The other benefit from owning  real estate  which can be  appreciation of value of  your property plus possibly a regular income flow  but also significant tax benefits.  some tips to benefit from property ownership during tax time.

Tax deductions for property *

If you own a property  and you are getting rental income from it you can qualify for certain tax deductions based on your circumstances. Some standard claimable deductions are listed below.

• Advertising costs ( To find tenants)
• Agents Commission (To collect the rent)
• Rates and Land Taxes
• Depreciation
• Travel costs to inspect property
• Repairs
• Security costs
• Insurance on buildings
• Water and sewage
• Interest on borrowings

Rent and rental expenses

Tax needs to be taken out from rent received by you  when its received into or credited into your account. Rental expenses claimed can be disallowed  if you are renting a house or property to a relative or family and you are not charging them the going commercial rate in the market.

Capital gains Reductions

If you sell a investment property  12 months  after you buy it only 50% is taxable. This can apply to Land as well as Holiday homes.

Residence  exemption

Claiming tips

Keeping a separate account for your property income and expenses can ease the pain of record keeping.

 

It is not necessary for you to get a Australian Business Number (ABN)  if you want to lease a residential property.

 

Keep all your receipts for expenses for yuour tax deductible expenses to be easily verified.

More technical property deductions

In some cases  a building write off deduction can also be claimed  at the rate of 2.5 % per year

If you make a capital gain after you retire and turn 60  from the sale of the property , the gain could be tax free if  that property  was owned by your self managed superfund and would be not included in your taxable income.

Capital gains can be reduced on sale of holiday homes  by holding on to receipts of non –deductible expenses incurred while maintaining the house.

In some cases depreciation schedule will be necessary to maximise your allowable tax deductions on any property that you own as an investment.

* Before claiming deductions it is advised to see a professional accountant or tax agent  to verify that you are correctly claiming the  deductions that are allowed to be claimed without incurring any penalties in the future.

1. Paint The house -

This is a great way to make your house stand out from many others around it. A fresh new paint coat will give it a clean cut look that any potential buyer or tenant is looking for. And when choosing a paint color, don’t just choose the cheapest. Use sound judgment in your choice of contemporary colors or appropriate colors for the age and style of the house.

Make sure that you don’t just paint everything the same color either. Use contrasting colors on the window frames, doors, and shutters.

2. Change the mail box –

This is a very  simple fix but can pay big dividends and make a difference to the entrance of th house and creat a good first impression . It is part of creating curb appeal. You want to draw the buyer or tenant toward the house not drive them away. Mail boxes are usually made of cheap material which can deteriorate quite quickly and look bad. Reinstalling a sturdy plastic box seems to be the best choice over metal boxes which can dent and rust.

Sticking the house numbers on the new box is also a plus

3.  Landscape -

There are many simple things outside the house,  in terms of landscaping  and designing that can be done to draw potential tenants or buyers to your property. The first thing that can be done is simple , just dig some beds in the front of the house and around the perimeter and throw down some mulch. Plant some good looking shrubs or small trees like barberries or spirals next to the front steps or entry.

Plant them in some type of symmetrical order to maintain the neatness of the property. Flowers can also be planted in those areas like bulbs along the side of the house or various types of flowers among the shrubbery in the front. Keep the grass cut and looking neat.

Fill in bare spots with soil and seed and keep moist to make sure it will take root. A manicured lawn can work wonders on the overall appearance!

4. Install a garbage disposal

in the kitchen sink! Not long ago,  it may have been considered a luxury to have one but these days more and more people are wondering how they could do without one. Again, you are thinking about an addition that costs a relatively small amount of cash relative to the return it will generate with a potential buyer or tenant.

5. Install a dishwasher-

Again, as with the installation of a garbage disposal, a dishwasher is now a modern convenience that few know how to get along without. If your property does not have one, you can install one fairly inexpensively to enhance the facilities and therefore value. This in turn will attract more potential tenants or buyers at a much higher rate, you will be able use this to depreciate this asset so it creates a tax benefit, and the general value of your property will rise.

