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Get a (Tax) Break: Grow Your Portfolio by Minimising Your Tax

By this time, you should have received your group certificate. Have you taken a long, good look at it? If not, take this time to check everything. Your group certificate or payment summary should tell you how much you’ve earned in the previous financial year and how much tax you’re paying. If you’re a property investor, these things should be of great importance to you.

Tax money up in the air

Your tax is intended to build roads, fund schools, and improve healthcare services, among others. But are you sure you know where exactly your hard-earned money goes? With news of Government officials using taxpayers’ money for things like, say a short helicopter ride from Melbourne to Geelong, you could be forgiven for asking questions.

Remember that when you pay your tax to the taxman, it’s gone. It’s in the Government’s hands already. You can’t take it back or use it for any other purposes unless you can legitimately claims for deductions. But what if we tell you that you can — and you should — reduce the amount of tax you’re paying to the Government? What if there are perfectly legal ways to pay virtually zero tax?

Tax breaks for property investors

When you spend money to maintain or improve the value of your property investment, you can claim the expense as tax deductions. These expenses reduce your assessable income, making you pay less tax every year.

Take Matt for example. He owns 5 investment properties and pays around $6,000 dollars in tax for his rental earnings. He can reduce his tax payable on his rental properties to zero by claiming some of his expenses against his assessable income. He may also be able to reduce his overall tax bill if he is negatively geared. Travel expenses to visit and check the properties count as tax deductibles, as well as insurance and interest expenses. Even agent fees and commissions can be claimed as tax deductions.

But among the rental property expenses you can claim, you should pay particular attention to depreciation schedule. It’s something some investors don’t know about, which is why they aren’t able to maximise the tax breaks available.

Organise a depreciation schedule

If you own a property built after July 1985, it helps if you could organise a depreciation schedule. This schedule shows the different rates of depreciation of the property’s structural elements like brickwork and equipment such as oven and dishwasher.

When you have the exact figures for every depreciation cost, you can claim them against your taxable income. For example, if your dishwasher costs $900 and has a 9-year life, you can claim $90 for 9 years. A quantity surveyor can organise a depreciation schedule properly, so make sure you get one.

Keep in mind that you should keep your receipts, so you can explain and justify your claims. Losing your receipts means losing money you can save from your taxes.

Take a closer look at your group certificate

Knowing your taxable position helped you to become a good property investor. Understanding how you can minimise your tax, however, separates you from the rest. You can start by taking a closer look at the group certificates you’re holding now.

Talk to us now to learn how to minimise your tax payable and use the amount you’ll save to grow your property portfolio.

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Stamp It Out: Is It Time to Abolish Stamp Duty?

Among the hundreds of taxes Australians have to pay each year — about 125 different taxes, according to the Treasury — stamp duty receives the most criticism, and for a good reason. Lately, it has been increasingly difficult for young and first-time buyers to purchase properties, and stamp duty is partly to blame.

You’re required by law to pay tax for every housing transaction you make. Imagine this: If you want to buy a home in NSW worth $500,000, you have to fork out $17,990 for the stamp duty. On top of this fee, you have to pay for the interest expense and transfer fees as well. This puts some investors out of the game.

Increase the GST?                                                                                                                      

In NSW, stamp duty now accounts for more than 28% of the Government’s revenue. This is one reason they have refused to abolish it. However it’s risky for the Government to rely too much on stamp duty too. Any price correction could impact their revenue.

So is there hope for those who want to remove stamp duty? NSW Premier Mike Baird thinks raising the goods and services tax is a solution. An increase in GST could offset the possible revenue loss if stamp duty is abolished.

The problem here is that it makes cost of living so much higher, which still can negatively impact the housing market. Tenants could be squeezed as the price of goods increases across the board.

Experts weigh in               

Julio de Laffitte, wealth creation expert and head of the JDL Strategies group, strongly suggests removing stamp duty altogether. He told ‘Your Investment Property’ magazine that this needs to happen for the housing industry, particularly those areas that have not yet seen the upswing that is evident in parts of Melbourne and Sydney. He added that it’s unfair to property investors as high stamp duty discourages buyers from entering the property market.

Even Treasury officials think stamp duty is unfair and the least efficient of all taxes. It actively discourages investors and home owners from improving their financial position thereby negatively impacting on their efforts to fund their own retirement and that means a greater burden on the taxpayer in retirement.
With more financial experts and officials voicing their opinions and lobbying against stamp duty, will Tony Abbott finally take heed and abolish stamp duty once and for all? If so, will the GST be increased to compensate for the revenue loss?

