|
Welcome
to the November Newsletter
Well
50% of the rate rise predictions were correct, there was an interest
rate rise in November. There has been and will be a lot of media
attention on what this means to the average mortgage holder. In
reality it is important to put this latest rate rise and all the
rate rises over the last year into context. If you do wish to
purchase property you do have choices:
1. Take ownership of
a property using someone else's money to assist in the acquisition.
2. Defer purchase until you have saved the complete purchase
price.
Borrowing money buys you time in the marketplace by
having an asset working for you. That's not to say that purchasing
at any interest rate is a good decision, it's not but it does
deserve careful consideration.
Those who borrow money to buy
property do so because they believe having the control of the asset
will be of a direct benefit to them, be that a roof over their head;
a revenue stream; or a growth strategy to list a few of the more
common motivators. However anyone buying should be aware that the
cost of money will affect their strategy and hence any calculations
prior to purchase should factor in a higher interest rate. Your risk
profile and your 'sleep at night factor' may include allowing for an
increase in the current rate by 1% or higher.
There is a way
to 'rate proof' your investment and that is to consider the long
term picture before you invest. Many who are in the market now have
found that their investment repayments are getting disturbingly
close to their limit. Opting to lock in a fixed rate, could buy them
time to stay in the market.
It is easy to concentrate on the
here and now but any investor, be they investing in their first home
or their 10th investment property does have a choice. Personally I
hope the recent National Australia Bank survey is correct and
interest rates don't move again in 2007. However the wise investor
will have a long term strategy to allow for any
eventuality.
Another way to stay in the market for longer is
to maximise cashflow. This month's article looks at one way
investors can improve cashflow through claiming their due in
depreciation. This follows on from the very well received article in
the March newsletter which talked about tax variations and the
enormous benefit this can bring to the astute investor. You may want
to revisit this one via the newsletter archive section of the
website.
As always I hope you find the information in this
newsletter relevant and interesting
Jane
| InvestKit Special with Dale Beaumont
As a Newsletter Member you also have access to
the InvestKit containing easy to use spreadsheets for
researching and locating the right property.
This
month, Dale Beaumont (author of the Secrets Exposed
series of books) offers his thoughts on the "Top 10 Essential
Qualities" of the many successful property investors he
interviewed for his book Secrets of Property Millionaires
Exposed.
The Link to the Invest Kit has
been removed as you are viewing this through the
website, signup for the newsletter and you will get access to
the
InvestKit. |
Are you maximising the tax depreciation and capital
allowance benefits available to you?
All types
of income-producing properties have substantial taxation
benefits available to be claimed as a tax credit. Many
property investors are missing out on literally thousands of
dollars in lost tax depreciation deductions.
Both new
and old properties will attract some depreciation benefit that
the owner is able to claim as a tax credit. A common myth is
that older properties will attract no claim. Therefore it is
worth making an enquiry about your property.
When a
property owner has not been claiming deductions for tax
depreciation, previous financial years' tax returns can be
amended. The Australian Taxation Office (ATO) allows for the
previous four years' returns to be amended, in some instances
the ATO may have to give you money back!
The
depreciation benefit available depends greatly on the type of
building, its age, use and fitout. Based on the 'Diminishing
Value' method of depreciation, the scenarios in the table
above are provided as an appropriate guide. (If you are
viewing this newsletter in text format similar tables are
available on the BMT website, follow the link
below)
The maximisation of a depreciation claim on any
building requires a combination of construction costing skills
and an excellent knowledge of Tax Legislation. This rare
combination of skills has resulted in a select number of
quantity surveying firms specialising in property
depreciation.
Quantity surveyors are recognised by the
Australian Taxation Office to be appropriately qualified to
estimate building costs for the purpose of depreciation. BMT
& ASSOC are specialists in maximising depreciation claims
for investors and I can highly recommend their
services.
Clients of Investors Choice Mortgages are
offered discounts and benefits from a number of service
suppliers, BMT is one of these.
Brendan Farrugia (B.
Con. Mgt - Hons) is a Director of BMT & ASSOC Quantity
Surveyors, Property Depreciation & Construction Cost
Consultants. For further information contact (02) 9241 6477 or
visit www.bmtqs.com.au for an Australia wide
service.
Click here to access
BMT |
| Christmas Budget
Don't be caught out by overspending. I remember talking to
a colleague one year who said he only keeps his credit card
for using at Christmas because he knows he will need the extra
$10,000 for holidays, presents etc. It then takes him 6 months
to pay it all off. Now, I don't know about you, but this seems
to me like a very painful approach.
This year, to
prevent January (February, March, April...) headaches when the
credit card bill arrives, assess what you are going to spend
your money on (allow for a few unexpected expenses) and then
stick to it. Plan now and you'll be able to relax and enjoy
your summer holidays safe in the knowledge that you've got
Christmas expenditure under control.
Hints for Christmas
Budgeting |
Updates
Many of you will know I am in the throes of
my 5th renovation. Given my experience with renovations over the
last few years there are still challenges. Those of you who have
been through this will understand that when renovating an old house
unexpected problems can arise and quick decisions need to be made.
After all, time is money. While renovations are proceeding (mostly)
to schedule I have had a few surprises in recent weeks. However
Lenny the builder summed it up nicely when he reminded me that
"Renovations are all about finding solutions to problems".
This month I have also had the pleasure of re-visiting the
Roxby Downs mine in the heart of South Australia as well as a trip
to Brisbane. This weekend I have been invited to speak at a seminar
for women interested in property investing, which is sponsored by
the Reno Kings (details on the website). I look forward to sharing
my renovation experiences with attendees, not just the warm fuzzy
moments but also the truth behind some renovation
surprises.
As always, if you find the information in this
newsletter useful or at the very least, thought provoking please
forward it to others who may benefit. My business is based on
referrals and I appreciate your support.
Until next
month, I wish you prosperous investing.
Jane
PS: at
Investors Choice we believe in sharing our systems, information and
resources. Our website is continually updated to reflect any new
information we think you might find of benefit. Check out the
website at www.investorschoice.com.au
Some people have
told us that the newsletter is not arriving in their inbox. Please
add the newsletter address Investors_Choice@mail.vresp.com to your
mailbox and the name "Investors Choice" to ensure you continue
getting the e-newsletters without the email going straight to the
spam or message release folders.
Disclaimer:
You should always speak to a financial planner or accountant about
your particular circumstances, the hints mentioned here are for
general discussion only and do not relate to your particular
circumstances
|
