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550 | How to Stack the Pain (and Why It Works): A Behavioural Guide to Better Money Habits (LIVE Q&A from Bali)

Folks, this week we’re reporting LIVE from… BALI?! 🎉 

That’s right — we travelled to Indonesia with some amazing TPC community members to support the John Fawcett Foundation, where we witnessed firsthand the life-changing impact of their work restoring sight through cataract surgery. 

Together, we raised an incredible $74,592.98, which funded 368 cataract surgeries, 1,901 patient screenings, 719 pairs of glasses, 12 prosthetic eyes, and 600 bottles of eye drops — changing lives in the most powerful way. 💛 

And while we were there, we thought… 

What better moment to hit record and answer some of the most insightful, practical, and real-world property questions from the legends who joined us on the ground? 


Here’s what we cover in this special ep: 

🔹 “What buffers?” — Katrina & Rhys get honest about money habits and building a safety net when saving feels out of reach. 

🔹 “How do you invest with lumpy income?” — Prue, a farmer with teens in boarding school, asks about structuring loans when cashflow isn’t consistent. 

🔹 “How do you find an accountant who actually gets property strategy?” — Will wants more than generic advice. 

🔹 “What happens when your IO loans expire?” — Adam shares his $3.4M portfolio dilemma. 

🔹 Plus: Are lifestyle apartments in places like Noosa or the Gold Coast really worth it? 

A HUGE thank you to each and every one of the amazing TPC community members who joined us on this life-changing trip and helped us create this unforgettable episode. Listen now!  


Resources Mentioned: 

  • Bryce’s 50th Charity Event: Together, we raised an incredible $74,592.98! 
    In honour of this milestone, Bryce, the TPC team, and 22 amazing community members travelled to Bali to support the John Fawcett Foundation.  
     
    Together, this donation funded 368 cataract surgeries,1,901 patient screenings, 719 pairs of glasses, 12 prosthetic eyes, 600 bottles of eye drops, and more — changing lives in the most powerful way. 💛  
     
    To everyone who donated, shared, or supported in any way — thank you. This wouldn’t have been possible without you. If you’d like to learn more about this incredible cause, or still wish to contribute, you can do so here >> 

Questions We Answer 

Q1) “Are apartments and townhouses in premium lifestyle markets like Gold Coast and Noosa a smart investment?” from Carolyn

Hi Bryce and Ben,

My questions are largely around the Gold Coast and Sunshine Coast Property Markets and particularly Apartments/Villas/Townhouses. I hear the land does the heavy lifting and houses are a better investment (and yes for the primary residence) but I’d like your thoughts on buying into apartments in quality developments e.g. the Gold Coast and Noosa. Does location do the heavy lifting?

Do you have any stats on capital appreciation of buying new vs buying older in these or similar areas?

Seems to be greater value in depreciation in the first five years of a new build? And then when do extra costs e.g. increases in body corp/maintenance etc. kick in on both in terms of timeframes?

Is there an ideal hold time for an investment property for it to break even for portfolio growth and to leverage to the next one? (Assuming you are starting to grow a portfolio)

Also, is it generally 2 years of capital appreciation to cover stamp duty, purchasing and selling costs as a rule of thumb? When is buying off the plan a good idea vs established, depending on availability, location and personal requirements.

The Select Residential Reports we had access to from yourselves 2 years ago indicated growth percentages for Noosaville Units ( and Gold Coast was much the same) as:

  • 2024: 3.6%
  • 2025: 7.2%
  • 2026: 10.3%
  • 2027: 13.2%
  • 2028: 16.4%

Do you feel this remains relevant with such economic uncertainty and do you have any update on this for the next 5 years?

Having 2 daughters in their early 20s who will want to stay in SE QLD, what is the future of development with access to first home buyers schemes etc. likely to be like? Is it better to help them out in a family trust situation with property? I’m sure some of this will be covered in your new book however any insights would be greatly appreciated.