How about you? As a property investor, what do you think of the proposal to repeal the stamp duty? Share your thoughts by leaving a comment below. JDL Strategies will always fight for the rights of property investors and their ability to increase their financial and wealth generation position.

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You Think You’re Ready to Reach Financial Success?

It’s a common misconception that one’s income is the sole factor to financial success. The truth is that financial independence is based on simple, easy-to-do practices. Without embodying these, the path to being financially successful will remain difficult.

Characteristics of Financially Successful People

Take a good, long look at yourself in the mirror and ask yourself this: Are you ready to reach your own state of financial bliss? One key to financial freedom is having the right attitude to managing your finances. To help you get an idea, here are some of the characteristics of money-savvy, financially successful people.

 

Being honest with oneself. From the very start, you have to be brutally honest with yourself. This helps you identify bad spending habits early on and correct past financial mistakes.

Being mindful of the future. Living in the moment is well and good, but in no way is it a good excuse for not living within your means. Remember that everything will come back to you — what you spend and/or borrow today will have a direct effect on your financial stability in the future.

Being organized. Money-savvy people are aware of every move they make that will affect their financial stability, from how much they are earning to every little expense in their everyday living. This ultimately helps them to live within their means and not spend money they don’t actually have.

Knowing the difference between wants vs. needs. One of the crucial aspects of being able to manage funds wisely is knowing the difference between wants versus needs. Manage your priorities well and minimise unnecessary expenditures as often as possible.

Being pro-active when it comes to savings. At JDL Strategies, we teach our clients to pay themselves first. If you’re truly serious about being money-savvy and being financially secure, you must actively strive to save. Make it a priority and make your money work for you.

Do you think that you embody any of these characteristics? Remember that every finance-savvy decision is a result of having the right mindset and attitude. Once you’ve finally taken the first step, you’re all set to start your journey to financial success.

5 Financial Practices of Money-Savvy People:

Know what you have and where it’s going. This simply means that you have to set a budget for yourself. Creating a budget can help you track money that’s coming in and what’s going out. That way, you can identify your cash flow and the areas where you can save.

 

Expenses Income (accounts receivable)
Transportation Full-time job
Recreational activities Part-time job / second job
Household furnishing & equipment Other investments
Clothing
Medical expenses
Mortgage
Credit card payments and other debts

 

You can start by using a spreadsheet, or any one of many budgeting tools that you can find online. Try to stick to your budget and be firm about it. This will help you get a grip on what your financial situation actually is and help you make sound financial decisions in the future.

Keep it simple. It’s easy to make mistakes when there are a lot of things to think about. Keep things simple by consolidating your savings, your super, and your debt so you can keep a better eye on your money.

Keep an eye on what return you’re receiving. Make sure that your hard-earned cash is working for you in the best way possible. Try getting the best rates that you can get from high interest savings account or term deposits.

Talk to the right people. Before you make any important decisions that will affect your finances in any way, find a way to talk to your bank or financial planner. This will help you ensure that the decision that you’re about to make is a sound one.

Keep on learning. Be it from your financial planner, a website, self-help book, or signing up for online courses, it’s a must that you proactively continue to boost your financial knowledge.

At the end of the day, we all want the same thing: To get out of debt and achieve financial independence and success. Keep in mind that being financially savvy is all about having the right mindset and, ultimately, managing your finances right.

If you are ready to finally take control of your finances, we’re inviting you to attend an exciting discovery event at a city near you. Talk to us now to learn more about this life-changing opportunity.

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5 Unforgivable Mistakes That Can Derail Your Property Investing Strategy

5 Unforgivable Mistakes That Can Derail Your Property Investing Strategy

If you’re just starting out as a property investor, it’s easy to over look minor gaffes you might make. After all, it could take some time to learn the ropes, and any loss would not be that huge yet anyway. If you already own a few properties, however, it’s a different ballgame. Some investing sins simply can’t be forgiven when you should’ve known better.

Take a look at the list of common mistakes even experienced investors make below. See if you are guilty of them, too:

Poor cash flow management

You should know by now how important it is to understand all the costs involved in purchasing and managing an investment property. There might still be out-of-pocket expense along the way, and with poor cash flow management, you might have troubles adding to your investment assets. Always underestimate your potential gain and overestimate possible expenses.

Self-managing properties

Many new investors get taken by surprise by the amount of work needed to be done after purchasing the property. Keep in mind that you’re responsible for any repair or maintenance your property needs. You also have to find potential tenants, collect the rent, and solve any tenant dispute. If you think you can’t do this, you can always hire a property manager who can do all these tasks for you.

