How Australians Can Pay ZERO Taxes Legally? Australian Real Estate | Property Investing Australia

Summary

This video features Nick Hill discussing strategies for making tax-free income from property investment in Australia. He covers the six-year main residence exemption, the potential tax benefits of shifting your home to an investment property, and the importance of structuring your portfolio correctly. Hill also addresses depreciation, deductions, and the tax implications of renting out a property before moving in. He emphasizes the value of consulting with an accountant before purchasing an investment property to maximize tax benefits and avoid future complications.

Takeaways

• 🏠 The 'main residence exemption' is a significant tax incentive in Australia, allowing homeowners to sell their property tax-free on capital gains if it was their primary residence.
• 🔄 There's a 'six-year main residence exemption' rule which allows homeowners to shift their main residence to an investment property and sell it within six years without paying tax on the capital gain.
• ⚠️ If another property is declared as the main residence during the six-year period, the tax exemption can be lost, emphasizing the importance of careful planning.
• 🌊 An example scenario is provided where shifting a home in Brisbane to an investment property while living in Sunshine Coast can be a tax-effective strategy if done correctly.
• 💰 The script suggests that there's a potential for making tax-free income through property investment, which is a significant loophole in the Australian tax system.
• 📈 For those not fitting the 'six-year exemption' scenario, getting a property valuation when shifting main residences can help lock in increased value, reducing future capital gains tax.
• 🏡 The discussion highlights the importance of proving intent to live in a property to claim tax benefits, especially when circumstances force an early move.
• 🔩 Depreciation is a key strategy for property investors to reduce taxable income, with different rules for depreciating furniture and the property's structure itself.
• 💼 Consulting an accountant before purchasing an investment property is crucial for structuring the investment correctly to maximize tax benefits and minimize liabilities.
• ⏳ The script warns against common pitfalls like incorrectly claiming travel expenses to rental properties, which are no longer deductible, and the importance of being aware of current tax laws.

Q & A

What is one of the biggest loopholes for making tax-free income in Australia?

One of the biggest loopholes for making tax-free income in Australia is utilizing the main residence exemption rule, which allows individuals to sell their property without paying tax on the gain if they have lived in it as their main residence.

What is the six-year main residence exemption rule?

The six-year main residence exemption rule allows individuals who shift their main residence to an investment property to sell it within a six-year period after the transition and still pay no tax on the sale, provided they do not declare another main residence during this period.

Why is it important to move into a property immediately after purchase if intending to claim it as a main residence for tax purposes?

Moving into a property immediately after purchase is important because if the property is rented out before the owner moves in, it can disqualify the property from being considered a main residence for tax exemption purposes, even if the rental period is short.

How can a valuation of a property help in minimizing capital gains tax when shifting from a main residence to an investment property?

A valuation of a property at the time of shifting from a main residence to an investment property can help lock in the increased value at that point, which increases the cost base and minimizes the capital gains tax liability when the property is eventually sold.

What are the two types of depreciation that can be claimed on an investment property?

The two types of depreciation that can be claimed on an investment property are standard depreciation, which applies to items like furniture and appliances, and capital works deduction, which applies to the depreciation of the physical property itself, such as the house structure.

Why is a quantity surveyor's report necessary for claiming depreciation on an investment property?

A quantity surveyor's report is necessary for claiming depreciation on an investment property because it provides a detailed assessment of the assets in the property and their effective lives, which the Australian Tax Office (ATO) requires to determine what can be claimed as a deduction.

What are some common expenses that can be claimed as deductions on a rental property?

Common expenses that can be claimed as deductions on a rental property include interest on the home loan, council rates, body corporate fees, insurance, bank fees, water rates, and utilities. Additionally, repairs can be deductible, but care must be taken to distinguish between repairs and renovations for tax purposes.

Why is it important to consider the structure of ownership when purchasing an investment property?

The structure of ownership is important because it can significantly impact tax liabilities. For example, placing a positively geared property in the name of a spouse with a lower tax rate can reduce tax payable, while placing a negatively geared property in the name of a higher-income spouse can maximize tax deductions.

