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Archive for category: ONYX Finance

How baby boomers screwed their kids
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How baby boomers screwed their kids

I read an article the other day with this very headline. As a “boomer” it got my attention. It was an overwhelmingly negative article about how Baby Boomers have kept Gen X, Y and millennials out of the property market. How have they done this? By greedily investing themselves which in turn has forced the property prices up.

A bit harsh. So let’s turn the negative into a positive.

Baby boomers can actually set their kids up for life!

The main barrier for getting into the property market is a lack of sufficient savings to cover the deposit and costs needed to buy property. With a little help for your family you can get into your own home faster.

Here are three great ways parents (or any other family members) can help get the next generation into the property market.

1. Family Pledge Loans.

Parents can use their own home’s equity to provide additional security for a portion of your loan amount. This solution reduces the child’s loan to value ratio and can also save a significant amount of money by reducing or avoiding the need to pay Lender’s Mortgage Insurance (LMI). The First Home Buyers Grant and stamp duty concessions can be used with this loan (if the child is eligible).

Things to consider – The parents are not responsible for loan repayments. When equity grows the loan can be refinanced and the parents can remove the pledge.

2. Managed Parent to Child Loans (P2C).

This loan does not require parents to enter into any guarantee or pledge. The parents determine the loan term and interest rate charged and the parent’s house is not needed as security. The First Home Buyers Grant and stamp duty concessions can be used with this loan (if the child is eligible).

Things to consider – A Fund Manager is needed to manage this process for all parties involved.

3. Releasing Equity.

Releasing equity in the parents property and using this equity to lend to the child. This is probably the most problematic of the options as the parents will ultimately be responsible for the loan.

Things to consider – Lending to borrowers in their 50’s and 60’s can also be more restrictive.

A word or warning. I have seen a few examples where lenders have taken the parents property and cross-collateralised with child’s purchase to provide the loan. I believe this to be usury behaviour and should be avoided at all costs. Please seek further advice about this.

There are lots of different options for parents to help their children get in the property market. I would welcome the opportunity to discuss these different options with you and guide you through the process.

Join us on Facebook! I will be live this Wednesday [22nd February 2017] (AEST) from 12noon – 1pm. If you are thinking about buying a home or starting an investment portfolio, pop online and I will be answering any finance questions. Visit us on https://www.facebook.com/onyx.property.investing/

I am here to help and offering five free 25 minute goal setting sessions per week to help you achieve your lifestyle and finance goals. If you have any questions about refinancing or anything else please get in touch with me.

You can call me on 0409 02 99 22 or send me an email.

Do you know your current interest rate? 3 simple steps to put cash back in your pocket
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Do you know your current interest rate? 3 simple steps to put cash back in your pocket

Latest research has shown the majority of Australians (85%) with a mortgage do not know their current interest rate. Of those surveyed 41% did not know their rate at all and only 44% could recall an approximate figure. This is also true for other debt, including credit cards.

It was also discovered that one in four (23%) believe that refinancing their mortgage was a good option to save money however it is a struggle to find the home loan product that suits them personally or to find the right competitive rate.

What does this mean for you?

You are likely paying thousands of dollars too much in interest a year, which is going straight to the banks.

Buying property is one of the largest investments you will make in your life. It is essential that you have the loan that suits your individual circumstances. Not every loan product is suitable to each person. There are other factors to consider, not just the interest rate.

Most importantly your individual needs will change over time, depending on where you are at in your life cycle.

What you can do?

✔ Spend 15-20 minutes to find out your current rates.

✔ Call me for an obligation free chat.

✔ Put more cash back in your pocket.

Home loan rates are currently at some of the lowest on record. Now is the perfect time to investigate your current loan and consider refinancing.

Actively monitoring home loan products and seeking the best rate can be time consuming and exhausting in an already busy world. This is where using a mortgage broker with a wide range of experience can be really handy and put more cash back in your pocket.