Overestimating the price

It’s a rookie mistake, but some experienced investors still fall into the trap of overestimating the price of a property. Home-hunting can be a long and frustrating process. When you see a ‘good enough’ house, often, you just want to get the purchasing done and over with. The key to avoiding this is intensive research. Don’t sign any contract unless you are sure you know what you’re doing.

‘Get rich quick’ line of thinking

Investment properties are great options for your nest egg because of their potential high returns. But if you think you’ll get rich quick, think again. Properties are geared for the long-term. You can maximise gains and enjoy the real benefits of property investing if you hold on to them for a long time. So, don’t expect to swim in a pool of money right away. But rest assured that your future would be comfortable and secure.

Doing all the work alone

You might be tempted to do all the leg work alone for your next property investment. This can be a disastrous move as you’ll have more things to think about and costs to manage. It’s always better to have a team of professionals who can help you make the right decisions. Fortunately, we have a team of researchers and real estate experts who’ll do all the leg work for you.

Buying your next investment property will be different now that you know what it takes to invest the right way. If you want to learn more and avoid hidden mistakes that can derail your investment strategy, talk to us now. We would be more than happy to help you expand your investment portfolio.

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Top 4 Reasons Good Tenants Seem to Avoid You

If there is one thing seasoned rental property owners wish they knew before starting out, it’s the fact that good tenants are hard to find. Sure, it’s nice if you can fill your rental units quickly. But good tenants — those who pay on time, take good care of your property, and want to have a good relationship with you — may seem a rare find.

The truth is, good tenants are everywhere. Some just feel discouraged to rent out your property because of several reasons. There are also cases when you’ve finally find the right ones, only to see them scrambling for the door soon.

So, how do you attract them and keep them from packing up their belongings? Simple. Avoid the following no-no’s:

Rent is too high

 Everyone wants value for their money. Even if you maintain your property well and make sure it has all the things a tenant might need, a steep rental cost is no good. Know the local market before you set the rent. You also need to take a look at the properties similar to yours and compare prices.

For good measure, you should ask a property manager to help you determine the right price for your property. Our experienced managers have all the know-how to make you get the best out from your rental property.

Lack of security measures

You don’t want to live in a home where you feel unsafe. It’s the same with your tenants. Even if your property is in a safe neighbourhood, it doesn’t hurt to add extra security measures. For example, you can install home security alarms to deter burglars from breaking into the property. Closed-circuit TV cameras also help boost security.

It’s also best to keep your property free from safety hazards. Especially if it is located near major construction or road works or property developments, do regular inspections and make sure your tenants are safe.

Not responding to repair complaints

Part of your job as the property owner is to ensure the property is in good condition. This means, you have to repair any facility that needs fixing immediately. Think about it this way: no one would rent your place if it has plumbing problems. Likewise, no tenant would stay if you don’t fix the problem soon.

The landlord is always unavailable

Lastly, managing rental properties is a business, and the heart of successful businesses is clear communication. There are times when you need to talk to your tenants to discuss some issues. Tenants might also need to reach you for various things. It’s fine if you might not be available on a few occasions. But if it becomes too frequent, you might miss the chance to build relationship with your tenants.

Good tenants are part of the reasons property investment is rewarding. If you want to know how to manage your rental properties more effectively, talk to us now. Contact us at 1300 723 580.

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The Top 6 Techniques to Improve the Rental Value of Your Home

When you’ve purchased an investment property, it’s important to optimize your return by optimizing the space within the home. Not only will you attract more prospective renters, you’ll also work to increase the property value too. Small, simple improvements can make a huge difference visually and on the property value as a whole — so consider using the following six techniques to improve the overall feel of your rental property.

1) Stage the home for viewing
There is nothing worse than walking into a home and trying to visualize what it might look like furnished – even if the property is currently empty. That’s because people enjoy seeing a home for the total benefit it is, not an empty void. Before you show the home to renters, consider creating a staged environment, so people coming through the property are able to visualize themselves living there.

2) Clean everything thoroughly
A little bit of elbow grease can go a long way — especially if you’re trying to rent the space. To ensure your viewings go well, make sure the entire property is clean, organized and ready for moving in. This way, your renter will know the property is going to match their standard, without having to question whether you’ll clean the property before they get the keys.

3) Update taps and light fixtures
The kitchen and bathroom are major selling points in your rental property — so make sure they make a lasting impression. While it doesn’t cost a lot to update the fixtures, seeing a newly updated space gives the tenants comfort knowing you’ll take care of the property should an issue arise.

4) Maintain the landscaping
Make sure the plants, grass and any green space are well-kept before you have potential renters viewing the property. Although it might seem like additional work, many individuals are looking for low maintenance properties that are well cared for. If you have any gardens or flower beds, plant perennials (plants that come back each year).

