Property Investment Articles
This article describes the THIRD ELEMENT of the SEVEN elements to building a successful property portfolio so that you can reach your financial goals sooner”
3. The Right Tax Advice – “How to build your property portfolio using the tax man’s money”
The Right Tax Advice
“How to build your property portfolio using the tax man’s money”
“It is crucial to get the tax strategy right from the beginning. The wrong choices during the crucial purchase period can result in losing tens of $1000’s in tax benefits forgone. It is also very costly to change the structure further downthe track.”
We will review individual personal situations, tax brackets of major stakeholders, future tax brackets, and many other issues so we can find way to legally maximize tax deductions such as depreciation and minimize income and capital gains taxes.
Issues that you need to consider before you invest in property are:
a) What structure to use to maximize tax benefits – individual, company, trust, self-managed superannuation fund?
b) What the income tax, negative gearing, capital gains tax and land tax issues related to each structure are – choosing the wrong structure can seriously increase your tax liabilities.
c) Whose name to buy in to maximize tax benefits – most people think that they should buy in the higher income earner’s name and this may be correct but can exacerbate capital gains tax and land tax.
d) Tax deductibility of pre-purchase and ongoing costs – can you claim the travel expenses to travel around the world (or Australia) looking for property? Perhaps.
e) How to maximize tax deductions – how are you going to record all your expenses? Should you get a depreciation report? What about travel expenses for interstate properties? Can you renovate before a tenant moves in and claim these expenses?
f) Structuring finance so as to maximize tax benefits – this is a very important step that many people get wrong.
g) Is there any way of legally extracting the equity from your home and using it to buy your next home in a tax-effective manner? Perhaps.
At Wholistic Financial Solutions we are able to assess each and every clients individual circumstances and provide expert taxation advice as to the best was to structure your portfolio to minimize tax.