Saturday, July 14, 2012

Self Managed Super Funds - What Are the Benefits of SMSF's?

Investment Frontiers SymposiaInvestment Frontiers Symposia (Photo credit: apec2011ceosummit)What most of us understand as Super Funds are set up by a central trustee for the benefits of all the members. The difference for a Self Managed Superannuation Fund (SMSF) is that the Trustee could be you. The benefits of this approach are as follows:
• You can still choose how contributions are made as
• You need only a minimum of $150,000 in order to make the investment worthwhile
• You can nominate specific beneficiaries or leave it to the fund trustee to administer benefits more efficiently to reduce taxes
• All members can make decisions about the fund
• Can have insurance policies for members
• Access to information to assist in running the fund from the ATO, including provision of forms
• You choose how your funds will be invested
Pooling of assets for increased diversity of investment
• Can make payments to individuals at the same time as collecting contributions from others
• Access to core specialists including an Accountant, Financial Planner, SMSF Specialist, Legal Practitioner
You can choose whether your contributions are employer contributions, personal contributions, salary sacrifice contributions, super co-contributions or eligible spouse contributions.
All members can make decisions about how their funds are managed by choosing their investment assets, as long as they comply to the trust deed which outlines the investment strategies, then the investment may take place. Each member will have their own account of contributions, investments and fees.
If allowed by the trust deed, insurance policies such as life, Total and Permanent Disablement and Income Protection may be facilitated through the superannuation fund. This will be reflected directly in the member's account.
The ATO has up-to-date advice about Self Managed Superannuation Funds to keep the trustee informed about changes in legislation. The trustee will rely on this advice in making investment decisions, book-keeping and reporting obligations.
In addition, you can seek advice and support from Accountants, Financial Planners, and/or Legal Practitioners that have specific SMSF training and qualifications.The importance of this can't be emphasised enough. It is possible to sign up online for free. This isn't something that most of us should consider. Sooner or later you will have to pay fees. Just make sure they make sense and you are not being charged excessively. It is far more important that you find the right specialist who invests in investment property and knows how to set up the structure that suits you best, aligned to your overall investment plan
The good news is you will never be alone in managing your own Self-Managed Superannuation Fund as there are many specialists available to support you.
Discover How You Too Can Retire Early with a Well Designed Investment Property Plan.

Friday, July 13, 2012

Property Taxes - What Taxes Do You Pay If You Have an Investment Property?

MIAMI, FL - MAY 10:  Miami-Dade mayoral candid...MIAMI, FL - MAY 10: Miami-Dade mayoral candidate and current Mayor of Hialeah, Julio Robaina, speaks during a forum with other mayoral candidates vying for the open seat during the May 24th general election on May 10, 2011 in Miami, Florida. The former mayor Carlos Alvarez was voted out of office by voters unhappy with a property tax rate increase and the fact that he gave salary raises to county employees during a deep recession. The vote to oust the former mayor made Miami-Dade the most populous area ever to recall a local official. 11 candidates are running for the open seat. (Image credit: Getty Images via @daylife)In Australia there are no investment property taxes as such, however your property sale may be subject to Capital Gains Tax (CGT). The purchase and sale of your property in Australia will be subject to Goods and Services Tax (GST) and your rental income will be subject to Income Tax.
GST is paid on almost everything in Australia at a rate of 10% on the purchase price of your property. GST must be paid on all property that is connected with Australia. With regard to residential property in Australia that is purchased and rented out, the investor can make a claim on input tax credits. That is any GST paid on goods and services purchased to maintain the property can be claimed as input tax credits. These input tax credits can be claimed on a Business Activity Statements (BAS) as a refund and reduce the amount of GST paid overall.
If your Investment Property is held as in a Trust or purchased by a Company, the Trust or Company must register for GST if it's turnover is greater than $75,000 or $150,000 for a non-profit organisation in a financial year. Once registered for GST the Trust or Company must lodge BAS regularly.
If your Rental Income is paid direct to you and the property is not owned by a Superannuation Fund, Trust or Company, then the Rental Income will be taxed at your Marginal Tax Rate. That is, if you pay tax at a top rate of 45 cents in a dollar, your Rental Income will be taxed at 45 cents in a dollar.
Thus the importance of communicating with your Accountant and Financial Planner about your financial situation so they can work out the best ways to purchase your investment property or properties in order to minimise or postpone the amount of Income Tax that you pay. That is, they will consider using a Self Managed Superannuation Fund, Trust or Company to be set up to purchase your properties.
Capital gains tax is another tax you will be subject to when you sell your property. So it is best to sell your property when your income is at a minimum as Capital Gains Tax is paid at your Marginal Tax Rate which is dependent on your income. If your Investment Property is owned for more than 12 months, you may able to receive a 50% discount on Capital Gains Tax.
Now, you are probably thinking is all this worthwhile? If you want to increase your holdings of property investments and you income, and you like the idea of investing in property, this may be the ideal solution for you. There are property investment specialists, Financial Planners, Accountants and Mortgage Brokers whom can assist you with your financial strategies to obtain the best outcomes for you.
Discover How You Too Can Retire Early with a Well Designed Investment Property Plan.