I’d also like to say thank you for your podcast which did lead me to the Advisors day in Brisbane last year and I am now the proud owner of a CERT IV in Mortgage Broking, it’s like getting a pen license. Ha Ha

I’ve secured an opportunity to commence a Part Time Mentorship in July with a Broker aligned with Purple Circle who is located in Redcliffe, north of Brisbane.

If you have 5 minutes over the course of the trip I’d love to make sure I’m on the right track to becoming an “investment savvy mortgage broker” and combining my love of property and finance. Ultimately, I’d love to work in the buyers agency area also. Whilst I’m currently ensconced in my own swimwear retail businesses I feel this is a good sideways move and a great basis to learn lots more about the property world.

Thanks so much

Carolyn

 

Q2) “What buffers?” from Katrina & Rhys  

Bryce and Ben, we are terrible savers. So bad we buy houses so we don’t spend money. We have had a budget for years so have always known we overspend. If we want to do something, we make it happen. I can hear you saying “pay yourself first” and “put the money somewhere you can’t see it”. The reality is we are flying through life on a buffer of luck with the flag of determination waving in the air.

Picture that little car on the monopoly board, $20 to their name and looking at what they can mortgage to buy park land. That’s us.

No amount of self help books or podcasts can save us. We have 2 investment properties now, but by not building up our savings buffer and reducing what we owe on our PPR, we are concerned we are going to fall short of our retirement goal.

What’s the secret Bryce and Ben, tell us how we can build up our savings buffer?

My other question is, how do you find like minded individuals to spend time with and discuss property. I’d love to talk about investment properties all day but Rhys would find a deserted island and set up a new 1 bedroom PPR. 

 

Q3) “Is there such thing as a savvy-structure based accountant?” from Will  

My partner and I spend a lot of time learning about different ways just trying to structure bank accounts, companies, trusts, etc. so much so we’re totally confused. We ask accounts and they give us very basic responses. Are we asking the wrong questions? Are we asking the wrong people?  

Is there such thing as a savvy-structure based accountant that sees the future and gets excited about how to strategically build a small, everyday couples’ portfolio? One that understands business and personal investment portfolios and how to have the two complementing each other, not working in isolation. Or is it only the spruikers that make us believe that such people exist?” 

 

Q4) “Finance, loan structures and investment properties for business owners with a highly variable income (farmers)?” from Prue 

Hi Ben and Bryce, 

Thanks so much for this incredible opportunity to travel with you and your families on this life changing event. I have learnt so much from both of you through all the wisdom you have given. 

My question relates to being a business owner with a highly variable income (farmers). What suggestions do you both have in relation to obtaining finance, loan structures and investment property purchases for people in this situation? 

We have made a profit farming for the last 20 years except last year due to terrible farming conditions. 

My husband and I are both 43 with 3 teenagers, (2 of them are at boarding school $$). We have one investment property in Adelaide being used as an Airbnb, that we can access when we visit our daughters. Are investment properties a good idea when we have a lot of capital already tied up in farming land? 

Thanks so much. 

  

Q5) “What if serviceability becomes an issue when IO loans expire?” from Adam  

My current portfolio is $3.4mill. LVR = 59%. Loans all IO. $1.64mill in personal name (x3 resi), $380k in a trust for one commercial property. Personal income $100-120k (happy to share more details of portfolio if needed). I’m concerned when these come off IO in 2027 and I go to refinance that banks will not lend to me due to serviceability of income. 

Ideally, I would like to keep all (as I’m servicing these fine), but if I did have to have to sell, how should I assess which property/s to sell? Considering location, yield, future growth potential, land size for future development etc. If I had to sell, I am considering re-investing profits into commercial to help supplement my income. Turn the portfolio cashflow positive to help with future lending and live a more fulfilling/adventure rich lifestyle sooner than planned. Would love to talk in depth with you guys on this and share any advice you might have.

Thanks, Adam. 

