
My rental income for the new IP is $14000per year
My Interest on a $400000 loan @ 6.4% is $32100 per year.
being a new IP maintenance is very low.
Land & water rates $1900 per year
Management fee @ 8% plus 1 week letting fee is $1400 per year

What is my return on my investment as a %?

and what are your thoughts on purchasing a IP when properties are at the peak of their cycle?

Regards Rolly

 

[ruk]

keep going;

5 6 7 10 20

why too many?


I have many - and registered for g s t - don't know if I had to.

some people I know, only have some of their properties registered for g s t.

#x%*@^ if I know how that works.

 

[Rixter]

A couple of questions? How much of your own money have you thrown into the deal as we need to know this to calc ROI, and how did you work out $400000 x 6.4% Interest = $32100?? By my calc its $25600!

 

[bundy1964]

Originally posted by rollyt
if you earn more than $50000 per year i start to pay GST. How does this work?

If all you have is residential it will make no differance as that is all input taxed - no GST claimable or payable.

You will need to fill out a BAS statement with income and expences for your business dealings........it's not rocket science to do it yourself or a deductable expence to have your friendly bean counter do it for you

bundy

 

[Mick A]

As a resedential property investor, owner etc, it does not matter how many residentail properties you own or how much income you receive from residential rent , you do not need to have an ABN or register for GST. Residentail rent is input taxed and you cannot claim a GST credit for any expenses incurred earning input taxed income.

Regards

Mick A

 

[dwyerfam]

But, don't you have to pay PAYG Tax? (It used to be called provisional tax - remember?). Here's a copy and paste from the ATO's e-tax:

Pay As You Go (PAYG) instalments

If you make a profit from renting your property, you will need to know about the PAYG instalments system.

The PAYG instalments system commenced on 1 July 2000 and replaced the former provisional tax system. This system requires you to pay instalments during each income year to meet your expected tax liability for that year. You will generally be required to pay PAYG instalments if you earn $1000 or more of business or investment income - such as rental income - and the debt on your income tax assessment is more than $250.

If you are required to pay PAYG instalments the ATO will notify you. You will usually be required to pay the instalments at the end of each quarter. There are two options if you pay by quarterly instalments:

· pay the instalment amount calculated by the ATO (as shown on your activity statement), or

· pay the instalment amount you work out, based on your instalment rate multiplied by your investment and business income.

However, you may be able to pay an annual PAYG instalment if your notional tax is less than $8000. Your notional tax is generally the equivalent of the tax you would have paid on your business and investment income, excluding any capital gain, based on your last income tax assessment.

For further information, see the publications Do I need to pay PAYG income tax instalments? (NAT 3990-3.2001), PAYG instalments for individuals (NAT 4200-4.2001) and PAYG annual income tax instalments (NAT 4269-5.2001). To get a copy of these publications visit the ATO website

My question now is where it says $1,000 or more etc a week? a year?

Danny D.

 

[handyandy]

Hi Rolly

You only pay tax when your income exceeds your expenses and you actually make a profit. I assume that the $50k mentioned is gross income before loan payments on the basis that the new purchase rents for $14k. So by the time you pay interest rate etc pm coms etc I would guess you are fairly -ve.

Certainly with your new purchase you are making a cash loss of $23700 less any deductions that arise from the property.

As already mentioned GST does not apply to res property you pay it in any expenses but can not claim it back.

In Particular I HATE LAND TAX

Cheers

 

[investor]

Hi

To avoid paying PAYG tax on investment rental and pay it at the end of the year if any after you heve deducted your expenses you have to lodge a special form into the tax department for that property. I can't remember what it's called D11 or something. Dale would certainly know.

Regards