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Episode 144 | The American Property Market: Tax Liens, Tax Deeds, Texas and Investing in Opportunity – Chat with Jeff Goins

We’ve spent the week in America, folks — so we thought we’d better bring you back a bit of gold!

Sitting by a pool in Dellas (yep), we scored some local intel on the American Property Market —like what’s making Texas a HOT place for investing — with today’s guest, Jeff Goins.

So who’s Jeff? A full-time investor of “Tax Deeds” in Texas which includes house “flipping”, he has a builder’s license and a sponge of property knowledge. What’s most eye-opening though, is his local insight into how Americans invest in residential property, including their lending rules and regulations, and their penalties for (and opportunities in) unpaid property taxes, which is VASTLY different from the way us Aussies do it!

Oh, and a couple of Texan “translations” before we start:

“Inventory” = Supply and Demand
“Rehab” = Renovate

 

So, what are we discussing?

  • What’s the appeal of investing in the American market; particularly Texas?
  • The US Government involvement in their lending and how it triggered the global financial crisis (GFC)?
  • Aftermaths of the GFC and how they recover their confidence in the real estate market?
  • The differences in Australia’s and America’s lending regulation
  • What are the interest rates like?
  • How to research investment grade locations
  • Understanding the geo-economic difference between both countries and how will it impact investors’ decisions
  • Why do they have such a volatile property market?
  • Why is the average property price in America SO much cheaper?
  • Are there offset accounts and are they able to leverage off equity?
  • What happens if you don’t pay tax on your property?
  • What does “Tax Liens” and Tax Deeds” mean?
  • How can investors benefit from Tax Liens and Tax Deeds?
  • Is there such a thing as residential property advice in America?
  • Where are the auctions held in Texas? (!)

 

ALSO, we’re doing Movember this month! We’ve been supporting this cause for years but this time, we plan to expand the awareness on men’s health and help the support the cause to our community. Our target is $5,000. Now, our show is free but if you think we are doing a good job, please donate here.

Every dollar counts! (Bucket loads of good karma awaits you.)

Here’s the link again: https://moteam.co/the-property-couch

 

 

 

Episode 126 | Q & A-ccounting with Frank Azzopardi—Tax Deduction, Capital Gains Tax, Land Tax and Aussie Expats

Alright folks! It’s Q & “Accounting” time! Yep, on the couch today we’re talking all things tax! Here to help us wade through the grey area is Frank Azzopardi from our friends (and accountants) at YK Partners. If the name sounds familiar, it’s because Frank joined us back at Episode 48!

So, we’ve received a couch-load of questions about tax lately, and quite the few of you have these questions because you’ve “temporarily departed” overseas—you’re Aussie Expats working in another country, but investing in properties back here. And as you know, this can be quite the pickle for tax purposes!

(The rest of you simply want to know what you can and can’t claim. Fair enough.)

Trying not to number-crunch the neurotransmitters in your brain, here are what B1 & B2 + Frank discuss:

  • Is there a tax-free threshold when you live overseas?
  • What is a Double Tax Agreement and what does it mean for you?
  • How does foreign tax credit work?
  • How do you offset tax loses?
  • Tax Talking, What’s the difference between a PPOR and an IP?
  • Can you claim tax on Lenders Mortgage Insurance (LMI)?
  • What really constitutes “Repair” or “Capital Improvement”?
  • Can you negatively gear a property as an expat?
  • What is the “6 Year Rule” of Capital Gains Tax?
  • Can you avoid Capital Gains Tax?
  • What’s the risk of loan in two people’s names (joint ventures)?
  • What’s the tax cut for your kids when they inherit your property?

 

Some of the helpful resources mentioned today are:

 

And… The questions discussed are:

 

From Andrea

“First of all I am loving the podcasts. I listen to them over and over. Secondly, as an Australian expat, living overseas long term but preferring to invest my money back home in Australia, are you able to do a podcast directed at Aussie expats wanting to invest back home but are not sure how to go about it? If you could talk about it or bring someone in? If you could talk about things Aussie expats need to be aware of ie—the different rules that apply regarding capital gains; tax depreciation; tax credits; services expats can employ to assist with the fact we can’t make a trip every week to attend viewings and sign papers. Having bought 4 places in the last few years, I have not completed my PIPA education yet—I am nervous about giving too much advice. Thanks and keep up the good work. I’ll be ready to buy again soon so will likely be in touch for assistance in this.”