 


Timestamps  

  • 0:00 – How to Stack the Pain (and Why It Works): A Behavioural Guide to Better Money Habits (LIVE Q&A from Bali)  
  • 1:22 – We’re recording this from Bali for Bryce’s 50th!  
  • 3:32 – Q1) Are apartments and townhouses in premium lifestyle markets like Gold Coast and Noosa a smart investment? from Carolyn  
  • 4:16 – The fundamental drivers of long-term growth in coastal markets 
  • 6:55 – What really makes a property “investment grade” in these lifestyle locations? 
  • 9:13 – Role of Depreciation in New Builds vs. Established Properties  
  • 11:11 – Lifestyle drivers in Noosa  
  • 13:04 – How to find where the next generation wants to live (+ why this research matters!)  
  • 16:51 – Why caravans are still holding their value  
  • 17:53 – Q2) “What buffers?” from Katrina & Rhys 
  • 20:50 – What does providing the best opportunity for your kids look like?  
  • 22:59 – How does NOT having a buffer affect them?  
  • 27:17 – The #1 driver for behaviour change  
  • 29:45 – What does stacking the pain look like?  
  • 35:05 – Q3) “Is there such thing as a savvy-structure based accountant?” from Will 
  • 36:03 – What an honest, professional Accountant looks like   
  • 40:42 – The complexity of structures & trusts  
  • 46:32 – Is there a single best solution?  
  • 48:42 – Q4) “Finance, loan structures and investment properties for business owners with a highly variable income (farmers)?” from Prue 
  • 49:47 – Dealing with inconsistent income  
  • 53:00 – The importance of liquidity & diversity for farmers  
  • 57:00 – Q5) “What if serviceability becomes an issue when IO loans expire?” from Adam  
  • 58:44 – Forming lender relationships & building buffers  
  • 1:04:22 – How to build a portfolio that balances growth today and cashflow later 
  • 1:08:57 – Thank you to all our amazing guests + wrap up from Bali!  
  • 1:10:19 – Together, we raised an incredible $74,592.98!

 

TPC Gold | How to Maximise Your Tax Returns in 2025

This snippet is from an Empower Wealth episode: How to Boost Your Tax Return in 2025: Ben & Julia’s Hot Tips. 

In this week’s bonus episode, Ben shares key highlights from his recent Talking Property Tax conversation with property tax expert Julia Hartman—covering what smart investors need to know before 30 June. 

From HECS/HELP debt changes to interest prepayments, land tax rules, and advance rental payments on commercial property, this episode is your end-of-financial-year tax health check. 

Here’s what you’ll learn in this short but sharp episode: 

💥 Why you should avoid paying off your HECS/HELP debt before 1 June 2025
🏡 How to decide if paying interest in advance is right for you
🧾 What deductions you can and can’t claim in advance for investment properties
⚠️ What to watch out for if your commercial tenant wants to prepay rent
📉 How to avoid getting locked into a deduction strategy that no longer suits you 

If you want to get ahead of tax season and potentially boost your return, this one’s a must-listen. 

Want to Maximise Your Return This Tax Time?

At our sister company Empower Wealth, the Tax & Property Accounting team specialises in helping property investors claim every dollar they’re legally entitled to—no guesswork, no gimmicks. 

We even back it up with our Maximum Refund Guarantee! 

If you want to get the maximum refunds you are entitled to, now is the time to get your tax strategy sorted. 

Book your free initial consultation today and chat with one of our experienced accountants via the link here: thepropertycouch.com.au/tax  

__________________

If You Enjoyed TPC Gold | How to Maximise Your Tax Returns in 2025, You Might Also Like:


Transcript

Ben Kingsley
G’day folks, Ben Kingsley here. Now last week I did an episode on Talking Property Tax with Julia Hartman. It was Episode Six of that series, and today we’re sharing a summary version of those conversations I had and it’s all to do with your tax planning in the lead up to the end of the financial year. So this is a summary version of the episode I did recently with Julia Hartman on Talking Property Tax.  

Today we’re going to be talking about some very interesting and timely topics. I’m going to cover off on HECS and HELP debt. So there’s some changes now that the Labor Party have got in. We’re also going to have a reminder around tax and property planning for those property investors, which is obviously our mainstay of audience. And then we’re going to go a little deeper in terms of some of the superannuation and planning around that, and also cover off on some of the fundamentals. So it’s going to be a great show. I’m looking forward to getting into it. So Julia, let’s get started. I want to talk about the HECS or HELP debt as it’s sometimes referred to, and what are some of the important things that we need to be aware of now that Labor has got back into power.  

