Homing in on tax time
YES, it is that time of the year when we all need to get our tax in order. For those of us who are property owners, it is really an ideal opportunity to also review our real estate finances. If you own your family home, this is the ideal time of year to review your home’s value. If you have a home loan you should undertake an equity update. This could allow you an opportunity to consider if maybe you could be using that money in the form of alternative investments – not just property, of course. Maybe that increased equity has allowed you to have a larger stake in the property so you could seek a new loan with a lower interest rate. Perhaps you could clear high-interest charging debts, or undertake essential repairs or upgrades to add value. Depending on the amount it could even be enough to be considering purchasing another property for investment. Of course, you need some genuine, independent, professional advice on these aspects; not just a quick “free” seminar with an in-house financial adviser who miraculously has an off-theplan house-and-land package just to suit your needs. For some, the best investment could be expanding or upgrading your existing property where there is no stamp duty and no tax on profit made. So many options, but none can be given true consideration without an endof-year financial health check. For those with investment properties, this should always be the time of the year to review the financial status of the investment.
Always ensure you know a true up-to-date value, then consider the rental income to be generated against your holding, maintenance and management costs.
Then you can ascertain if this will be a year of income or cost, and budget for the year.
This review will also show your profit and loss for the last tax year.
Will any capital growth, or the prospect of that, justify you retaining the property for another year?
Sometimes it really can be better to cut your losses and move on.
On the flip side, if substantial capital growth has occurred and big profits could be achieved by selling, perhaps you should give that serious consideration.
You have to collate the data for the previous year anyway.
So combining that with a valuation and an assessment of the year ahead, both for your finances and the market, will help you make the right decisions and avoid the unexpected.
For property investment, it is all about when you purchase and when you sell, no matter what the property type or its location; plan ahead and watch that market.
For those with one family home, don’t ignore all that potential “cash” sitting there not working for you.
Any investment has an element of risk, so play around only with money you can afford to, act carefully and take stock.