Below is a collection of various questions that we hear all the time in relation to our service and possibility of creating enduring long term wealth. Please be sure to read through all of these questions and answers before engaging Kovacs Property Group, so that you can truly understand the benefits of using KPG to save you valuable time and money in the future.

 

If after reading through these, you have any further questions, don’t hesitate to contact us directly.

 

Why should I use Kovacs Property Group, instead of finding my own investment property directly?

Finding the right investment property that suits your circumstances is not normally as easy as most people think it is.

There is a lot of thought that must go into the process; and many questions you must answer first….

  • What type of property structure best suits long term capital growth?;
  • What finance structure should you have?, what location works best?;
  • What type of tenant is best for you?, what are the economic drivers that keep the investment property safe?;
  • How can you be sure the construction is of high quality workmanship?;
  • What covenants are more important than others?;
  • What type of property gives me the best tax rebate and stamp duty reduction?

The Kovacs Property Group (KPG) service eliminates these things for you, saving you massive amounts of valuable time – which is primarily what our service is all about! We provide innovative property and finance structures that take into account all of the above with our experienced and dedicated team, making sure that you have the absolute best chance of maintaining your high quality lifestyle when you decide to cut back on or stop work.

 

I am a busy professional – I don’t have time to look after a property portfolio! Who manages the property for me?

We provide the best Independent Property Managers for you at all times. This is very important as your Property Manager becomes your eyes and ears for everything to do with your investment property portfolio. From making sure you get the right tenants, then making sure the rent turns up in your account on time and finally making sure that your investment portfolio is being looked after through regular inspections and then regular reports to you. This peace of mind allows you to focus on your priorities… family, life, other interests!

 

How much tax can I keep in my pocket?

Tax minimisation is when your tax affairs are arranged in a way that complies with the law to reduce the amount of tax you pay. Everyone is unique so the amount of tax you can keep for each investment property is calculated by your Accountant using a set of guidlines from the ATO.

Here is list of items the ATO could allow as deductions.

  • Advertising for tenants - You cannot claim for Advertising to sell the property, except against the eventual sale price.
  • Adjustments for rates and land tax for purchaser – When you purchase or sell a property, the solicitor makes adjustments for items such as rates and water charges.  To account for these properly, obtain the settlement statement from your solicitor to bring in when you do your tax return.
  • Bank Charges – You can claim bank fees for accounts held purely for managing the funds of the rental property.  You can also claim regular fees for having a loan.  You cannot claim fees for bank accounts that also have a private purpose.
  • Body Corporate fees – You can claim all body corporate fees, but you cannot claim for contributions to a special purpose fund if the funds are to be used to fund capital improvements, or if the funds are not spent by the end of the financial year.  You can claim a capital works deduction for capital improvements once the money is spent, or a full deduction if the repair is made.
  • Borrowing expenses  – Funds spent in obtaining a loan can be written off over 5 years or the life of the loan, whichever is lesser.  Mortgage insurance is considered a borrowing expense.  Penalty interest for early repayment or mortgage discharge fees are deductible when incurred.  Bring in your credit control schedule detailing the fees you were charged when you obtain the loan or refinance so we can put these together.
  • Cleaning expenses
  • Council rates
  • Depreciation on plant – You can claim a deduction for items installed or attached to a property, or even on the property.  You can also claim a deduction each year for the cost of the building itself and other subsequent capital improvements.  Have a quantity surveyor inspect your property on purchase and keep your receipts for items purchased.  Note that you should have a chat with the quantity surveyor first to see if it is worth having a schedule prepared (don’t just get one blindly) and make sure you bring a copy of last year’s depreciation schedule to your accountant next year.
  • Gardening/lawn mowing
  • Insurance (Landlords and Building.)
  • Interest on loan(s) – This is the area with the greatest amounts of claims for new property purchasers but it can also be filled with traps.  Don’t mix private funds in your loans or make redraws for private purposes or you will reduce the deductibility of the loan.
  • Land Tax – For those you have used up their land tax threshold.
  • Legal fees – Legal fees on purchase, sale or transfer are not deductible against your rental income, but legal fees for say kicking out delinquent tenants, checking credit references of tenants or pursuing for damages are deductible.
  • Pest Control
  • Property Agent fees/commission
  • Quantity Surveyor Fees
  • Repairs and Maintenance – There are also many traps in this area.  For example, if you replace part of a fence after it has degraded over the time that you owned it, you get a full deduction for it, but if you replace the entire fence, you can claim a portion of its cost over 40 years!   List improvements or repairs made to the property, what they entailed, what they fixed, the amount and the date when seeing your accountant.  There can be up to five different tax treatments for this type of expenditure.
  • Stationery, telephone and postage
  • Travel expenses – You can claim a deduction for travel to inspect property, make repairs, collect rent, do the banking and to prepare the property for tenants.  You may not claim a deduction for travel to purchase the property, sell the property and to make improvements.
  • Water charges
  • And remember, you need to keep your records for 5 years from the date of lodgement of your tax return.

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