Julia Hartman
Well, I suppose the most urgent and important thing is to warn you not to pay off your HECS debt between now and the 1st of June. So there’s not many people who are going to benefit from that. But whatever you owe at the 1st of June, the government’s going to give you a 20% discount on it. So you want to owe as much as possible at that point. But the uplift factor will kick into that amount too, but that should only be about 3%. So what your employer takes out of your pay packet is not going off your HECS debt until you do your tax return, so don’t worry about what’s coming out of your pay. It’s just those voluntary payments that you don’t want to do in the next three weeks.  

Ben Kingsley
So it’s a pretty straightforward piece of advice and that is because it’s a 20% value of your existing HECS debt. Well, don’t pay it before the 1st of June because that’s the calculation date. So if we leave it till after that, then you’ll basically get the higher deduction off your HECS debt. So great piece of advice there, Julia. And that one was an easy one. There wasn’t really much else in regard to general far reaching or macro changes that the Labor Party have made to the tax system this year, so what I wanted to do was focus in on tax planning for property investors, because this is the time of year.  

Now it is early May, and so we need a little bit of time to basically potentially do some of these things, and in terms of getting ourselves in order for the next tax round. So the first one, and one of the most common ones we get asked about, is obviously the ability to pay potentially 12 months’ expenses in advance. And that’s the rule. That’s all allowable when it comes to residential investment properties. And the biggest one, obviously one of the biggest costs for a lot of people is the interest cost. And so talk to us about the interest in advance, interest costs that might be claimable, and what are some of the pros and cons associated with that, Julia?  

Julia Hartman 
Right, well first of all when you enter into this arrangement it’s not just enough to work out what the interest is and pay it off the loan. You’ve got to make arrangement with your bank that they actually do charge you the interest and that’s what you pay to get interest in advance. And then you’ve got to think about: Is this the year to do it? And the tax brackets aren’t that different over the next few years so you can look at your income and also whether you might be taking time off work. So if you pay two years’ worth of interest in this year, then next year the only way you’re going to get any interest deduction is to pay a year in advance again. So you see you’ve lost that advantage; you’ve just got one years’ interest next year and you’re locked in to paying it in advance each time in order to get any deduction at all. So you want to save it for that big capital gain or something like that. Or on the other side of the coin, save it for a time when you might take a year off work – for family or whatever reasons. So you make the extra payment the year before you take the time off work, and then when you don’t need the deduction so much in the following year you can catch up, and then the year after that it’s all business as usual.  

Ben Kingsley
Yeah, so there’s a couple of really important points that you make there. In the event that if your income is going to be regular over a long period of time, once you’re sort of in this interest in advance, you then have to keep rolling it over and over. And so a lot of people think: Well, why am I doing this? I mean, there’s potentially a cost for your tax agent to do that. Also, if you’re working with a broker, this needs to be put in place with a lender. That’s why we’re talking about it in May, because it does take a bit of time and you ultimately need to pay that money into the bank so there’s a record and documentation which is what Julia was saying. So the best time when these things are advantageous is in the event that you have a high income year that you want to offset the tax. And then to Julia’s point, if you’re having maternity leave or paternity leave and your income is going to drop considerably in the next year or two, that’s the run-up and planning that we’re talking about. So may not be applicable for you this year. Or the other thing, if you’re maybe coming closer to retirement and the same principles apply in terms of if your income is going to drop substantially, then the interest in advance on lending is something to consider as part of your tax planning. The other ones which are probably a little bit less known for some people, Julie, is things like rates, insurances, body corporates. Do you see a lot of that throughout the BANTACS practices in terms of people trying to pay those in advance?  

Julia Hartman
No, not really. I’ve included this more as a warning to people that you can only pay 12 months in advance. So if your body corporate fees are already in advance, you can’t go and pay another 12 months’ worth and claim a deduction for it.   