 

From Salim:

“Hi Guys. I listen your podcast regularly and leaning a lot!! I have a question and have been searching for the answer for a while; but no luck so far (asked same questions to few accountants but all of them have different opinions)! I bought an investment property last year in Melbourne in July 2016 (that time I was living and working in Sydney) but very soon, I am moving to Melbourne and am living in my investment property as principal residence.
1. I paid around $7500 as LMI. Can I claim this for tax deduction?
2. Can I offset the interest in my Tax?
Any help would be greatly appreciated!! Look forward for your resonance. Thanks.”

 

From Nick:

“Hi guys! Really enjoy the podcast—you have both helped reshape my approach to property investment and I’m currently in the process of developing an investment strategy that suits the specific circumstances of my partner and I, rather than rushing into the often-scary Sydney market.
We’re a couple currently renting in Sydney with a combined income of over $220,000/year, around $80,000 sitting in the bank, no kids at the moment (but probably will within the next 2 years); and we’d like to get our foot in the door of the property market. One challenge we face is a high likelihood of moving overseas for work within the next 5 years. If we buy as owner/occupiers we’ll be looking at 2 bedroom apartments in the medium-priced suburbs of Sydney – right at the limit of our purchasing means. Should we move overseas for work, my understanding is that we won’t be able to negatively gear the property (since our income tax will be overseas). It does appear that some other countries have negative-gearing policies, although it’s not clear whether losses incurred from overseas investments are eligible and the rules differ from country to country. My feeling is that stretching to buy an apartment in Sydney for ourselves now could force us to sell early if we move overseas and the repayments are strongly outweighing the rental income—not a situation we want to be in.
If we instead look at rent-vesting and aim for a cheaper investment property in a growth location somewhere outside of Sydney, with a path to getting it positively geared in the short-term, this seems like a lower risk strategy that still gets us a start on our journey to a property portfolio. I’m hoping the principles you talk about have sunk in a bit and I’d love to hear if you think I’m on the right track.
I think our situation is quite common for a lot of young professionals. What tips can you give from both a tax and property selection point of view to the many Australians working overseas or planning to work overseas, who still want to invest in the Australian property market and start building a passive income for their futures?

 

From James:

“Hi Ben & Bryce. With the strategy of accumulating 3–5 good capital growth properties and potentially selling 1–2 in the long term future upon retirement, would we not be best to (if possible) move into each property for minimum of 12 months to avoid capital gains tax when the properties are sold? Thanks for such a valuable podcast I always listen to each episode a couple of times a week. Regard, James

 

From Simon:

“Boys. Love the book and am now an avid listener to your podcast each week. I have a land tax question for your next Q&A session that no one can seem to give me a clear cut answer.
My wife and I have a PPOR (Newcastle), as well as one current investment property also in Newcastle. Recently we have just purchased an apartment off the plan which is not due to be completed until late 2018 at the earliest.
Currently all three properties are in both our names—50/50 share.
My question is regarding NSW land tax which the 2017 threshold is approximately $549k. (Lets just say $550k for ease of rounding off)
Does this mean that as a couple we have a combined threshold of $1.1 million or despite having two people owning these properties do we still have to come under the $550k to avoid land tax as a couple?
If the latter is the case, what is the best way to minimise our exposure to paying land tax if we wanted to continue to purchase investment properties in NSW? Should our next purchases be in separate names?
Thanks for your help. Simon.”

 

If you like this podcast: “Q & A-ccounting with Frank Azzopardi—Tax Deduction, Capital Gains Tax, Land Tax and Aussie Expats”, don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: New Topics

Episode 115 | What Does The 2017 Federal Budget Mean To The Property Market?

What a week! Apologies for the podcast’s downtown earlier this week and thank you to those of you who wrote in to us. We had a system update and things didn’t quite work out as we wanted them to be. That aside, the 2017 Federal Budget has been released just a couple of days ago. So let’s talk about that.

There were a few proposals relating to the affordability issue and a couple more that aims at the property investors pool. But overall, this was not an overly exciting budget. It was a conservative one. Nonetheless, what impact will if have on property owners and the Australian Property Market in general. Some of the issues that Bryce and Ben discussed in today’s episode are:

  • The proposed changes to depreciation deductions for plant and equipment
  • Capital Gains Tax exemption for foreign and temporary tax residents
  • Investors’ travel expenses claims
  • The implementation of First Home Super Saver Scheme and is it a good idea
  • The expanded audit on overseas investors

If you would like to understand more about the 2017 Federal Budget, please check out this link.