I am consistently reviewing all products, old and new, across the market place to make sure that we find you the best loan to meet your individual needs. I have over 15 years experience in finance and have worked with a range of different clients, there is no issues we cannot work towards solving and no loan too big or too small for us to assist with.

I am here to help and offering five free 25 minute goal setting sessions per week to help you achieve your lifestyle and finance goals. If you have any questions about refinancing or anything else please get in touch with me.

You can call me on 0409 02 99 22 or send me an email.

Why ‘rentvesting’ is the new Australian dream
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Why ‘rentvesting’ is the new Australian dream

Increasing numbers of first-home buyers are turning the game upside down. They are replacing the old ‘great Australian dream’ of living in their own home with a huge paradigm shift. Here is what you need to know about ‘rentvesting’.

What is rentvesting?

Simply, rentvesting is renting in an area that suits your lifestyle and budget, whilst buying in an affordable area with good yield and lots of growth potential. This can mean living in an ‘expensive’ inner CBD suburb and buying further from town or interstate. This strategy means you’re in the market and not missing out on building a property portfolio.

The reality of rentvesting

The main benefit of rentvesting is being able to live in your desired area whilst still being able to get into the ever growing Australian property market. There are significant tax benefits including negative gearing and depreciation. As well as tax deductions such as interest repayments, maintenance costs, insurances (and others depending our your circumstances). There is also the benefit of being able to use the rent towards paying your mortgage. Ideally you will buy in an area with strong long-term growth so your property grows in value allowing you to invest further.

What about the ‘great Australian dream?’

Like many Australians, we were brought up with the notion that owning your own home was the sensible thing to do – no ifs or buts about it. Work until retirement and own your own home. The media constantly promotes the ‘great Australian dream’ and puts fear into not being in the property market. There is a certain level of stigma attached to renting – ‘renting is for the poor’, ‘rent money is dead money’ and on and on.

Here’s a couple client stories:

Bree & Eric

Of course, I always wanted to buy and live in my own house but the dream was proving difficult. When we heard about ‘rentvesting’ and actually realized it was a viable option (before it was actually called ‘rentvesting’) we knew it suited our situation and our 10 year plan. We were eager to enter the property market and to be honest a little scared of being left behind. We have now had our investment property for 5 years and currently working hard to add to our portfolio. Rentvesting allowed us both to have a year off when we had our daughter and we have just returned from living overseas.

Bec & Matt

I knew I wanted to buy a property and I knew it was going to be a great way to get started financially, a great nest egg. The thing is I also love living close to the city but the prices were way above my budget. That’s when I heard about the idea of ‘rentvesting’. Renting my lifestyle in a great suburb and also having an affordable investment property that wasn’t going to blow my budget. I’m so glad I was able to get into the market when I did, at just 25. My cousin and I are joint investors in a 4 bedroom home in Bacchus Marsh and we are lucky to have some great long-term tenants. This has been such stress-free way of getting into the property market, especially when we were so young.

Why rentvest?

  • More affordable to get your foot into the property market
  • Live where you love to be
  • Flexibility to live overseas and travel
  • Tenants are paying your mortgage
  • Tax benefits such as negative gearing and depreciation
  • Property related expenses are tax deductible
  • Multiple streams of income from investments which enables you to reinvest

As always we are here to help and would be happy to spend time with you to help you achieve your lifestyle and finance goals. If you have any questions about ‘rentvesting’ or anything else please get in touch with me. You can call me on 0409 02 99 22 or send me an email (greg.clough@onyx.net.au).

Cheers
Greg Clough
Owner and Founder
0409 02 99 22

Four reasons investors should claim depreciation in 2017
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Four reasons investors should claim depreciation in 2017

As we start the New Year, many investors might be formulating their annual New Year’s resolutions.
Investors often think about the ways they can reduce the costs of owning an investment property and wonder how they could boost the cash flow earned. However when they do so, the deductions they can claim via depreciation are not always at the top of their list when it comes to saving money.
Around 80 per cent of investors still do not maximise the depreciation deductions available from their investment property, so this is a very good reason why investors should add requesting a tax depreciation schedule as part of their 2017 resolutions.

