What is the process?
We strictly follow a 4-step process:
- Meeting with the initial consultant at your home or in our office.
- Meeting with our financial planner
- Presentation of selected options
How much is it going to cost and how do you get paid?
It doesn’t cost you anything. We offer free services. The reason for this is we are a solution-based company so for us to get paid, we need to be able to provide a solution for you. If that solution involves finance of some kind then we get paid by the bank like a broker or so on so we are paid by third parties. We don’t need to be paid by you.
What are your services?
We operate on a financial planning basis so all strategies are based on your individual situation – income, expenses and what you want to do.
Our firm provides our clients with a licensed financial planner, accredited mortgage broker and real estate license holder.
We offer a one stop shop to clients. We will provide a financial strategy based on your individual situation. If this strategy involves finance of some kind then we have an in house mortgage broker who has access to a number of different lenders and can find the cheapest interest rate etc.
If the strategy involves property or something similar down the track then we will source that for you also and we have affiliated accountants, property managers and various other people that you may need along the way.
What is negative gearing?
Negative Gearing is when you borrow to acquire an investment and the interest and other costs you incur are more than the income you receive. Negative gearing of investment property in Australia is used as a means to make it easier to hold property and let it grow in value over time.
In terms of property investment negative gearing in Australia refers to a situation where your expenses to maintain an income-producing property exceed the income of the property itself. Positive gearing of an investment property refers to an excess of income, over and above any expenses. The ultimate aim for most smart investors is obtaining a portfolio of positively geared properties. Initially however, it is through negative gearing and the associated tax benefits that investors are able to purchase real estate at minimal cost to them. The difference between the amount of rent from your property and the expenses related to the property are (assuming there is a loss) tax deductible.
What is depreciation?
Depreciation effectively refers to the part of the property that goes down in value over time. That is, the building portion and not the land component. Depreciation is a provision for non-cash expenses, for example depreciation on items such as light fittings, carpet, building costs, etc. which may increase your available deductions. The important words are “Tax Deductible”. Below is an overview of these deductions and how the investor is able to take advantage of them to create their own real estate portfolio.
Deductions on Purchasing Costs
(Tax deductible over 5 years)
- Valuation Fees Bank Application
- Fees Mortgage Insurance
- Consultancy Fees
- Building Costs (2.5% p.a. over 40 years)
- Fixtures & Fittings
- Inspection Costs
- Other acceptable costs (as per tax schedule)
Calculation of depreciable items is very specialised. The above figures are indicative only and ZTI recommends that the services of a Quantity Surveyor be used to ensure you maximise your depreciation deductions. Investors should also use an accountant who specialises in property investment to ensure all tax deductible items are claimed.
There are many factors to consider when selecting your property and one of them is new or existing. The answer is simply ‘NEW’ or near new. This is to maximise your tax advantages and to reduce the out of pocket costs to you to fund the property.
Why does the government make it so attractive for property investors?
An advantage to governments is the relief of pressure to supply and maintain housing for people who are not in a position to purchase their own home, thereby saving millions of dollars in funding plus huge administration and infrastructure costs. Further to this point, approximately 35% (and growing) of the population rent. An under-supply of rental property would not only push rents up (giving rise to inflationary pressure), it would also put further pressure on the government housing supply….something that is starting to be seen more & more of late. To encourage the private sector to invest in property for rental, governments have made available extremely viable tax incentives for the investor. It is through these available tax incentives that investors are able to purchase property at very little cost to themselves and in many cases at virtually no cost to themselves.
Simply put: the tax man and the rental income pays for your investment property!!