Following these  tips will definitely help add value to your property. You must think about the value added when performing these various  tasks. If you take this advise, you will not be disappointed at the value this will create for yourself and the happy buyer  and your potential buyer or tenant will be more likely to choose your property over another.

In addition to his managing your property well can also benefit you , check out this book which might help you get a few tips.

Did you find this article helpful. If so then go to the following

link which I believe is a tremendous value for any investor or property owner. Go to http://www.virtualdealfactory.com/r/rmerrick

Article Source: http://EzineArticles.com/?expert=Ryan_Merrick

Jenny uses her $50,000 deposit to borrow $350,000 and buy a $400,000 investment property. At 8% the annual repayments total $28,000 on an interest only loan. The rent she receives from this property is $400 per week, or $20,800 per year – leaving her out of pocket by $7,200 per year.

Other expenses include rates, levies and maintenance costs, which add up to $3,500 per annum. Jenny has now spent $10,700 to own that asset over and above the income she has received for it.

So when it comes time for Jenny to do her taxes she will be able to reduce her taxable income by $10,700. That’s negative gearing.

But wait there’s more! _  ( Negative gearing )

Jenny’s property was built in 1995 and Washington Brown Quantity Surveyors has advised Jenny that she can claim $8,000 in the first year for depreciation.

So now Jenny can tell the ATO to reduce her taxable income by $10,700 plus the $8,000 in depreciation allowance (a total of $18,700).

The reason we have separated the depreciation from other out-of-pocket expenses is because Depreciation Allowances are not reliant on whether the property is negatively geared, positively geared or cash flow neutral.

Most investors are willing to accept a loss in income if they believe they will be compensated by capital growth in the future. But you must be able to fund this shortfall while you wait for the investment to appreciate in value.

You also need a taxable income from which this loss can be negatively geared against. And the higher your income, the higher the benefit will be.

For instance, if Jenny were on the highest tax rate of 45 percent, her $18,700 loss has now resulted in an $8,415 tax refund ($18,700 x 0.45% = $8,415). So in real terms it has only cost Jenny $2,285 ($10,700 – $8415 = $2,285) to maintain this investment in that particular year.

So for approximately $44 per week, Jenny owns an asset that will hopefully increase in value. If her property appreciates 5% in the first year, that’s an increase of $20,000 with a $2,285 holding cost.

Sounds good doesn’t it!

But the reverse applies – if Jenny’s property goes down 5% then she’s lost $20,000 off the market value of that investment.

At the end of the day, there is no point negative gearing into an asset class that decreases in value.

But history has shown that if you buy well-located property at the right price and hold it long term, it has been a great investment.

And if you can do that whilst keeping the holding costs to a minimum – then your gains are magnified

REF:http://www.4sale4investors.com.au/resources/negative-gearing#affordIt

http://australian-homeloansguru.blogspot.com/

Investing in the property market is an effective wealth creation strategy and method that many Australians use to get ahead financially and secure their future While managed funds and shares and other type of investments also offer opportunities to increase your wealth, some experts will say that real estate is your best bet in the current market.

Property Vs shares

There are so many reasons to invest in property, including the fact that you’re buying a real and tangible asset (an actual bricks and mortar asset ) which will be always be in demand and can be sold in the market . Stocks and companies and shares, on the other hand can lose all of their value in a day or even get liquidated or closed down. We all have l heard the horror stories, of companies falling over an stock market crashes and your money disappearing in a flash.

 

But as long as there is an increasing population, people will always need a place to live in , which makes property a more stable and attractive option.

Why property investment is better than the stock market and shares investment

Receive possibly two income’s

If you plan your investment right, you could have two income sooner than you think. A property bought at a lower price in a mining area or a area that has suddenly shot up in value will possibly put you into positive gearing and earn you a second income. When you purchase a property at today’s market value, while you hold the investment it is likely to increase in value over time, due to a favourable economy, and population growth. However, you don’t need to sell this asset to make money, you can continue to earn income from the property while you hold it and leverage of it if you want to make further investments or then just keep renting it and let it increase in value

Leveraging and using your property to grow

Property as an asset is much easier to leverage when compared with other investment options like shares due to its volatile and rapid share market fluctuations and volatility. Banks are generally comfortable to lend more for property than a share portfolio as they consider it as a low-risk investment option, and they’re also confident that they can recoup the cost as prices for property and land have historically only gone up wards.