How can the timing of moving out of a main residence affect its tax-free status when sold?

The timing of moving out of a main residence can affect its tax-free status because if the property is rented out or vacant before the owner moves back in, it may no longer qualify for the main residence exemption, potentially leading to tax liabilities on the capital gain when the property is sold.

What are the implications of buying a property off the plan and then moving out shortly after settlement for tax purposes?

Buying a property off the plan and moving out shortly after settlement can result in a large capital gain being tax-free if the property was used as a main residence for at least six months. However, if the property was rented out before the owner moved in, that period may be taxable, and the tax implications should be carefully considered.

Outlines

00:00

🏠 Tax Implications of Shifting from Main Residence to Investment Property

The first paragraph discusses the tax benefits and considerations when transitioning a property from a main residence to an investment property in Australia. It highlights the 'six-year main residence exemption' rule, which allows individuals to sell their former main residence within six years of transitioning it to an investment property without paying tax on the capital gain. The paragraph also warns of the risks involved, such as losing the exemption by declaring another property as the main residence during this period. It provides an example scenario where an individual moves from Brisbane to the Sunshine Coast, rents out their Brisbane property, and sells it after five years without incurring tax liabilities, illustrating the potential wealth-building opportunities.

05:01

💼 Capital Gains Tax Exemption and Valuation Strategies

Paragraph two delves into the nuances of the capital gains tax exemption, particularly focusing on the importance of proving intent to live in a property to claim tax-free profits. It suggests that while a general rule of thumb is to live in a property for six to twelve months, the key factor is the genuine intention to reside there. The paragraph also advises on the strategy of obtaining a property valuation at the time of moving out to lock in the increased value for tax purposes, which can minimize future capital gains tax liabilities. It emphasizes the responsibility of the taxpayer to provide proof to the Australian Tax Office (ATO) and the potential risks of frequent property transitions.

10:02

🛠 Depreciation and Deductions for Investment Properties

The third paragraph explains the concept of depreciation for investment properties, distinguishing between standard depreciation for movable assets like furniture and capital works deduction for the property's structure. It outlines how these deductions can be claimed and their impact on taxable income. The paragraph also discusses the tax benefits of obtaining a quantity surveyor's report, which is required for claiming depreciation on a property but is itself fully deductible. It touches on other deductible expenses such as interest on loans, council rates, insurance, and repairs, while cautioning against mistaking repairs for renovations, which are subject to different tax treatment.

15:03

💡 Structuring Investment Properties for Optimal Tax Benefits

Paragraph four addresses the importance of structuring investment properties correctly to maximize tax benefits. It discusses the impact of property ownership on tax rates, suggesting strategies such as placing positively geared properties in the name of the spouse with no taxable income to avoid tax. Conversely, it advises against placing negatively geared properties in the name of the non-earning spouse, as this would reduce the tax benefit of deductions. The paragraph also mentions the implications of land tax, the potential use of trusts, and the long-term considerations for property investment. It underscores the significance of consulting with an accountant before purchasing an investment property to avoid costly mistakes and future tax liabilities.

20:03

📍 Walker Hill: Specializing in Property Market Advisory and Structuring

The final paragraph introduces Walker Hill, a firm that offers services to small businesses and high net worth individuals, particularly in the property market. It outlines the firm's focus on compliance, tax, and advisory services, including structuring property portfolios and providing strategic advice on property investments. The paragraph concludes with contact information for those interested in learning more about Walker Hill's services.

Keywords

💡Tax-free income

Tax-free income refers to earnings that are not subject to taxation by the government. In the context of the video, it is discussed as a potential benefit of property investment in Australia. The script mentions that many people utilize this strategy to generate income without paying taxes, which is a significant loophole in the tax system. An example given is turning one's home into an investment property and leveraging the main residence exemption to sell it tax-free within a six-year period.

💡Main residence exemption

The main residence exemption is a tax rule that allows individuals to sell their primary residence without paying capital gains tax on the profit made. This exemption is a key point in the video, as it is one of the ways individuals can make tax-free income from property investment. The script explains that if a person sells their home that they have lived in, they do not have to pay tax on the capital gain, which is a significant tax incentive.

