Pre & Post Purchase Analysis

At V M Business Consultants we will work with you at every stage of your investment transactions right from assessing the best structure to buy your investment to liaising with Real Estate Agents, Brokers and Solicitors & Banks if need be.

We will do all the sums, calculations, and number crunching exercise and present to you a simple and understandable report analysing all avenues of this major investment.

Our services includes but not limited to the following:

• Analyse cash flow & profitability of property investments
• Calculate the weekly after tax cost of owning the property
• Administration – assistance with maintaining accurate records for ATO
• Compliance – preparation of tax returns and other forms required by the authorities
• Where applicable, prepare an annual PAYG Variation to bring forward the annual tax benefit of the loss into your regular pay packet to help with your cash flow
• Provide a referral to a suitable insurance broker, solicitor, etc.
• We'll be there ... a sounding board for your ideas and ambitions ... discuss the questions you have helping you make those important decisions including:
• In whose name should the next property be in?
• What is my risk profile?
• Do I need to structure into a trust with this or the next property?
• How many properties should I hold in any one trust
• How much the structures will costs?
• What are the land tax liabilities likely to be?
• We are in a unique position to advise you regarding the process of purchasing and maintaining a negatively geared investment property. We understand your tax position and have access to analytical software designed to produce reports including multiple years cash flow projections, taxable income forecasts and future equity predictions etc.
• Please see couple of the samples of those reports:-
  

  

   
• One of the most important decisions you need to make when purchasing an investment property is which entity or person should own the property. We can recommend the appropriate structure so you maximize the tax savings and protect your investment. There are a number of factors to consider because transferring the property at a later date can prove costly with stamp duty and capital gains tax implications.
• Obtaining the right loan can nearly be as important as finding the right property. Interest only, principal and interest, fixed or variable are all key considerations. Clearly finance needs to be planned to suit your ultimate investment goal and should not focus on fees, interest rates or other gimmicks used by lenders to get your business. Get it wrong and the costs of rearranging loans with 'deferred establishment fees' and early payout penalties can waste thousands of dollars. We liaise with mortgage brokers and financiers to help you obtain the right loan, correctly structured for maximum tax effect

What is Negative Gearing

Negative gearing occurs when you borrow to invest in an income producing asset and the cost of borrowing exceeds the returns (income) from that asset.

Negative gearing for an investment property, for instance, occurs when the annual interest payable on the loan used to acquire the property plus other expenses incurred in maintaining the property, exceeds the annual rental income received from your tenants.

The real benefits of negative gearing are only realised when you combine the correct Tax & Financial Advice with a suitable property in the right location funded by the most appropriate loan product.

As such you should always seek expert advice and make sure the purchase is within your budget and will deliver long term financial benefits supported by Tax Concessions.

Put simply, a Negative Gearing example is when:

• You borrow to acquire an investment
• The interest and other costs you incur are more than the rental income you receive from the investment (in other words you make a cash loss), and
• This cash loss is offset against income from other sources, thus reducing your taxable income, and hence the amount of tax you have to pay (compared to the tax you'd pay without the investment).
• In other words, with a negatively-geared investment you make cash loss, but the effects of this cash loss are buffered or absorbed by the tax system. Because of the tax effects your loss is reduced.

Simply put: the tax man and the rental income pays for your investment property!!

Negative Gearing - The Risks

If you were to believe some people it would all seem very simple – buy the right property in the right location and then have the tenant and the Tax Office partially fund your tax loss while you sit back and profit from the appreciating property. The truth is, while gearing can amplify your gain it can also magnify your losses.

If you negatively gear property, you need to understand some important points:

• Investing in property requires planning and the tax benefits should not be the only reason for the property purchase.
• Negative Gearing isn't suitable for all investors because it implies a negative cash flow that you will need to fund from other income sources. The income tax and capital gains tax implications will depend on factors such as the ownership structure, marginal tax rate and holding period.
• The family home is a purchase from the heart while an investment property needs to be a purchase from the head. Planning and research is required and the old saying that the three most important things when buying a property are ‘location, location, location' rings true when buying an investment property.
• Properties generally only create profits through capital gains that accumulate over a medium to long term period. They are illiquid assets which can't be sold overnight which could pose problems should your circumstances change.

Positive Gearing

Positive Gearing occurs when you borrow to invest in an income producing asset and the returns (income) from that asset exceed the cost of borrowing.