Thursday, July 12, 2012

Investment Loans: 7 Tips How To Use An Advisor Team To Get The Best Investment Loan

Investments benefiting from the IPL in JordanInvestments benefiting from the IPL in Jordan (Photo credit: Wikipedia)In today's turbulent economic markets, we want the quick fix and we want the results as soon as possible, however investment earnings take time. Time should also be taken in finding the best investment loan to meet your needs.
1. Discuss your investment plan with your financial planner and accountant. Can you afford an investment loan?
a. Honestly discuss your current financial situation - come prepared with loan balances for all loans including car loans, personal loans and all credit cards; bank balances; pay slips; and any existing budgets. If you are unable to afford an investment loan at this point, consider strategies to pay off your current debts by reducing your expenses and possibly increasing your income. Your Financial Planner or Accountant should be able to assist you with putting together a budget.
b. Discuss the risks involved for investing in shares and/or property. Determine which types of investments you and your partner (if you have one) feel meet with your risk profile. A risk profile is an assessment of how you would feel in certain circumstances such as a reduction in the value of your property or shares. A risk profile should be completed independently be each investor. Your Financial Planner should be able to assist with this. If you don't understand what is being said, ask questions.
c. Work out how much money you can contribute per month to your investment from your budget calculations. These payments may be in the form of a margin call (if you borrow money to purchase shares) or property maintenance.
2. Use a trusted investment loan broker to find you the best loan option for you.
a. Use a broker whom will be honest with government authorities, because any "mistakes" made on your loan application will be authorised by yourself and you will have to answer any questions about your investment loan.
b. Be realistic about how much you can afford to borrow and follow your budget, do not deviate from your budget at this point.
3. Discuss different types of investment loans
a. Use a loan broker that has access to different lenders and different types of investment loans to be sure that your investment loan meets with your needs. If you don't understand anything, ask questions.
b. Don't sign anything that you don't understand. If you don't speak English, ensure that you have someone at all the meetings with specialist advisers to translate for you.
c. Seek pre-approval for your loan before you purchase your investments.
4. Having discussed which types of investments you are interested in, research those that meet your needs. You may want to discuss this with your financial planner as they will have some knowledge about the investments that you are attracted to.
a. After you have worked out which investments you would like, confirm your purchases with your Financial Planner and advise him or her of your pre-approval loan number so that the paperwork may be completed.
b. Your financial planner will contact you when the transactions have been completed. You may also have online access to your investment purchases and accounts to see how your investments are tracking.
c. However, be aware that your purchases are for the long term and variations in share prices will happen continuously. Property values are more stable but may still be subject to market fluctuations. All this would have been discussed with you by your Financial Planner when talking about your risk profile.
5. Review your loan every few years to ensure that it is meeting your expectations and that your investment is making capital gains in the long term.
6. ALWAYS, ALWAYS, ALWAYS have a buffer amount in your loan. Ideally 10-20% available equity after you have refinanced for more investing to cover unforeseen expenses, miscalculations, under valuations and market corrections
7. Sit back and relax. Try not to review your investment portfolio too often. Remember, positive investment returns take time. Stay in contact with your professional ad visors and let them know if you have any changes in circumstances that affect your income or ability to earn an income.
Discover How You Too Can Retire Early with a Well Designed Investment Property Plan.