💡Investment property

An investment property is real estate that is purchased with the intention of generating income, either through rental payments or capital appreciation. The video discusses various strategies related to investment properties, such as turning one's home into an investment property and the tax implications of doing so. The script also touches on the idea of considering an investment property as a means to create tax-free income.

💡Capital gains tax (CGT)

Capital gains tax is a tax on the profit made from the sale of an asset, such as property. In the video, CGT is a central theme, especially in discussions about the tax implications of selling investment properties. The script explains that while the main residence is exempt from CGT, rental properties are subject to it, with taxes applied at the individual's personal tax rate.

💡Six-year main residence exemption

The six-year main residence exemption is a rule that allows individuals to claim their property as their main residence for tax purposes for up to six years, even if they have moved out. This exemption is crucial for those transitioning their main residence to an investment property, as it allows them to sell within six years without paying tax on the capital gain. The video uses this rule as an example of a strategy to make tax-free income.

💡Depreciation

Depreciation, in the context of the video, refers to the tax deduction available for the wear and tear on assets within a property, such as furniture and fixtures, as well as the building itself. Depreciation is a significant aspect of property investment as it helps to reduce an investor's taxable income, thereby increasing cash flow. The video explains the difference between standard depreciation and capital works deduction.

💡Quantity surveyor's report

A quantity surveyor's report is a document that outlines the depreciation claims an investor can make on a property's assets and structure. It is required by the Australian Tax Office (ATO) for claiming depreciation on investment properties. The video emphasizes the importance of this report for investors to correctly claim their deductions and avoid potential tax issues.

💡Negative gearing

Negative gearing occurs when the costs of owning an investment property, such as interest payments, maintenance, and depreciation, exceed the income it generates, resulting in a tax-deductible loss. The video discusses how depreciation and other expenses can contribute to negative gearing, which can be strategically used to reduce an investor's taxable income.

💡Capital works deduction

The capital works deduction is a tax deduction that allows investors to claim depreciation on the structural elements of a building, such as the house itself, over a set period. The video explains that this deduction is applied at a flat rate of 2.5% over 40 years, which is less aggressive than standard depreciation but still provides a consistent tax benefit for property investors.

💡Structuring

Structuring, in the context of the video, refers to the strategic arrangement of assets and investments, such as property, within different legal entities like individuals, trusts, or companies, to optimize tax outcomes. The video discusses the importance of structuring for property investors, as it can significantly impact tax liabilities and cash flow, especially when considering factors like negative gearing and land tax.

Highlights

The main residence exemption is a significant tax incentive in Australia, allowing homeowners to sell their property tax-free.

The six-year main residence exemption allows for tax-free sale of a property within six years of transitioning it to an investment property.

Care must be taken not to declare another main residence during the six-year exemption period to avoid losing the tax benefit.

If shifting from a main residence to an investment property, getting a property valuation can lock in increased value and reduce capital gains tax.

The tax-free income loophole is a significant advantage for property investors in Australia.

A general rule of thumb is to live in a property for six to 12 months to claim tax-free profits when selling.

Intention and immediate move-in are crucial for claiming a property as a main residence for tax purposes.

The ATO is less likely to investigate frequent property transactions if they appear to be one-off events rather than a pattern.

Depreciation on furniture and capital works deductions are two key tax deductions available to property investors.

A quantity surveyor's report is required by the ATO to claim depreciation and capital works deductions.

Interest on home loans is a significant deductible expense for property investors.

Repairs and maintenance costs are deductible expenses for property investors, but must be distinguished from renovations.

Travel expenses to rental properties are no longer deductible due to recent ATO rule changes.

Structuring the purchase of an investment property correctly can significantly impact tax outcomes.

Purchasing an investment property in the name of a spouse with a lower tax rate can reduce tax liabilities.

Land tax implications should be considered when structuring property investments, as trusts can offer tax benefits.

The long-term perspective and potential changes in circumstances should be considered when structuring property investments.