To assist investors, here are four great reasons why investors should request a schedule today:

1. Claim an average of $5,000 to $10,000 in the first year
Property depreciation is a non-cash deduction which can be claimed due to the gradual wear and tear of both the building structure and the plant and equipment items contained within the property.
On average, investors can claim between $5,000 and $10,000 in deductions within the first financial year alone. The Australian Taxation Office allows investors to claim depreciation on the building structure over the effective life of the property (forty years) and deductions for plant and equipment assets based on their individual effective life.
By claiming property depreciation, investors are essentially reducing their taxable income and therefore may benefit by receiving more in their annual tax return or avoiding having to pay additional taxes.

2. Every property investor can benefit from a depreciation schedule
Some investors think that because their investment property is old, they won’t benefit from claiming depreciation. This is untrue. Both new and old properties will attract depreciation deductions for their owners.

Depreciation deductions can be claimed for all types of investment properties including residential, commercial, industrial, retail, manufacturing and hotel and tourism accommodation.

3. Adjust the previous two years tax returns
If you haven’t been claiming or maximising depreciation for your investment property, the previous two years tax returns can be adjusted and claimed back.

4. The fee is 100 per cent tax deductible
Although there is a cost involved in arranging a depreciation schedule, the fee is 100 per cent deductible. Investors who arrange their schedule prior to the 30th of June each year can claim the fee back in the same year, while investors who arrange and pay their schedule in the new financial year can claim in the following year. This is all the more reason why investors should arrange their schedule in the lead up to a financial year rather than wait until tax time.

BMT Tax Depreciation offer a guarantee of finding double their fee in deductions in the first financial year or there will be no charge for their services.

Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. If you would like to learn more about property depreciation visit BMT’s residential property depreciation page or you can contact one of BMT’s expert staff on 1300 728 726.

Seven Tips to Healthy Finances
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Seven Tips to Healthy Finances

Would you like to save $1000’s a year of your own money?

It really is easy and we can all do it. Follow these 7 easy steps to healthy finances and treat your finances like you would your health, hobbies or taxes. You need to invest a small about of time keeping them ‘healthy’ to reap the most rewards.

Seven tips to healthy finances

1. Review your loan portfolio regularly. It is more important than ever to ensure your loans and structure are most suitable to your current situation. Record low interest rates has resulted in more competition than ever, meaning that what was right for you last year may not be now. You should review your loans whenever your circumstances change or every six months (if this is a little daunting – every year is a good place to start).

2. Use a Finance Broker. Like you would an accountant or financial planner, it is important to have a good Finance Broker who may save you thousands of dollars, hours of time and lots of stress. The loan market place is more confusing and crowded than ever and they will guide you through the process and analyse a wide range of loans currently available.

3. Consider the smaller bank and non-bank lenders. Traditionally borrowers have tended to favour the big four banks however the second tier banks and non-bank lenders generally offer superior service, are very competitive and may have more flexible policies.

4. Plan ahead. Most good accountants provide structures and advice that will minimise your income tax obligation however this may work against you when you come to borrow. Be sure to keep your accountant informed of your intentions to borrow for future property investments.

5. Know your Credit Cards. One of the most usury and unsavoury behavior by banks is to constantly offer very expensive credit that you don’t need or can’t afford and then punish you when you want to borrow cheap money for good debt. Reduce your credit card limits to what amount you actually require on the monthly basis and move to an interest free option, if possible.

6. Get pre-approved. To ensure certainty when purchasing your property, it is often worthwhile to get pre-approved. This pre-approval will only be subject to the ‘contact of sale’ and valuation of the property. This will give you an advantage if there is multiple parties interested in a property and can save you time and most importantly stress.