5) Allow natural light
Windows can be a home’s biggest selling feature, yet they are often forgotten when renting a space. Make sure to highlight all windows with proper fitting coverings or blinds (which can be included in the rental or removed). When showing the property, open the curtains or coverings to allow the most natural light in to the space — it will make the room feel larger and more spacious. If a room lacks large windows, strategically place a mirror on the wall to reflect the light into the space.

6) Wax, clean and refinish the floors
While you might not mind the occasional stain in your rental unit, prospective renters are looking at their next “home”. Make sure you professionally clean any carpets within the home to remove stains and odors. Likewise, look to have the floors refinished and waxed — including the baseboards. Any carpets which are severely worn or discoloured should be replaced and updated. Remember that your goal is to find an individual who is able to appreciate the fine details (and maintain them while renting the property).

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4 Things Every Landlord Needs to Know

There is more to being a landlord than simply finding someone to pay you rent — yet failure to understand the rules and regulations can land even well-meaning property owners in hot water. With conditions in place to protect tenants and their rights, it’s critical to comprehend everything you need to know before you find a tenant. To help get you started, here are four things every landlord needs to know about renting a property:

1) Understand the laws and guidelines you must follow
If you’re renting the property to an individual, you need to ensure you’re following the law; especially when it comes to tenant rights within the home. While you might believe you can enter the unit without notice (it’s your house, right?) — tenants are protected by the Residential Tenancies Act. This act enforces rules you must abide by as a landlord and the steps you must take should you want to enter the unit, evict a tenant and much more.

2) Requests for repairs should be done immediately
While a tenant is living in your home you are responsible for ensuring repairs and maintenance are performed as needed. This includes any emergency work (like leaks, broken valves or fuses) and on-going requirements (furnace filters and smoke detectors). When a tenant contacts you with a repair request, schedule a date and time for an inspection of the damage. Make a note of any damage that needs to be repaired and photograph the item in case you’re not sure how to fix it. At the inspection, arrange a time to complete the repair and ensure it’s done properly. If you are unable to complete the repair yourself, contact a contractor or repair person immediately and arrange the appointment with your tenant.

3) Good tenants are hard to find
If you’re looking to secure a long-term tenant, remember to vet your applicants properly. This includes any background, security and reference checks — even if an individual seems reliable and trustworthy. By asking for references, you’ll ensure that the person you accept as a tenant is someone who pays their rent on time, keeps on top of basic maintenance throughout the home and shows a level of respect to you as a landlord. It’s also important to remember that even good tenants can struggle — show compassion and understanding for individuals who are temporarily facing challenges but are otherwise outstanding tenants.

4) Outline your lease carefully
Most lease documents can be sourced online or through various templates, but it’s important to know you can adapt the template to match your specific needs as a landlord. Your lease is a legally binding document; ensure all the terms (late payments, pet policy, noise levels and other miscellaneous conditions) are outlined and completed so there is no room for misinterpretation. Once you’ve drafted a custom copy of the lease, consider contacting an attorney to ensure there’s nothing illegal or against the act which could discredit your document.

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The Top 3 Questions Every Landlord Needs to Ask Prospective Tenants

Making the decision to rent your home should never be taken lightly, especially when you’re trying to find tenants to fill the space. With the lure and promise of additional income, it might seem like finding any tenant should be the top priority — but finding quality, long-standing individuals should be the focus.
While you’re interviewing prospective tenants, don’t forget to ask the following three questions:

1) Why are you moving?
While having a tenant can sound promising, choosing the wrong tenant can lead to hassles and extensive repairs upon vacating. That’s why it’s important to ask your tenants a little bit about where they’re living now — to get a better idea of how they’ll behave at your residence. Take note of how they refer to the landlord; are they happy where they are? Is there a logical reason for needing a new place, like new employment or family members?

Take special precautions with tenants who seem disgruntled or negative with their current living situation. Tenants who are especially rude or condescending might offer a higher likelihood of acting the same way toward you in the future.

2) Are you comfortable with credit and background checks?
Credit checks can offer valuable insight into the financial stability of prospective tenants, especially if they have a history of late or incomplete payments. While bad credit can happen to the best of people, a majority of those with serious debt might have issues paying rent every month. Likewise, pay attention to any individuals who have a history of criminal convictions or judgements — they are more likely to cause issues down the road for you (even if it’s not a financial concern). Remember, these are strangers who will be staying in your property — you need to feel comfortable with them taking care of your items while you’re not there.