Transcripts

is one of the

biggest sort of loopholes it's pretty

much

you tell me but it must be the only way

in australia to make

tax-free income you'd be surprised a lot

a lot of people do it um and i've very

rarely seen the ato kind of come down on

it

tax-free money in australia at the

moment in today's video we have account

nick hill taking us through the one way

you can make income in australia without

having to pay tax he also takes us

through if you think about buying

investment property the things you need

to be aware of if you think about

turning your current home into an

investment property what to do and how

to correctly structure your portfolio if

you're looking at making wealth from

property investment it's an

action-packed video so i hope you get

lots of value from it let's jump right

in moment like a lot of people have

bought properties over the last two or

three years have sort of built up a lot

of equity and and the question i'm

getting asked a lot is like if i'm

thinking about turning my home into an

investment property and then buying

anything to live in potentially

what should i do like what's some

questions you should think about and

they're shifting like a main residence

to an investment property yeah

so it's a pretty pretty big topic that

one uh there's a lot of benefits that

can come out of it but there's also a

lot of risk areas as well

um

ultimately

uh with with uh with your main residents

there's uh there's this um amazing tax

incentive called the main residence

exemption where effectively if you

choose to sell your property um that you

lived in um

you ultimately pay no tax on the gain

which is which is amazing

so uh it's a little bit different for

rental properties where ultimately any

capital gain you earn on the rental

property is taxed again at the rate

that your personal

position falls into

however if you're shifting a main

residence to an investment property

one of the big ones you need to consider

is obviously this main residence

exemption

there's this

great rule called the six year main

residence exemption

where

ultimately

if you shift your main residence to an

investment property you could still

claim

um ultimately you could sell this

property

within six year period of doing this

transition and still pay no tax on sale

which is amazing like that's that's

awesome like a six year growth

can't beat that

so that's a great part the

double-edged sword there is you've got

to be really careful if you go and do

that

but then decide to declare another main

residence during that period and pretty

much wipes that out so you've got to be

really careful for example perfect

perfect scenario you go

you've got a house in brisbane but you

want a sea change you want to go live on

the sunny coast and

rent out your your home here you shift

it to an investor property you take out

a rental at the sunshine coast so you

don't own it it's not your main

residence and you could effectively live

live there for six years paying rent

building the equity in your brisbane

property and then say five years in you

go yeah time to sell

prop the market's hot make a big gain a

zero tax brilliant then you go out take

that money say you want to then shift

into our main residence in the sunny

coast damn that's a perfect thing to

consider when you're shifting from uh

main residence to investment property

for sure

yeah i think let's come back to that but

um more on the the capital gains

exemption for a home because i think

this is one of the biggest

it's a loophole it's there people know

about it but in the case where um you

know in that example where say you're

moving from brisbane going to the

sunshine coast um potentially so if you

bought a home on the sunshine coast is

there anything you should do like

getting evaluation on your previous home

the time you leave like what's some

stuff

that you should yeah essentially think

about doing so at that point

if you do do kind of uh a jump between

main residents

that does obviously that that puts you

into that risk area

but what you can do is at that point you

can if you shift from one main res to

another or declare a new main residence

you can actually organize a valuation at

that point in time on the original

property

uh to then lock in that

increased value like you do this on the

basis that the property's gone up in

value and so you can lock that in which

in

in fact will increase your cost base

which will then in the future if you do

go to sell it

uh minimize your your capital gains tax

so yeah that's a perfect way to do it if

you kind of don't fall into that perfect

scenario of being able to claim the full

six years uh you can ultimately look to

trigger evaluation once you do shift one

from one main residence to another so

yeah it's a it's a huge win as well yeah

that's a huge one i see it a lot you

know where you might have bought a

property originally for three hundred

thousand you move out five years later

it's worth five hundred thousand um you

get a valuation when it's worth 500 so

when you go and sell it it's not you

know the capital gains aren't calculated

on the original 300 purchase prices on

the 500 it's kind of can help you save

tax on that um absolutely i guess you

can get a you can get stuff it's harder

to get back dated i suppose it's a point

