29 Jun 2023 Podcast: It’s Tax Time! Investment Properties and Business with Accountant Ash Ross

In this episode, Maddie and Evelyn chat with accountant Ash Ross to uncover valuable insights and expert advice on maximising tax benefits, navigating what to claim as a property investor, and optimising your financial strategies.

Whether you’re a business owner, investor, or simply interested in the intricacies of tax planning, this episode will provide you with actionable tips and clear explanations.

We explore a range of key topics related to business tax and investment properties. We dive into strategies for maximising tax benefits, providing practical tips on reducing tax liabilities and identifying deductions. We also delve into the tax implications of investing in real estate properties, covering topics such as rental income, depreciation, and capital gains.

Additionally, we discuss different business structures and their impact on tax liabilities, while highlighting common tax pitfalls to avoid.

Finally, we emphasise the value of professional advice and conclude with Ash’s best tip for first home buyers and property investors alike!

Find out your next step in property finance:

You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at
https://www.everlend.com.au/

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You Have My Interest is brought to you by Everlend, a mortgage and finance broking firm built for the purpose of educating and empowering you to make informed financial decisions tailored to your wealth goals. Find out more and book in your free initial consultation at ​​https://www.everlend.com.au/

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Find out more about You Have My Interest at everlend.com.au/podcast and connect with us at podcast@everlend.com.au

You Have My Interest provides information and educational content relating to mortgages, finance and property. You Have My Interest‘s content is general in nature and does not take into account the individual financial, legal or tax needs or objectives of its audience members.

It is not intended as a substitute for professional advice. Listeners should seek out a licensed professional to discuss their individual financial, legal and tax requirements.

If you need mortgage or finance advice tailored to your own personal situation, contact Everlend today for a free consultation. Everlend are authorised credit representatives of Loan Market Pty Ltd, Australian Credit Licence number 390222.

Podcast produced with Apiro

Please find a Podcast summary below with the interview highlights:

Podcast: You Have My Interest
Hosts: Evelyn and Maddie
Guest: Ash Frost, Head of Broker Business Performance, Loan Market

This episode featured Ash Frost, an experienced accountant and property expert, discussing business structures, property investment strategies, and the intricacies of tax and wealth-building. Ash shared his journey into accounting, his role at Loan Market, and practical advice for business owners and property investors.

Key Topics Discussed

1. Business Structures and Profitability

• Common Business Structures:
  • Sole Trader: Simple but lacks asset protection. Suitable for small-scale or side-hustle operations.
  • Partnerships: Rarely recommended due to shared liability risks.
  • Companies: Provide asset protection and a flat corporate tax rate (25%).
  • Family Trusts: Offer flexibility and capital gains tax concessions but can complicate bringing in new business partners.
• Asset Protection: Ash highlighted the importance of keeping personal and business assets separate, often by placing assets in a spouse’s name or a trust for added protection.

2. Business Metrics

• Key Metrics: Focus on profitability, not just revenue.
• Measuring Success: Ash believes success is reflected in wealth accumulation outside of the business, such as property investments or savings growth.

3. Property Investment Insights

• Structuring Ownership:
  • For individuals, investments are often held in personal names for tax benefits.
  • Trusts can be useful for flexibility but may limit ease of sale or succession planning.
• Key Considerations:
  • Tax Depreciation Schedules: Recommended to maximise deductions, especially for new or recently renovated properties.
  • Capital Gains Tax (CGT): Hold properties for over 12 months to qualify for the 50% CGT discount. Timing sales can minimise tax liabilities, especially by selling in low-income years or shifting sales dates across financial years.
  • Six-Year Rule: Allows a property to retain principal residence CGT exemption for up to six years after being rented out, as long as another property isn’t declared as a principal residence.

4. Financing and Taxation Strategies

• Interest-Only Loans: Recommended for investment properties to maximise deductible interest expenses while focusing on reducing non-deductible home loan debt.
• Offset Accounts vs. Redraw: Offset accounts provide greater flexibility and protect future tax deductibility when converting a home into an investment property.
• Income Tax Variations: Adjusting tax withheld through an income tax variation can help manage cash flow for property investors, particularly in high-interest environments.

5. Airbnb vs. Long-Term Rentals

• Airbnb can yield higher returns but comes with added responsibilities, maintenance, and risks, such as regulation changes.
• Long-term rentals provide stability and less administrative work, making them suitable for hands-off investors.

6. Building Wealth Through Property

• Land Tax: Investing in multiple states can help manage land tax thresholds, though some investors prefer properties closer to home for peace of mind.
• Growth vs. Yield: Investors should prioritise capital growth over rental yield for long-term wealth building.
• When to Sell: Consider selling properties with poor growth potential or high maintenance costs to reinvest in better-performing assets.

7. Ash’s Top Tips for First-Time Property Buyers

• Research Thoroughly: Focus on long-term growth, choosing properties in areas close to transport, schools, and amenities.
• Push Your Limits: Buy the best property you can afford, even if it stretches your budget, as it’s likely to yield better long-term returns.
• Seek Guidance: Surround yourself with experienced professionals, including mortgage brokers, accountants, and real estate agents, to make informed decisions.

Final Thoughts

Ash emphasised the importance of careful planning, education, and surrounding yourself with the right advisors when building wealth through property. Whether running a business or investing in real estate, success lies in strategic decision-making and long-term vision.