Ben Kingsley
So a lot of people don’t realise that, but body corporate fees don’t run necessarily on a financial year. So the example there is if you’ve paid body corporate fees up until the 31st of December already in advance, then technically you’ve only got six months of additional fees in advance. And I think some of the other challenges there is again, you’ve got to actually pay it before 30 June, and you’ve got to have documented evidence of that. And I’m just trying to think, from a rates notice or from a council point of view…how would they account for that and what sort of record or information would they provide to you?  

Julia Hartman
Well, you can get a statement off most councils that should show the payment being made.  

Ben Kingsley
But it’s certainly not something that I hear often about because it’s not a huge amount of money, whereas the interest in advance on a loan potentially has some advantages associated with that. So that’s interesting.  

Julia Hartman
Yeah, it’s just a warning.  

Ben Kingsley
Okay. Let’s move down now to land tax. And obviously land tax is treated differently. So let’s talk to what are those differences, Julia?  

Julia Hartman
Well we’ve been talking about paying in advance and all those sorts of things to draw the claim forward. But the land tax is only deductible in the year it applies to, so paying it the following year doesn’t mean it goes in that year’s tax return… and certainly you can’t do any payments in advance. It’s: Right, you’ve been assessed for that year; that’s the year the tax return goes.  

Ben Kingsley
Yeah, so your accountant will do that calculation and make sure that they’re claiming the right portion in the right year as part of that story. So that’s an interesting one. The other one that’s interesting is in terms of interest in advance, and we’re going a little bit into commercial tenancies here. There might be a few people who have some commercial tenancies. There’s, you know, in terms of the discussions and reading the blogs that you put together, in some instances the tenants potentially might want to pay in advance, but that has unintended consequences for the actual owner of the property, doesn’t it?  

Julia Hartman
Yes, well it’s generally people that can get a tax deduction for their rents, so commercial properties is a rule of thumb. If they pay you that money 12 months before the 30th of June, you’re going to have to declare it unless you can argue somehow you might have to pay it back. It’s the Arthur Murray principal… where it’s dance school and they said oh yeah, but if they don’t take all the classes, we’d have to pay it back. So then they didn’t have to declare it, but I think that would be pretty hard when you’ve got a lease in place to stay. So yeah, you’re stuck with 12 months’ extra rent in your tax return if they pay it. Run.  

Ben Kingsley
And can you, you know, I suppose in your commercial contract you might have a clause in there that says no rent is payable in advance because you don’t potentially want that surprise. Is that sort of something you’ve seen in the past? 

Julia Hartman
Yeah, it would be not surprising for a tenant to want to pay rent in advance in a good year. So it’s just something to watch out for.  

Ben Kingsley
But it potentially has to be agreeable by the landlord as part of those deals or no if it’s received in the bank account. Surprise surprise, you’ve got a little bit of extra tax to pay in that year. You’ve got a little bit of surplus cash that you didn’t expect coming.  

Julia Hartman
Yeah, it’s not all the windfall it’s made out to be.  

Ben Kingsley
Nah, true, true.  

Well there you have it folks, that’s obviously just a snippet… the highlights of some of that episode. If you want to listen to the full version of the episode, just go to the summary notes or the notes inside this episode, click on that link and you’ll get full access to the whole episode where we go a little bit deeper on the topics.  

Also before you go, if you don’t have a property specialist tax accountant and you are looking for one, of course this is where I say you may want to consider Empower Wealth. We obviously have a guarantee and that guarantee is the Maximum Refund Guarantee. So we’ll ensure you get the maximum refund possible for all of your investment property tax returns, and also your personal tax returns as well. So you can check that out by going to www.thepropertycouch.com.au/tax. Thanks for that and always remember, knowledge is empowering but only if you act on it. 

 

542 | The Overlooked CGT Timebomb Hidden in Joint Tenancy – Chat with Julia Hartman

As tax season looms, we’re bringing back Australia’s #1 property tax expert, Julia Hartman, to help you understand the nuanced world of joint tenancy, debt recycling, and more! 