in time so it's definitely something you

probably want to think about

when you're doing that yeah absolutely

uh you know when it comes to the ato the

owners of proof is always on the

taxpayer unfortunately

so getting valuations dated back three

four five years

traditionally you know

it loses a bit of credibility but if you

get the valuation

yeah at that point in time

when you're looking to do the transition

it definitely stacks up a lot more

effectively so yeah 100

yep and so that back to the capital

gains tax exemption i think this is one

of the

biggest sort of loopholes it's pretty

much

you tell me but it must be the only way

in australia to make

tax-free income um

so like i guess practically

how does that work is there a limit

do you have to live in the home for a

certain amount of time to claim to be

able to sort of profit like what if you

bought a home off the plan

it settles tomorrow and i move out the

next day

for a hundred thousand dollars profit do

i get to keep that hundred grand like

what are some of the rules around that

that you know tax-free income

yeah it's uh

it's great there's there's a rule of

thumb of six to 12 months um

like the longer the longer you're in

there the more it's going to stack up

well

but that's not it's not the be-all and

end-all it it really comes down to

intention as well um if you can

obviously live in there for a minimum of

six months that kind of works really

effectively

uh but sometimes you find that

you've chosen to uh

buy the family home and then there's

some personal circumstances that are

kind of

blown up in your face and you've got to

make a transition out you do

the one thing that you do need to do

though is you need to make sure you move

in straight away

right that's that's actually one that

catches a lot of people out

i've seen i've come across scenarios

where individuals have purchased

their main residence but it was rented

and so

what's happened is uh following the data

settlement it was rented for three

months

and a lot of people actually believed

that um

as long as you can move in at the

earliest like the convenient time that

that period doesn't count but it does if

you

have that someone renting

from date of you settling that actually

throws the main residence out which is a

huge

huge punishment to the person moving in

so the one thing you want to do is move

in straight away

the longer you're in there the more that

works in your favor

by general rule of thumb six to 12

months gets you the win

um but yeah if you move in for three

months and then personal circumstances

have you having to jump ship

that can work in your favor you just

need to prove intent

though

and i guess like if if you're doing this

once you buy a house you move out in 12

months and you move to another one it's

like

it's generally okay but for

people that do this as a profession um

yeah surely the ato be on that right

like if i bought a house every

12 months and one day

sold it for a massive profit

and then did it rinse and repeat every

year and every year like although i'm

gonna be tax free as like living in you

know

you'd think um

you'd think the ato would be more on it

but it's a common practice i especially

see it in construction the construction

game people that do this for a living

ultimately if um yeah you

have your main residence you move in um

they traditionally do a little bit of it

up

be able to sell it for a profit um

it me it meets the rules and uh at the

end of the day uh yeah it's it's a tough

argument for the ato

the more you do it the more argument you

give to the ato to obviously investigate

and question what you're doing

but you'd be surprised a lot a lot of

people do it

and i'm very rarely seen the ato kind of

come down on it wow so arguably it's the

only way to make tax-free money in

australia at the moment clearpoint like

i do see a lot at the moment where um

first home buyers home buyers are buying

a home to live in but it's rented for

three or six months um then they're

going to move into it so

are there any risks of buying a property

in that circumstance like say if you if

it was rented for three months you move

in there you still meet the bank's own

occupied rules the stamgy exemptions et

cetera et cetera are there any risks for

when you go and sell it in like five

years that it was technically an

investment property do you have to do

anything differently because you're a

landlord for three months what's some

stuff look at

technically uh you've got a three-month

period which is effectively taxed so

i sell it

you sell it at the five year mark um

three months like what's that that's or

something like five percent of the whole

ownership period technically you should

be paying tax on the five percent

wow

yeah it's a bit of a bit of a sneaky one

um

but

you know that's

that's a five-year period a lot happens

in five years uh

it's tough to track

to be honest uh but

it is technically a risk area you need

to be careful of

so what you ultimately want to do is

get the get the renters out before you

move in

okay no that's that's interesting yeah

or extend settlement i've had some

clients do that because it does cause

issues with like the first home loan

deposit scheme you have to move in

within six months so if there's a lease

in place like it causes dramas

um