We’ve also answered a few questions from:

  • Joel on the First Home Super Saver Scheme: Hi property couch crew! Since the website is down ill throw my question for the next Q&A here. A good one of the younger generation first home buyers as well as parents. My question relates to the announcement of the first home buyers saving scheme announced in the budget, with the tax break through superannuation. Being someone who has been taught in uni and at home by my parents not to touch my super and add extra payments where possible, is this scheme of accessing it for a house deposit reasonable? I see the tax break being a great idea but opening the idea of people taking there super to buy a house they cant save for rings alarm bells for me. Do i have the correct understanding of it all? Would you recommend another way?
  • Leo on property valuation: Hi Ben & Bryce – (and the Stig!), I cannot thank you enough for the endless amount of value that you provide for your listeners. Your content is conversational and easy to understand even for a first-time investor like myself.
    I have a suggestion that may also benefit other listeners. I have recently purchased my first investment at 23 years old. It is an existing (3 bed, brick and tile) property and I am in the process of planning a cosmetic renovation. My question is – When refinancing against an existing asset, do all property valuers have a set agenda when valuing your property? Since all valuers will have a different opinion on price, is there a similar set of factors they look at? (i.e Condition of kitchen, bathroom, flooring etc) – going on from this, Is there ways you can make your property more appealing to a valuer in order to gain a higher valuation to leverage onto the next investment? Thanks alot guys – I appreciate your work!
  • Derek on bookkeeping for investors: Something that isn’t as widely discussed in the field of real estate is book keeping. You guys mention the need to spend 10 hours or so per year to review each property in a portfolio. Can you dive into greater detail as to what exactly this entails? What sort of information do we need to keep track of and is that done through spreadsheets or specific software?

 

If you like this episode (What Does The 2017 Federal Budget Mean To The Property Market?), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Episode 48 | Different investment structures (family trust, company, partnership), CGT and other tax related topics – Chat with Frank Azzopardi

Our loyal listeners would have noticed by now that every single time a tax related question pops up on the podcast, Bryce and Ben will try and answer it in a general sense (sometimes, probably too general). So, this time on The Property Couch, we have invited Frank Azzopardi from YK Partners to help give a clearer definition when it comes to questions related to tax and property.

Sit tight and be prepared because this episode can be very technical. Some of the issues that they’ve touched on in this episode are:

  • Investing under trust ie: family trust – what it involves and the tax implications
  • Investing under a company structure – why people do it and areas to be cautious about
  • Partnership in property investing – what to expect, difference between partnership with family and friends and types of partnership
  • Capital gain tax (Capital Gains Tax) and the 6-year rule
  • Are buyers agent fees and stamp duty tax deductible

 

Now, please remember that this podcast is general information only and is intended to assist you in understanding the different investment structures and some tax regulations related to Australian property. It is by no means a full representation of all aspects of the property tax and listeners/viewers should not rely on the information provided in this podcast when making their investment decisions. The Property Couch and our guests strongly recommend that listeners/viewers first seek qualified and professional advice to assess their individual and unique circumstances before making any decisions. For more disclaimer, please click here.

If you like this podcast: “Different investment structures (family trust, company, partnership), Capital Gains Tax and other tax related topics”, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Episode 025 | Q&A – High LVR, Capital Gains Tax, Cross Collateralisation and SMSF Property

Its Questions and Answers time! Thanks for all the suggestions on new topics to cover in this podcast. For today’s episode, Bryce Holdaway and Ben Kingsley will be addressing questions from:

  • High Loan to Value Ratio (LVR) question from Andy : As a relatively new investor, would you recommend gearing as many of my initial purchases at 90-95% LVR as possible to help get ahead early on and do you foresee a lot of the banks starting to restrict this type of lending going forward with the interest rates currently so low. If you do recommend it, how do we best manage the risk for the first few years until the properties grow and loans come down to the 80% mark?
  • The Property Couch - Property investing podcast - smsf propertyCapital Gain Tax (CGT) question from Paul : It would be great if an episode could cover “capital gain tax“. I have recently had to sell an investment property due to lifestyle decision but didn’t incur any charges as it was my first place. In future if I have to sell to upgrade to a bigger investment It would be great to know the CGT laws in each state.
  • Cross Collaterisation from Andrew : In recent Episode 20 you touched on cross collateralisation and while it is not the best option, I  was wondering if you could expand on where you might need to use, why you would use it, to what extent would you use it and how would you un-cross collateralise your portfolio?
  • SMSF and Property from Billy : I’m interested in using a Self Managed Super Fund to invest my super in property. I’d like to hear your opinions on this subject. Would you recommend SMSF Property or not?

 

For access to The Property Couch’s media kit, please email us here: info@thepropertycouch.com.au.

 

If you like this Q&A episode, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

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