Hom­ing in on tax time

The Weekend Post - Real Estate - - Front Page -

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.

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