so that's that's probably the first way

to save you know to pay no tax and the

second way to pay tax is is depreciation

and sort of running expenses on there i

know you're not a depreciation expert

per se but it's something you deal with

a lot do you want to explain yeah

definitely how that works because

obviously there were some rule changes a

couple of years ago where

this this was changed pretty

dramatically but how does it kind of

work today on an existing property on a

property yeah yeah so uh there's two

different types of uh depreciation i

keep it fairly simple you know you've

got your your standard depreciation

which is um i know fridge freezers uh

lounges all of the the kind of things

you could take away with you uh the

furniture effectively um and then you've

got your capital works deduction which

is

um depreciation of the physical

properties so the house itself

um the you know the bedrooms the the

infrastructure effectively so there's

these two different deductions that are

available to you

uh

they work they work quite differently uh

the depreciation of furniture uh you can

write that off a lot more aggressively

so you're looking at

uh effective life which is the life of

the furniture let's just use a fridge

for example could be four years pay a

thousand dollars for a fridge you can

claim a 250 deduction each year for four

years

right um so that's pretty

straightforward one the capital works on

the other hand uh being on the house

itself

uh is at a flat 2.5

over 40 years so it's not a massive

deduction

uh but it's consistent for the life that

you're kind of renting out the property

uh both these the deductions uh what i

call notional so you're not physically

paying for them every year but you're

getting the deduction because you've

pretty much paid for them

you know either on purchase of the

property or you've gone out and bought

the furniture

um

both of these deductions work against

bringing your taxable income down and

that's where this this one is probably

the biggest one other than interest that

helps you drive a positively geared

property into a negatively geared

property it helps you cash flow and like

i guess it helps

yeah withholding at the end of the year

because you might get a refund um yeah i

guess down that similar vein like what

are some other expenses that you can

claim on a property

that you're renting

one of the big ones that people don't

know about

which is a bit of a win is obviously to

be able to claim depreciation and um

capital works you need to

the ato requires you to get a quantity

surveyors report now

and that's pretty much a report that

tells you what you're allowed to claim

based on the the assets in the house the

furniture in the house and then the

value of the house

that quantity surveyors report is going

to cost you money but that's fully

deductible

so

basically you can claim a deduction on

getting a deduction which is pretty cool

um so that's typically a win and when i

tell most homeowners about that they

pretty much go and get the report

straight away because why not

beyond that interest is your second

biggest deduction nine times out of ten

uh so the interest on the home loan that

you paid throughout the year

great deduction and sometimes you can

get a win on that by doing prepayments

of interest

i don't see it very often anymore but um

it is a a nice little windfall but

you've got to consider the year-on-year

effect of that interest because if you

do a prepayment what you're effectively

doing is you're bringing next year's

deduction 40-year

so you just got to be careful with that

you want to do it when your tax rate is

at its at its peak or

maybe you just want to kind of double

down on you on your refund so you do it

in that that year so those are the two

biggest deductions then from there you

know you've got your council rates

you've got your body corps for your town

houses and

apartments

uh you've got insurances so you want to

take insurance out over the property

which is fully deductible

you might have to pay some bank fees

throughout the year again deductible

water rates utilities

another big one

one that can be potentially big is

repairs

so you could one year have a repair of

100 bucks fully deductible you might

have to go out and do some pretty

significant repairs one year

they can really add up and you can

pretty much get a really good deduction

in that instance

i'd probably just disclaim you've got to

be really careful with repairs they can

transition into what's called

renovations or improvements once it

falls into that realm it goes under this

quantity surveyors report concept that

i've spoken about so

if that's the case a repair is 100

deductible but if it falls under a

renovation

it falls under that depreciation rule

and ultimately is depreciated over a

period of time so you should be careful

with that but

those are those are the big

big deductions that are available

i don't like to talk about what we miss

out on but uh unfortunate rules changing

a few years ago a lot of people used to

travel to their rentals

and claim uh flights and

and uh you know car allowances and stuff

like that the ato pretty much ripped

that out

so if anyone's telling you you can claim

travel to rental properties they're

living in the past unfortunately

