Investment FAQS

Investing into property is still a hot topic at the moment. Property prices are more realistic, and with interest rates low, it makes sense to start looking at a property investment portfolio. Here are some common questions:

Q..Can I buy an investment property without a deposit?

A..Yes, if you have sufficient equity in your existing owner occupied home.  Here is an example:

- Existing home valued at $500,000

- Existing home loan $350,000

-Investment property will cost $300,000 plus fees of say $15,000. Total loan required = $315,000

If we can cross collateralise (use both properties at the same time) the homes then you actually have

$800,000 worth of security against total loans of $350,000 + $315,000 = $665,000.  You are borrowing about 83% of the total values.

You have now purchased an investment property with no upfront outlay.

Before making any decisions about buying an investment property you should seek some advice from your accountant or financial planner.  A Finance Broker will assist with the application process once you have sought the advice.

You will need to be able to show that you can afford to repay your existing home loan plus the new investment loan, and any other debts you may have.

Don’t be fooled into thinking that the rent will cover your monthly repayments. It is pretty unusual in this day and age to see a property with positive gearing.  Once agent fees, rates, strata fees if applicable and other incidentals are deducted from your weekly rental income you will probably not have enough to make the loan payment.  This money needs to come out of your income. Fortunately, the banks will allow interest only payments on your investment loan, whether it is a fixed rate or not.

You can only claim the interest portion of the repayment as a tax deduction so it makes sense to pay the minimum on the investment loan with any surplus monies being paid off your owner occupier home.

Q..Where should I buy an investment property?

A..Speak to your local real estate agent. They may know of some ‘hot spots’ to look out for. Otherwise, you can do some research at  www.reiwa.com .  Some agents hold property investment seminars, find out when the next one near you will be.

Don’t worry if the property is some where you might not normally venture.  You don’t have to live there, however, some lucky tenant will love it!

INDIVIDUAL TAX RETURN CHECKLIST

·    Name

·    Tax File Number/ABN

·    Date of Birth

·    Occupation

·    Bank Account Details

·    Home & Postal Address

·    Email Address

·    Telephone Number

Income details

[ ] Group certificates & payment summaries

[ ] Lump sum payments eg Eligible Termination

[ ] Centrelink, social security, pensions, allowance documents & statements

Income from Investments

[ ] Bank statements (interest received & fees)

[ ] Trust distribution statements

[ ] Managed Fund investments annual statements

[ ] Share dividend statements

[ ] Contract notes for buy/sell transactions

[ ] Capital Gains Tax statement

[ ] Tax statements from stockbroker/financial planner

Deductions

[ ] Receipts or work related deductions eg. clothes/laundry/meals/car/travel

[ ] Receipts of gifts/donations to charities

[ ] Receipts of self-education expenses eg. books/computer costs/ car expenses

[ ] Tax & ongoing financial planning advice

[ ] Last year’s fees

Investment Related Deductions

[ ] Interest on borrowing for investment purposes

[ ] Asset purchase agreements

[ ] Asset sale documents

Other useful information

[ ] Last year’s tax return

[ ] Prior year tax losses

[ ] Centrelink debts

[ ] HELP or SFSS debt

[ ] Superannuation co-contributions

I HAVE A FAMILY

[ ] Private health insurance statement

[ ] Spouse contributions to superannuation

[ ] Child care benefit details

[ ] Family tax benefit details (names & birthdays) [ ] Medical receipts (if spent more than $1 500)

I HAVE AN INVESTMENT PROPERTY

[ ] Total rent received

[ ] Date property was purchased

[ ] Number of weeks property was rented

[ ] Bank fees & Borrowing expenses

[ ] Capital costs

[ ] Loan interest

[ ] Advertising

[ ] Agents fees

[ ] Corporate body fees & strata levy

[ ] Cleaning, gardening & lawn mowing

[ ] Council & water rates

[ ] Insurance & legal fees

[ ] Depreciation reports

[ ] Repairs & maintenance

[ ] Purchase/sale document (if you’ve sold your property this year)

I’M IN BUSINESS/SELF-EMPLOYED

] Cash Book/Invoice Book/Profit & Loss

[ ] PAYG instalments

[ ] BAS Statements

Deductions

[ ] Tools & Materials

[ ] Home Office Expenses

[ ] Insurance

[ ] Rent

[ ] Wages

[ ] Vehicle Expenses (if applicable to business)

[ ] Other business costs eg. advertising/stationery & printing/bookkeeping etc

Other Deductions

[ ] Superannuation contributions

[ ] Financing lease statements

[ ] Income protection premiums

Source: Internet.  This is a guide only.

While we have taken all reasonable care in producing the information contained in this article, we do not promise that it contains all the information you need to answer all your questions. This document is for information purposes only, and must not be relied upon as a substitute for professional services or legal advice. Diversifi Pty Ltd does not guarantee the accuracy of information provided by third parties linked to this site.