Gain from your tax refund and save money

An investment property is tax deductible, so the Australian Taxation Office (ATO) will allow you to claim a tax deduction for most of the expenses you incur when buying and managing your investment property. If you experience a financial loss from this property. Which means that the yearly costs of owning your investment property exceed the annual rental income you receive – you can offset these losses against your income tax.

This strategy is known as negative gearing. Normally, you would receive this tax amount back at the end of the financial year when you complete your tax return, but it is also possible to receive this money in your regular pay thus giving you the added advantage that you need not even pay the difference in the mortgage repayments and rent amounts received. In other words, you can receive the tax saving during the course of the year to provide better cash flow for your daily expenses.

Long-term investment rewards for property Investment

Property values sometimes fall slightly in the short-term, but historically over the long term it always increases in value. It is also less time consuming as investors don’t need to keep up to date with daily share markets

Albany: Lifestyle features, government decisions, urban renewal

Broome: Lifestyle features, boom town, government decisions

Bunbury: Transport infrastructure, boom town, lifestyle features

Geraldton: Boom town, government decisions, transport infrastructure

Joondalup: Government decisions, lifestyle features, transport infrastructure
Karratha: Boom town, government decisions, lifestyle features
Merredin: Boom town, government decisions
Port Hedland: Boom town, government decisions
Rockingham: Ugly ducklings, government decisions, transport infrastructure, lifestyle features
Waroona: Boom town, transport infrastructure

Well at least there is one good news for property investors with the new Henry report document that has been released , negative gearing is not going to be affected. This is going to encourage people to invest in property and therefore create more  dwellings  for the new influx of the ever expanding australian population

Investing when young can make you a millionare

Recently  friend of  mine  ( age  26)said he was a bit hesitant with   investing  in his second property given the Henry review was just coming out and things were uncertain , but now that things are not changed with property investment  , he is going ahead with looking out for a good property in caning vale australia. Mind you this area has already gone through a big price boom in the last couple of years.

what  is his  investing strategy ?

He  has  already invested  in a land and house package at $360 k  and now  has decided  to make it into an investment property. Given that  the loan is a interest only loan he will  not be paying a   huge amount on the  loan repayments and  the rent derived will cover part of the repayments. The House was about 200k so he will be able to claim full depreciation as it is new house ( which will be approx $5000). Now given that  he  would  have already paid the shortfall in repayments of the loan from his own wages from job for this whole year. Come tax time he would be getting  5 k worth of depreciation plus negative gearing on expenses on the house. This money which he saves as tax deductions if he  puts aside  for next year , he would possibly not have to  put any more money into this investment for the rest of  his life.

If he is lucky enough and there was a substantial price growth in this house  , he would be looking  to  go forward with his next house  in caning vale  and create another investment and possibly  be one of those property millionaires in a couple of years.

Punters need to keep in mind  , they would have to afford the deposit on their first house , plus the  Bank mortgage insurance if it is  a investment property or then if it is even a second investment property. Lucky punters who have had substantial growth in their first investment would not have to worry about this  as the equity gained could be used to take care of the mortgage insurance in the second investment. Now my friend could possibly even retire  at 35 with the right kind of luck with sensible decision making  with his property investments.

Good luck  property with your investing

Article by sheldon singh

The first-home owners grant will be restricted to people buying homes worth up to $750,000 from next year amid fears the market is overheating.

Fierce competition that started late last year in the lower end has now expanded into the mid to upper sectors. A surge of Australian investors is also gaining momentum.Buyers of all budgets are increasingly concerned that missing out will mean a wait until autumn, when prices and interest rates could be greater.

On October 1, the first-home owners boost was reduced from $14,000 to $10,500 for existing homes and from $21,000 to $14,000 for new homes. The grant will be lowered to $7000 for both new and established homes from January 1.