7. Take the gig! Treat your finances like you are getting paid to manage them. Think of it as if someone is offering you several thousands of dollars for a few hours work. Make time for your own finances and you will be rewarded.

As always we are here to help and would be happy to spend time with you to help you achieve your lifestyle and finance goals – why not take action right now and give me a call on
0409 02 99 22 or send me an email on greg.clough@onyx.net.au.

5 Ways investors could be saving millions in tax
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5 Ways investors could be saving millions in tax

According to BMT Tax Depreciation, which has worked with over 400,000 Australian property investors, there are millions of dollars in unclaimed tax that investors are missing out on every year.

1. Not claiming enough

According to CEO of BMT, Bradley Beer, the first mistake investors are prone to is not being thorough enough with their returns.

“Items such as smoke alarms, security systems, swimming pools and even garbage bins are often overlooked but hold valuable tax savings for property investors,” said Mr Beer.

“Fixtures and fittings with a depreciable value less than $300 can be immediately claimed in the first financial year. A garbage bin valued at $250 and smoke alarms valued at $145 are just two examples of items which are eligible and can generate immediate tax savings for applicable investors,” he said.

2. Believing your property is too old

BMT believes some investors think their properties are too old to claim on, but the age of a property does not necessarily rule out all deductions.

“In order to claim the capital works allowance for structural elements of a rental property such as walls, floors and ceilings, your property must have been constructed after 1987. However, owners of older properties can still claim deductions for renovations carried out after the relevant date, even if these were completed by a previous owner,” said Mr Beer.

“They are also eligible to claim deductions for plant and equipment assets within the property such as carpets, hot water systems, blinds and stoves,” he said.

3. Missing deductions after renovations

Items that are scrapped and replaced during renovations can be eligible for deductions.

“Ideally, a property should be assessed before renovation to determine the value for scrapped assets such as tiles or appliances like dishwashers and refrigerators, then after a renovation to account for new additions,” said Mr Beer.

4. Believing that once a return is gone, it should be forgotten

Just because an investment was purchased some time ago, or you have already lodged your return and not included something deductible on it, does not mean you have to miss out according to BMT.

“The ATO allows two previous tax returns to be adjusted so investors would be wise to examine whether they have missed anything and if so, speak to their relevant adviser to have their tax return amended,” said Mr Beer.

5. DIY Deductions

Investors are always seeking to maximise their profit on their property portfolio, but as in other areas this doesn’t mean doing your own taxes is the best path to take.

Not only is using a professional tax deductable, you’re also more likely to get a bigger return than you would doing your taxes alone.

“Some investors may not realise the cost of obtaining a depreciation schedule is 100 per cent tax deductible,” said Mr Beer.

“By taking the time to explore the tax depreciation system and working with an expert quantity surveyor, property investors can avoid making these common mistakes and help ensure their investment properties are generating the maximum amount of cash flow possible,” he said.
[Source: http://www.whichinvestmentproperty.com.au]

Seven Simple Tips for a Bright Future
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Seven Simple Tips for a Bright Future

Welcome to 2017. This year shapes up as a fantastic time to start or continue your property investment journey. Record low interest rates combined with stable pricing provides ideal circumstances.

These 7 simple steps guide you through the process to a bright and fruitful future with financial security and freedom.

1. Plan for your future. Retirement may seem far away, building your wealth takes time. The best time to start is today.

2. Start somewhere. It may seem a daunting task but once you have taken your first step things often build momentum. Set an intention, or visualise how you see it looking.

3. Be proactive! Despite the low interest rates that everyone is talking about, many major lenders have not passed on substantial savings to you. Contact your Mortgage Broker / Finance Expert today to see what savings you can make.

4. De-clutter your life. Most of us have things (furniture, jewellery, clothes and sporting equipment) around the house that we could sell online or at your local markets. The extra cash can be very useful and you are de-cluttering at the same time.

