Hi Terry, have I got this wrong somehow? Wouldn't increasing the LVR on the loans result in higher interest which is deductible?
Yes.
Unless the equity or increased funds are used for income producing purposes, the interest will not be claimable.
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Hi Terry, have I got this wrong somehow? Wouldn't increasing the LVR on the loans result in higher interest which is deductible?
Hi Terry, have I got this wrong somehow? Wouldn't increasing the LVR on the loans result in higher interest which is deductible?
thanks ellejay.
Yes, have organised a meeting with our accountant this saturday and will talk to him about it.
yes maybe is time not to work my second job because majority of my pay goes to the tax man anyways.
That's a silly approach? I am glad to pay my share as the more I pay means the more I have. So would you rather not pay any tax and be at a loss???
Sometimes people miss what they wish to achieve, would you invest just to make a loss, or would you rather invest into a worthwhile investment?
I wish I pay HEAPSSSSSSSSS of tax, as that would mean I would earn HEAPSSSSS!!!
Anyway, I am not an accountant so this is only advice, but some things I can think of:
1. Check if you can prepay the loans a year in advance.
2. Do any repairs on your IPs (not improvements!).
3. Salary Sacrifice into Super or pay forward concessional contributions.
4. Purchase another IP this year and pre-pay the loan a year in advance (purchase is considered at contract date rather than settlement date).
5. Any assets bought above $1000 would need to be depreciated and would be pro-rata.
6. Donate as tax deductible donation.
I suggest only your accountant can really advise as would be really familiar with your circumstances!
I don't know, but I consider earning and income a privilege not a punishment, and most of us need to understand we need the footpaths, and schools, and police, and security, etc.... I think I own part of the footpath, or the police car that drives pass part of it is owned by me, etc... I think I just shifted my mentality, or basically applied different mindset once I understood that we as a whole society could not exist if we did not contribute in some way!
Perhaps planning your financial future for the next year will help you there, so good luck!
That's a silly approach? I am glad to pay my share as the more I pay means the more I have. So would you rather not pay any tax and be at a loss???
Sometimes people miss what they wish to achieve, would you invest just to make a loss, or would you rather invest into a worthwhile investment?
I wish I pay HEAPSSSSSSSSS of tax, as that would mean I would earn HEAPSSSSS!!!
Anyway, I am not an accountant so this is only advice, but some things I can think of:
1. Check if you can prepay the loans a year in advance.
2. Do any repairs on your IPs (not improvements!).
3. Salary Sacrifice into Super or pay forward concessional contributions.
4. Purchase another IP this year and pre-pay the loan a year in advance (purchase is considered at contract date rather than settlement date).
5. Any assets bought above $1000 would need to be depreciated and would be pro-rata.
6. Donate as tax deductible donation.
I suggest only your accountant can really advise as would be really familiar with your circumstances!
I don't know, but I consider earning and income a privilege not a punishment, and most of us need to understand we need the footpaths, and schools, and police, and security, etc.... I think I own part of the footpath, or the police car that drives pass part of it is owned by me, etc... I think I just shifted my mentality, or basically applied different mindset once I understood that we as a whole society could not exist if we did not contribute in some way!
Perhaps planning your financial future for the next year will help you there, so good luck!
The $1K depreciation issue isn't right.If you are an individual taxpayer (non-business) or own IPs the cap is $300 per item.
If you are in business its (ex-GST and adjusting for non-business use) $1000 pre budget and $20K per item post budget
You cant claim deductions for a property you haven't settled and own and have available for rent. You are mixing CGT rules and income tax.
Increasing loans will result in higher interest. But the increase is new borrowings and the extra interest will only be deductible if the borrowed money is used for investments.
How does the ATO measure where those funds are spent???
Also, when you get your interest statement at the end of the year from the bank, how would you break down what is legitimate taxable interest from the original property purchase and what is additional interest that wasnt re-invested?
Self assessment. ATO doesn't measure anything. You must prove to the ATO your own calculations if audited.
You should not be increasing loans but splitting loans so each relevant portion is separated and then the interest will be clear for each part.
if you increase an existing loan you will have a mixed loan and then must apportion the interest - generally a difficult task.
Sure - so if you split loan (apologies for using the term "increased" but I meant split) do the extra repayments from your split loan become tax deductible?
If the answer is yes (so long as you use them for re-investing) how do we show this to the ato if audited? IE, for my last split loan, I took out 90k. This went straight into my offset where all my other income and spare cash go. I then used some as a deposit, and in another few months will be using more as another deposit but in the mean time there are other incomings and outgoings from that same account. Is there a standard or ato approved way to identify split loan funds that have then been used for re-investment?
Thanks guys, appreciate all this info!
Hey bg. Admire your worth ethic and the consequential "first world problem" of having to pay large amounts of tax. It sux but thats the price we pay living in oz!
Just to further some previous comments i agree that you should not buy something you dont need just to save roughly 40% in your case. Unless its a very good deal to begin with. Wot do u do for a living? Maybe there are things that you could buy that you do need which you can benefit from. You mentioned laptop.. Do you have a small business with Abn? You maybe be able to upgrade equipment? You may even be able to sell of some of ur excess gear to recoup some costs
But it seems like reading on the forum, ppl creates a business on the side with an ABN and somehow offset and deduct via their business to reduce tax.
Is this even possible?
But it seems like reading on the forum, ppl creates a business on the side with an ABN and somehow offset and deduct via their business to reduce tax.
Is this even possible?