Change to First Home owner grant

Each state and territory government would be allowed to cap the ”enormously successful” grant, federal Housing Minister Tanya Plibersek confirmed yesterday.

The real estate crush has already contributed to a 1 per cent rise in the headline rate of inflation for the September quarter, the highest rate for a year. It makes a Melbourne Cup Day interest rate rise of 25 or even 50 basis points almost assured, as the Reserve Bank moves to tackle inflation before it gets out of control.

In NSW, Western Australia and the Northern Territory, only homes less than $750,000 will receive the $7000 grant. In Victoria, the cap will be set at $600,000 while Queenslanders will be able to pay up to $1 million and still receive the bonus.

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John Edwards, chief executive of Residex, recently said that he’d made $60,000 in six weeks – on a flat he’d bought for $300,000. The trick is to go for the upper end of the first time buyer’s market- which is less saturated than the lower end – and find a flat that needs a bit of work.

Edwards thinks now is the time to make a “quick kill” – with more growth to be carved out of the property market over the next two years. After that, the period of good growth will be over and the market will settle back, he said.

Home Property investment pays

According to property pricing specialist RP Data research, which was commissioned by Commonwealth Bank of Australia, there are 94 suburbs across Australia where the monthly cost of rental outstrips the monthly mortgage repayment on both houses and units. 

Tim Lawless, national research director at RP Data, says there will always be isolated examples of people making a quick buck through the “pick and flick” strategy.

Edwards says there are obvious things to look for when picking out an investment property: is there evidence of new infrastructure or developments, or has everything been built and already sold? How close is the property to local schools and transport links?

Residex data shows that the gap between money made on flats and houses has narrowed in Sydney. Apartment prices have historically returned growth of 1 percent to 1.5 percent a year, less than houses and land. But last year in Sydney, the housing market saw average returns of 0.79 percent, while units jumped 4 percent in value.

Right Time for investors in property market

Property prices are expected to continue to rise across Australia – by as much as 10 percent over the next year some experts say. The government’s grant for first time buyers has boosted prices at the lower end of the market – and investors are expected to pick up the slack when the grant winds down on September 30.

All this is bad news for anyone with stretched affordability, but I’m told it’s great news for investors with cash to splash – ie speculators.

The scheme provides affordable rental houses to Australian  people  by providing affordable rental dwellings around Australia  by giving a tax benefit  to  investors  to charge below average rent prices. The National rental Affordability scheme  launched last year.

So how can you as a investor benefit from this Rental scheme ?

When the investor  charges  20 percent below the market rental rates , they  qualify  and are entitled to  receive an $8000  annual tax free incentive over 10 years on eligible dwellings

In Govt Speak here is what the scheme is

“National Rental Affordability Scheme – The National Rental Affordability Scheme (NRAS) is an Australian Government initiative that aims to increase the supply of reduced cost rental housing for low and moderate income individuals and families across Australia. The Scheme involves the allocation of a National Rental Incentive to participating organisations, to encourage large-scale investment in and innovative delivery of affordable housing.”

"This is a good way to be giving back to the community  and investing at the same time. You can get more information regarding the National Rental Affordability scheme over  ->here

Information from Victorian Government website :

National Rental Incentive

The NRAS offers an annual National Rental Incentive for new rental dwellings approved under the Scheme, which comprises of

• a Commonwealth contribution in the form of a refundable tax offset to the value of $6,000 per dwelling per year for 10 years.  Not-for-profit organisations endorsed as charities by the Australian Taxation Office will receive the contribution in the form of a payment; and
• a State or Territory contribution to the value of $2,000 in the form of a payment or other in-kind support per dwellings per year for 10 years.

To be eligible to receive the Incentive, dwellings must meet mandatory requirements applications must address five assessment criteria.  The Australian Government’s NRAS website has detailed information on these requirements and the process for applying for Incentive allocation

Links:

 Niche Living (provides packages with this scheme in Ballajura , Kelmscott and Langford) Tel : 08 9398 6055

Impact will the National Rental Affordability scheme have upon housing affordability?

For more information on taxation and the NRAS scheme, vitit the ATONRAS site.

Tax Variations & National Rental Affordability Scheme