5. No regrets. In a years time you will only regret what you put off today. Don’t wait until next year to start something you can easily do today.

6. Find time for yourself. Aim to find 1-2 hours a week to do something that feeds your soul.

7. Exercise. Start small but aim to do 20 minutes everyday. A leisurely walk is a fun place to start.

4 reasons investors should claim depreciation in 2017
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4 reasons investors should claim depreciation in 2017

As we start the New Year, many investors might be formulating their annual New Years resolutions.
Investors often think about the ways they can reduce the costs of owning an investment property and wonder how they could boost the cash flow earned. However when they do so, the deductions they can claim via depreciation are not always at the top of their list when it comes to saving money.
Around 80 per cent of investors still do not maximise the depreciation deductions available from their investment property, so this is a very good reason why investors should add requesting a tax depreciation schedule to their annual resolutions for 2017.

To assist investors, here are 4 great reasons why investors should request a schedule today:

1. Claim an average of $5,000 to $10,000 in the first year
Property depreciation is a non-cash deduction which can be claimed due to the gradual wear and tear of both the building structure and the plant and equipment items contained within the property.
On average, investors can claim between $5,000 and $10,000 in deductions within the first financial year alone. The Australian Taxation Office allows investors to claim depreciation on the building structure over the effective life of the property (forty years) and deductions for plant and equipment assets based on their individual effective life.
By claiming property depreciation, investors are essentially reducing their taxable income and therefore may benefit by receiving more in their annual tax return or avoiding having to pay additional taxes.

2. Every property investor can benefit from a depreciation schedule
Some investors think that because their investment property is old, they won’t benefit from claiming depreciation. This is untrue. Both new and old properties will attract depreciation deductions for their owners.
Depreciation deductions can be claimed for all types of investment properties including residential, commercial, industrial, retail, manufacturing and hotel and tourism accommodation.

3. Adjust the previous two years tax returns
If you haven’t been claiming or maximising depreciation for your investment property, the previous two years’ tax returns can be adjusted and claimed back.

4. The fee is 100 per cent tax deductible
Although there is a cost involved in arranging a depreciation schedule, the fee is 100 per cent deductible. Investors who arrange their schedule prior to the 30th of June each year can claim the fee back in the same year, while investors who arrange and pay their schedule in the new financial year can claim in the following year. This is all the more reason why investors should arrange their schedule in the lead up to a financial year rather than wait until tax time.

Investors who own or who are planning on purchasing an investment property who would like to find out more about the depreciation deductions available for their investment property should contact the expert team at BMT Tax Depreciation on 1300 728 726.

Article provided by BMT Tax Depreciation.

9 things all first home buyers need to know
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9 things all first home buyers need to know

 

1. Are you eligible for a home loan?

How much money can you borrow from the bank? That’s the single most critical consideration for first homebuyers. After all, there’s no point in house hunting if you can’t get a loan. Greg Harris says there are many variables that can influence your home loan eligibility. “Your lender will need an accurate picture of your current financial situation, such as evidence of your assets, income, budget and existing debts,” he says.

2. Get your finances in order.

In assessing a loan application, banks will look at your ability to meet the repayments. Harris says borrowers who can demonstrate a good savings record will be looked on more favourably. He also advises potential borrowers to “pay down your debts”. “Try to clear them and close the borrowing accounts. If you have ongoing debt, stay on schedule with payments to maintain a strong credit rating,” says Harris.

“One of the most important factors in acquiring a home loan is proof of income. The higher and more consistent the income, the easier it will be to make repayments.” Banks will consider employment security and will also ask for proof of regular earnings such as payslips, PAYG summary and bank statements.

“Self-employed applicants will need to provide their most recent individual tax return, business tax return, profit and loss statement and balance sheet,” says Harris.