um and it was a big loss for a lot of

people you know they were actually using

the gold coast tourism market

yeah yeah the interstate travel uh to go

check out the rental and do repairs um

it's a big loss but um it is what it is

yeah john i used to fly up every year to

sydney or from sydney the gold coast and

that was his thing but yeah like it

changed a couple of years back um find

their first investment property

a lot of times you kind of just go in

there without thinking don't talk to an

accountant don't look at stuff like

what's

why would you talk to your accountant

before you buy an investment property

what's some stuff that you've seen that

can go wrong

and i guess stuff like tips that you

give to people to try and maximize the

tax deductions overall

big big one that i deal with a lot is

the structure the structuring side of

things um purchasing in the right

right entity

uh

even if we don't overcomplicate it and

do like a review of companies and trusts

even looking at the individuals so

uh you know you might have a mum and dad

team where dad

ultimately has a

effective tax rate of

47 which is huge um and then the wife uh

makes no money stay at home with the

kids for argument's sake uh has no

taxable income

now you know talking really in isolation

and obviously this is general so each

circumstance is different but if you

were to say have a positively geared

property

and you put that in the husband's name

you're paying 47 tax so for every dollar

you earn positively gear wise you're

pretty much

paying the tax man 47 cents all right so

in that case it's a no-brainer you'd be

putting it in in the wife's name where

she's not making any money on any income

you pretty much probably paying no tax

on the positive with your property which

is awesome

flip side on that if you're looking at

negative gearing same scenario and then

you put it in the wise name or even if

you split it 50 50

right so we want to hedge our beds

that's all well and good but you've now

lost 50 of the deduction going into the

wife's name because she has no taxable

income

right and so you're kind of losing out

on a tax saving in the husband's name

or the dad's name which so you'll be

really careful with that that's a lot of

advice that we give is finding the right

place because each each circumstance is

different

sometimes

people want to look at investment trusts

as well

got to be careful with that because if

it's a negatively geared property the

losses get captured in the trust you

can't use them so again like why would

you put it in the trust in that case

um you've also got to be careful land

tax land tax in the individual's name is

quite high throw it in a trust it pretty

much halves it goes down to like 350k

which if you've got a land rich property

and a family trust or or a company

you're paying land tax every year that

you wouldn't have otherwise paid if it

was in your personal name so you'll be

really careful with with little things

like that um

big things like that to be honest land

tax is a bit of a nightmare

yeah yeah i guess there's a lot to

consider there because even the common

thing is you know buying first

investment property

current properties in both our names

we're going to buy it together you go

and sign the contract put in both names

and the simple thing of just putting

two names on the contract to sale like

you said can have pretty huge impacts on

tax

even in the future um you know any

ongoing cash flow depends on i guess the

aims of that property so it's pretty big

yeah

yeah and you've got to i guess

also consider the long-term perspective

as well you know when i was talking

about the husband and wife team um you

know you've got your short-term

strategies but you've also got to

consider long-term as well

so yeah gotta make sure you consider

quite a number of things not as simple

as just buying a property

um in so-and-so's name thinking you can

fix it later because the transfer out

actually costs a lot of money

the only way to avoid transfer duties or

costs of transferring is uh separation

so family court which

don't necessarily want to go down that

path not ideal

so it's the most expensive way to get

out of a property it's pretty much

pretty much

um mate that's awesome i think we might

wrap it up there so um if people want

more information on you and your

business walking hill do you want to um

tell us a bit more about what you guys

do and where we can find you

yeah no worries so walker hill

we deal with small businesses and

high net wealth individuals looking to

get into the property market as well

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we do our backbone services compliance

and tax but we do a fair bit of advisory

and uh structuring so you know we've got

a couple of clients that uh you know

we've kind of helped with their property

portfolios getting into the company's

trusts and even just looking at

splitting it between mom and dad teams

so we do a variety of that kind of work

and help people

ultimately get the right structure based

over uh petrie terrace just around

caching street in brisbane

and

you know if you're ever interested in

finding out a little bit more about how

we can help you nick walker hill.com

best bet or three three six seven three

one five five

cool thanks your time mate appreciate it

no worries thank you