Network Assistance

When you need local assistance in any field, we have a Network of Professional Finance Brokers, Accountants, Lawyers, Tax Agents, Investment Specialists, Valuers, Developers and Builders available to assist and answer your questions.

There are various opportunities available to you and there are a number of independent professionals in every field here in Queensland with local and legal knowledge.

Set below are examples given to us by professionals in their field as overviews of possibilities available for you to explore or utilise.

Finance

There are many choices when it comes to finance, and it is advisable that you look at all of the options available to you. It is of the utmost importance that you choose the financial vehicle best suited to your requirements, budget, and criteria.

We have access to professional financial groups and brokers, who can negotiate with all of the major banks and lending institutions on your behalf. They are constantly shopping the market for the best rates using all the leading lenders. They do the work for you in establishing loans and accounts - saving you money and valuable time.

Accounting

Your own personal accountant is the best person to advise you on the structure of your finances, but a second opinion doesn’t hurt. And if your accountant doesn't specialise in property they may be out of touch with the latest up to date information and procedures available to benefit you.

There are various opportunities available to you and there are a number of independent financial consultants and accountants here in Queensland that we can recommend, and who can also help to show you the tax advantages available that you can achieve to maximise your benefits.

Stamp Duty

Stamp duty is a State Tax on written documents (‘instruments’) and certain transactions, such as: Motor vehicle registration and transfer - Insurance policies - Leases and mortgages - Hire purchase agreements - Transfers of property (such as businesses, real estate or shares).

The rate of stamp duty varies according to the type and value of the transaction involved. Depending on the nature of the transaction, certain concessions and exemptions may also be available. For further information it is best to contact the relevant State or Territory revenue office.

What is Negative Gearing?

Negative gearing is when the interest rate on the borrowed funds used to purchase an asset or make an investment is higher than the expected income yield on the investment. This practice is called negative gearing, and the investor may be able to offset the loss against other taxable income.

Negative gearing is a form of financial leverage where an investor borrows money to invest and the gross income generated by the investment is less than the cost of owning and managing the investment, including depreciation and interest charged on the loan (but excluding capital repayments).

Taxes

The following is a guideline only of varying taxes. For further information or clarification, you should seek independent advice from a professional licensed financial institution.

For all taxation related decisions please also consult your Accountant and visit the ATO website and search under General/Property

Land Tax

Land tax is imposed in all states and the ACT, but not in the Northern Territory. It is a tax levied on landowners, except in the ACT where it is levied on lessees under a Crown lease. Landowners are generally liable for Land Tax when the unimproved value of taxable land exceeds certain thresholds.

In some States there are deductions and rebates available, depending on the use of the land. Principal places of residence are usually exempt from land tax although this is subject to certain qualifying criteria, which vary between States.

Land owned and used by the following organisations are generally exempt from land tax: Non-profit societies - Clubs and associations - Religious institutions - Public benevolent institutions - Charitable institutions. As exemption criteria vary between states, you should seek clarification from your local State or Territory revenue office.

• Land Tax is assessed by the Queensland State Government on the “Unimproved Capital Value” (UCV) of the land only on which the building is constructed.
• Land Tax for the next Land Tax year (June to June) is assessed on the basis of land owned in Queensland as at midnight of the 30th of June each year.
• For Body Corporates, the UCV and Land Tax is apportioned between the individual owners in the building according to their shares or lot entitlements in the building.
• For Non-Residents, Companies and Trusts there is a Land Tax free threshold of $350,000 of unimproved capital value of land for each owner. for example, where a Husband and Wife jointly own a property, they are entitled to own properties in Queensland with a total UCV of $700,000 before Land Tax is payable.
• If the total UCV of properties owned in Queensland by a Foreign Resident is below $350,000, no Land Tax will be payable in future years.

Income Tax Deductions on Income Producing Property

Deductible at the time the expenses are incurred:

• Accountancy fees
• Bank charges
• Commissions
• Electricity
• Insurance
• Land tax
• Management fees
• Motor vehicle expenses
• Rates
• Telephone
• Advertising
• Cleaning
• Repairs & replacements
• Garden and ground maintenance
• Interest • Lease costs (legal fees, etc)
• Mortgage discharge costs
• Pest control

Partly deductible each year:

• Borrowing costs
• Depreciable assets
• Certain building costs

Capital Gains Tax

Capital gains or losses are recognised when you dispose of all, or part of an asset acquired on or after 20th September 1985. These capital gains and losses are aggregated (with certain exceptions) and tax is levied on any resulting "net capital gain". A net capital loss must be carried forward and offset against capital gains in subsequent years (i.e., a capital loss cannot be set off against revenue income).

The rate of the tax that applies to a capital gain depends on the amount of your other taxable income. As a result your exact circumstances need to be considered before the rate of tax that applies to the capital gain can be determined.

Attention: A change of residence status can result in a deemed acquisition or disposal of world-wide assets under Australian capital gains tax legislation. Therefore, the sale of any worldwide asset may give rise to a capital gains tax liability.

Accordingly, capital gains tax implications need to be considered before a change of residency status occurs. You should take positive steps to ensure that any assets you acquire are accurately recorded. This will allow you to calculate any capital gains tax on disposal.

Remember to record the following details:

• The date of acquisition and disposal of the asset
• The amount paid for the asset.
• Any incidental costs of acquisition or disposal of the asset (e.g., legal fees, commission, stamp duty, advertising, etc.)
• Date and amount of any capital improvements to the asset
• Any holding costs, such as interest, council rates, land tax, insurance, etc… (but only if these have not been claimed as a tax deduction).

Capital Gains Tax (CGT) is the tax that you pay on any capital gain you make and includes on your annual income tax return. It is not a separate tax, merely a component of your income tax.

You are taxed on your net capital gain at your marginal tax rate. Your net capital gain is your total capital gains for the year less your total capital losses (including any net capital losses from previous years) less any CGT discount and small business CGT concessions to which you are entitled.

Property Tax Allowances

Property tax allowances are a valuable aspect of any property investment due to their ability to enhance an investor's return and produce a better cash flow. However, a high level of expertise is required to ensure that investors obtain maximum allowable entitlements.

Property tax allowances form part of the Income Tax Assessment Act 1997 (ITAA 1997) and provide an opportunity for owners of income producing property to reduce their assessable income.

There are a number of property tax allowances available to property owners, investors, and developers, including allowances for building structure and depreciation on plant. Property tax allowances are often simply referred to as tax depreciation.

Tax Deductions

All expenses (excluding stamp duty) are tax deductible. This is the same for an Australian Citizen or Overseas purchaser. The prime cost for building construction cost is 2.5% for 40 years or 4% on some unit buildings. Fixtures and fittings etc… are on a diminishing value method.

Please take the time to visit the Australian Tax Office (ATO) website for information.

Please note: We are not qualified to give any advice outside of the property industry and all of the above are simply guidelines which have been given to us by relevant professionals and it is advised that you seek professional independent advice.

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