Investment Properties

[switched Advanced Member Find all posts View Profile Close switched]

IMO residential investment was good in the last 10 years, but no so anymore. Capital gains are long gone (maybe except in sydney). I expect prices to trend sideways at best....
just my 2c

[photoprado Avid PP Poster! Find all posts View Profile Close photoprado]

I find "My Atm" offers excellent returns. 20% guaranteed for 10 years.. So on a base spend is about 1500 a month returned to your account.. On a 140k spend, nearly 3 k minimum to your account.

Hmm.

I'm guessing the initial capital investment is never returned, the ATM will be junked after 10 years, so we are in fact effectively buying an annuity here?

Michael

[yowie78 Junior Member Find all posts View Profile Close yowie78]

I looked into the ATM thing a while ago. It is only worth doing if you have the cash. Borrowing money to buy in doesn't really do any good. You do sell it back at the end but only for about 10% of origional cost.

[dermie75 Member Find all posts View Profile Close dermie75]

Live for today. Save for a rainy day. No point being the richest person in the graveyard.

Where's the LIKE button?? I love this one NTP!

[Guest Close Guest]

Piggy,

What company is involved with your ATM?

Strangely: http://www.myatm.com.au/

[digger Junior Member Find all posts View Profile Close digger]

Do not think you can knock some one for looking to the ahead , i have looked at what my kid will be able to afford in 20 years and if I have to work a little harder and a few more hours to give him a step I will. Yes he will still have great holidays as camping is low cost but still want to give him a hand later on. Defense housing is something to look at , but every one set up is different but my goal is to have a simple unit to to rent to my son to keep money in house and pass it to him when he learns the meaning of paying his way .

[Antmann Lurker Find all posts View Profile Close Antmann]

Yowie78 has nailed it. It just means you are receiving the tax rebate in your pay packet rather than once you have completed your tax return. A negative geared investment has it's place if you are in a higher tax bracket, and your personal debt is manageable to you & your lifestyle.

[AJ120 Out of control poster! Find all posts View Profile Close AJ120]

The idea is to use the equity in the house we already have to buy another for investment purposes. We use a tax variation through the ATO to "forecast" how much expenses associated with both properties and use that money to pay off the mortgages.

Pete

Getting back to the original question, OK I understand the tax variation part, this is not any extra money, just getting your money a bit earlier. If the company is telling you that you can forcast expenses for both properties and use the money from the variation to pay off both mortgages That sounds dodgy to me, only the expenses of the investment property should be included, and if you overestimate the expenses, instead of getting a tax refund you may get a tax bill.

Added to that if you are getting a reduction in your tax from your investment property whether it be by variation or your normal tax return you need to understand that this means you are making a loss. What you are really doing here is making a short term loss (money out of your pocket) with the hope that capital gains will give you a profit in the future hopefully when your taxable income is lower.

It can be a viable option if you can afford it, but you really need to have a very good understanding of what is involved and what it all means before borrowing large sums of money to invest.

You don't mention the company involved, if it is the Investors club I would suggest that you are in "DANGER Will Robinson, DANGER DANGER"

Best of luck with whatever you decide.

Cheers Andrew

[Hubble80 Member Find all posts View Profile Close Hubble80]

It seems I may have not communicated it properly!!! The "forecast" is actually called a Tax Variation where you estimate how much the property is going to cost and claim the deductions weekly rather than a yearly tax return payment. Then using this money to pay off the mortgage of the property.

Both of the properties are investments. And it is not the Investors Club

[Guest Close Guest]

If your living in one house (as your first post said) it is NOT an investment. And cannot be claimed as such.

How you can claim weekly is beyond me, as the tax dept dont work "weekly" more monthly/ quarterly on BAS/GST and yearly on tax (of which an investment property would be under I would think as mine are done this way)...
A weekly claim could be done perhaps thru a salary sacrifice, but I cant see you being able to claim thru the tax dept weekly any other way? Correct me if I am wrong however.

[yowie78 Junior Member Find all posts View Profile Close yowie78]

It is weekly if you are paid weekly. It is all done by your employer once they have recieved a letter from the ATO. So it is just your normal pay cycle.

Also, a negative geared property isn't necessarily loss making. It can be positive income and negatively geared at the same time. This isn't a gimmick. Try reading some of Margaret Lomas's books. She is one of the most highly regarded property investors in the country.


For EVERYBODY though. Please don't take financial advice off this or any other forum. See an accountant and do your own research.

[Hubble80 Member Find all posts View Profile Close Hubble80]

Sorry Piggy I need to clarify where we are living. We have one house that we don't live in but it is currently rented by tenants. We live in a company house and pay subsidised rent through a salary sacrifice agreement.

The way I was explained that the Tax Variation work is to forecast my expenses for the investment property for the year and the are put back through payroll to reduce the tax paid each pay period. I know a lot of people who do this already. As yowie said, it is a legal thing to do. I just don't think a lot of people know about it.

The extra cash flow is used to purchase another property for which another Tax Variation is setup. The idea is to use the extra cash from the variation and from rent to pay off the loan, helping to own the house sooner. If anyone is wanting to know the name of the company (and there are a few doing this at the moment) I can tell you through PM. It is a QLD based company, so no dodgy overseas call centres etc and has builders and Certified Tax Accountants as partners.

[Fox Junior Member Find all posts View Profile Close Fox]

The application used to be called a "221D" from memory, you complete the form and your employer reduces your weekly PAYG tax liability to reflect your estimated tax position at year end, based on rental property losses. If you estimate a $10k loss on rental, that might represent a $4k reduction in overall tax liability, therefore you can apply to have weekly tax withholding reduced by about $80 per week. These are just rough numbers.
In my opinion, negative gearing a rental property doesn't make a lot of sense in a depressed property market, be sure you are going to make a capital profit on sale or what is the point?

Yowie, not sure where you are going with your statement that negative gearing doesn't have to be loss making and it can be positive income and negatively geared at the same time, sounds like property marketing spin to me.

[yowie78 Junior Member Find all posts View Profile Close yowie78]

Yowie, not sure where you are going with your statement that negative gearing doesn't have to be loss making and it can be positive income and negatively geared at the same time, sounds like property marketing spin to me.

Not spin at all. If your property costs you more than the income produced then it is negatively geared. At the end of the year you claim all your deductions such as interest payments, insurance, management fees and depreciation and this makes up the short fall plus a liitle bit then it is defined as positive cash flow. As long as you do the maths and get a newer property that has good depreciation figures, this can easily be done. No spin, no tricks, just smart investing. Plus any capital gains are a bonus too.

This book is recommended by Paul Clithero and is excellent reading.
http://shop.destiny.net.au/securesho...hp?ProductID=2

Just so you know, I have no vested interest in any of this, but I have spent a lot of time educating myself. I am not an accountant or in the realestate business.

[KIMBOPRADO Senior Member Find all posts View Profile Close KIMBOPRADO]

The application used to be called a "221D" from memory, you complete the form and your employer reduces your weekly PAYG tax liability to reflect your estimated tax position at year end, based on rental property losses. If you estimate a $10k loss on rental, that might represent a $4k reduction in overall tax liability, therefore you can apply to have weekly tax withholding reduced by about $80 per week. These are just rough numbers.
In my opinion, negative gearing a rental property doesn't make a lot of sense in a depressed property market, be sure you are going to make a capital profit on sale or what is the point?

Hi All

Agree all you doing is getting $80/week now instead of $4k refund at the end of the year

http://www.ato.gov.au/individuals/co...t/00189056.htm

However everyones situation is different - get advise from your accountant/tax agent

Regards

Kim