3. Get into the market as soon as possible.

Domain chief economist Dr Andrew Wilson says Australian capital city housing markets “are robust and reliable over the longer term with significant financial advantages for home ownership, particularly through taxation benefits”. “To get into the market expeditiously, be prepared to compromise on location, property type and condition,” he says. “It’s important to put your first step on the ladder, then as your journey continues you can broaden your choices over time.”

4. Think affordability first.

Wilson says: “Buying decisions should reflect affordability considerations and compromises without concerns over the prospect for house price growth or interest rate movements, either up or down. “Established suburban units also represent good entry-level opportunities for first homebuyers.”

5.  Understand the sales process.

Real Estate Institute of Australia president Neville Sanders says first-time buyers need to work out “which process – auction or private sale – will serve them best”. “Find out how each model works in your state and make sure you understand the process as well as your rights and responsibilities,” he says.

“There’s a lot of focus on auctions in the media because the auction arena is where the theatre is. However, private treaty is by far the most common type of property transaction.”

6. Get independent expert advice.

“First homebuyers should seek legal advice before signing the contract of sale,” says Sanders. “Everything you need to know about the property you are purchasing is disclosed in the title and contract of sale so you need a lawyer or conveyancer to look over the documents for things such as easements or covenants. These are things you want to know before you sign the contracts, not after.”

7. Do your own research.

“Don’t rely solely on prices agents tell you when you attend open-for-inspections. The agent might only mention the best prices achieved for similar properties sold in the area. There may be six other lower-priced examples” (Cohen Handler managing director and buyers’ advocate Simon Cohen).

8. Strike while the iron’s hot.

“You need to have your finance approved and deposit ready so you can swoop in ahead of the competition when the right opportunity arises” says Cohen.

9. Don’t buy a lemon.

First homebuyers should think logically to avoid being “caught with a lemon”, says Archicentre architect Robert Caulfield. He says 30 per cent of all homes inspected by Archicentre have “serious problems” including rising damp, structural faults, cracking, plumbing and electrical faults.

“Any one of these could cost up to tens of thousands of dollars in repairs. Add them all together and it’s not uncommon to see homes with $50,000 to $100,000 of faults that the home buyer didn’t expect,” says Caulfield. He says buyers should look for faults, or hire a building inspector to look for them, and find out what it would cost to repair the faults before making an offer.

“In real estate, the term that applies is ‘buyer beware’. In other words, when you buy a house you buy it in the condition it is sold in. If subsequently you find problems with it, you can’t take it back to the vendor. That’s your house and you’ve unfortunately bought a lemon,” says Caulfield.

*Archicentre is the building design, inspection and advice service of the Australian Institute of Architects.

[Source: http://www.domain.com.au/advice/nine-things-all-first-home-buyers-need-to-know-20161012-gs16be/]
Moving House? 5 Tips to Avoid a Headache
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Moving House? 5 Tips to Avoid a Headache

Moving House? At some point we all do it. Here are some easy tips to avoid a ‘moving house headache’.

1. Get your insurances in order. Find out if your current insurance policy will cover the move, this may or may not include moving yourself / hiring a removalist. Find out exactly what your are covered for.

2. Make sure the electricity meter is accessible. Check your meter before the electricity is connected/disconnected.

3. Look after your fridge when moving. If your fridge/s was laid on the side or back while being moved it will need to be left for 24 hours before being plugged in and turned on. This will ensure the fridge coolant works properly.

4. Disconnect AFTER the house is cleaned. Whether your are DIY-ing or getting in professional cleaners, make sure the electricity/gas is disconnected after cleaning has finished.

5. How to switch your gas on. Turn your gas meter lever (usually a red/yellow handle or tap) so it’s vertical with the pipe. Wait a 2-5 minutes before trying your gas appliances. Appliance pilot lights will need re-igniting too. If you still having issues contact your gas supplier.

Moving into an apartment? To save big delays, find out if there are any strict moving times, where apartment access bays are located, and how to get a lift key. It is usually a good idea to email the building manager and let them know your moving plans as well.

[Source: Some information taken from Energy Australia]

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