3) When would you want to move in?
Responsible tenants understand that there needs to be a reasonable amount of notice (typically 30-days or more) before moving into a new residence. Those individuals who are looking for an expedited move in date may have a reasonable excuse for the hurry — or they may simply not be the best judge of time when it comes to relocation. A reasonable tenant may ask for a 30-day move in date or longer — which should coincide with their notice to their previous landlords.

Although these are not the only three questions you should be asking your prospective tenants, it’s important to qualify individuals before having them move in — to avoid problems like non-payment or damages. Make sure you feel comfortable with the people you decide to rent the home to. If you’re not sure about a tenant, there is nothing wrong with waiting until another candidate comes along; it’s better to have a reliable, confident tenant than a person who is going to cause problems for you after moving in.

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Four Ways to Adopt an Investors Mindset

You’ve been talking about investing for years, you’ve Googled and read and fact checked until you’re sure you’re an expert but you still haven’t done anything about it. When the time comes, you stall, afraid of the consequences, the risk, the what if it doesn’t work out.

You aren’t the only one. Only six percent of Australians own an investment property, a number that is staggeringly low considering we live in the land of opportunity. But it can be an overwhelming process unless you’re in the right frame of mind.

Here are four tips to get you in the right mindset to becoming a property investor and on the road to financial freedom:

Want to be an Investor

Where thoughts go, energy flows. If you focus on what you want to bring into your life, you are sure to get it and if you want something badly enough, you will find a way to make it happen. If you’re comfortable living with a reasonably paying job, chipping away at your mortgage until you retire, then that’s the way it will be. But if you are constantly thinking about the benefits of investing, the ways investing will change your life and your future, it will inspire you to get started rather than settling for less than you deserve.

Assemble a Support Crew

There are always going to be people who know more than you who can help you make the right decisions. They are experts so let them do it. Investing in property is a life changing event so you don’t want to make decisions that may come back to bite you later. Enlist people who will support you through the process, give you knowledgeable advice on the best areas to buy, how much money you need to be saving and who will generally be there when it all seems too much. Going it alone is extremely daunting for any property investor let alone a first timer.

Develop a Plan

To fail to plan is to plan to fail. Jumping straight in the deep end is never a good idea regardless of the venture you’re undertaking. Set goals, write down the steps it will take to get you where you want to be. What does success look like to you? Decide on the life you want to live and work backwards to determine how you’re going to get there. For example how much money do you want to retire on? How many properties do you want to own? Once you’ve started thinking about the logistics, it will be easier to begin to plan how to get there.

Stay focused

Ensure you understand that investing in property is a business decision, not an emotional one and it’s easy to get caught up in the excitement. Choosing a property based on how you feel about it rather than focusing on the financial return is going to be a recipe for disaster. Keep referring back to your plan, stick reminders of your goals on the fridge and continually imagine yourself living the life you’re building having invested in property and allowed yourself to become financially free.

If you think you’re ready to take the plunge and start the process for buying your first investment property, why not complete our financial wealth check. It will give you a much clearer picture of where you are financially including when you’ll be able to comfortably retire if you continue on your current path and how things will change if you start investing your savings

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Benefits of Consolidating Your Debt

Consolidating your debt can be an opportunity to save money but when considering if it’s the right thing for you to do personally, there are some things to consider.

Consolidating or combining your debt will mean that all or some of the loans you currently have are combined into one. Doing so can mean that your debt will be paid off faster as you will have less interest to pay on multiple loans and this money can then be used for extra payments or for emergency money to be put away in case you need it.

Consolidating your debt will also make payments easier as you will only have one to think about and put money away for, rather than losing track.

Reasons to Consider Consolidating Your Debt:

You are struggling to make payments because your credit cards are almost at their limits,

If you have defaults on your credit report, it may be difficult for you to secure some types of debt consolidation loans. However if you do have a good credit report, you should be able to obtain an unsecured personal loan to pay down your debts,

If you already have a low interest credit card, you maybe be able to balance transfer any higher interest loans onto it to lower your overall interest and create one payment for all,

If you have equity in your home you may be able to borrow against it with a low interest rate loan again allowing you to combine your debts with a lower interest rate and one payment per month.

Remember, if you already have low interest rate loans for your credit cards and personal loans, you may not be able to secure anything lower but it is certainly worth looking into if any of the following apply to you:

Will it lower the interest you are paying?

Will it allow you to pay your debts off faster?

Will it help you become more organised to avoid late fees and exceeding your limit?

Can you get a fixed rate loan?

If you answered yes to any of these questions, it might be time to consider consolidating your loan. If you would like any further information about how you can save money and take your first step on the path to financial freedom and creating a retirement plan today, call us on 1300 723 580 for an obligation free chat.

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