Julia is the Chief Technical Tax Adviser here at Empower Wealth and the founder of BAN TACS, a cooperative of tax professionals that’s been helping Aussies navigate the world of property tax since 1992. 

This week’s episode is all about how to avoid accidentally handing thousands over to the taxman. 


Here’s what we unpack: 

✅ Debt Recycling: Can you legally turn non-deductible debt into deductible debt?  

✅ Joint Tenants vs. Tenants in Common: How choosing the wrong ownership structure could trigger a massive Capital Gains Tax bill later! 

✅ Victoria’s $50K Land Tax Grab: Who’s caught in the net, and can you avoid it? 

✅ Dominant Purpose: Understand this concept, and you could legally save thousands 

From legislative shake-ups to understanding the grey areas in tax-deduction strategies, this is a jam-packed episode for property investors and homeowners alike. Tune in now!  


Free Stuff  

  • We’re growing — and we’re looking for passionate Buyers Agents to join our team!
    At Empower Wealth, you’ll work alongside some of the best in the business — helping everyday Australians secure their dream homes, build wealth through property, and move closer to financial peace. If you — or someone you know —  is a dedicated professional who puts people first and is ready to grow with a values-driven team, get in touch at Empower Wealth or via The Property Couch. 
  • Give the Gift of Sight – Just $100 Can Change a Life 👁️
    To celebrate Bryce’s 50th birthday, we’re on a mission with the John Fawcett Foundation to restore sight through life-changing cataract surgeries in Indonesia. Thanks to our incredible community, we’ve already raised over $50,000 — and we’re aiming for $60,000 by May 27! As TPC listener, Jeff, shared: “It just felt so real — giving sight to unsighted people. I signed up and donated in 10 minutes.”

  • Here’s what your donation can do:
    👁️ $100 = Restores sight to 1 person
    👁️👁️ $200 = 2 people
    🖐️ $500 = 5 people
    ✋✋ $1,000 = 10 people
    Give the gift of sight >> 

Timestamps  

  • 0:00 – The Overlooked CGT Timebomb Hidden in Joint Tenancy – Chat with Julia Hartman 
  • 1:15 – In the shadows of tax time…  
  • 3:23 – The $20K instant asset write-off  
  • 4:08 – Exciting upcoming guests; stay tuned!  
  • 6:51 – We’re on the hunt for Buyers Agents!  
  • 8:05 – Bryce’s 50th: Give the gift of sight for $100 😮  
  • 8:28 – Mindset Minute: “Success is something you attract, not something you pursue” 
  • 11:08 – Welcome Julia!  
  • 12:10 – Topic #1: Debt Recycling 
  • 13:13 – What is debt recycling?  
  • 14:59 – Understanding dominant purpose 
  • 16:11 – The Harts Case & Part 4A as the Government’s secret weapon 
  • 19:51 – The Grey Area: Debt recycling with Principal & Interest vs. Interest Only loans 
  • 24:26 – The 3 Definitions of Debt Recycling  
  • 28:11 – “You can’t owe yourself money”: How folks lose deductible interest on their deposit 
  • 31:22 – Topic #2: Joint Tenants do NOT technically inherit, here’s why! 
  • 33:28 – Joint tenants vs. Tenants in common  
  • 34:55 – Julia’s ideal plan 
  • 36:03 – Is it right? Couples carrying forward their partner’s CGT debt  
  • 38:25 – The Catch: Changing from joint tenants to tenants in common 
  • 41:36 – THIS is why tax planning is essential…  
  • 42:26 – Nuanced Examples: The 6-Year Rule, can stepchildren challenge the rule, and more! 
  • 46:59 – Topic #3: Victorian Land Tax Grab – The $50K Trap 
  • 51:00– The ATO tripwire & data matching  
  • 53:04 – What triggers this tax?  
  • 56:30 – Is it possible to avoid this? CGT, small business concessions & moving your home businesses  

And… 

  • 59:04 – What a fantastic fireside chat with Julia!  
  • 1:00:55 – Life by Design hack: Don’t ask your child what they want to be when they grow up. Ask these 5 Qs instead!  
  • 1:03:26 – WMPN: What do US tariffs mean for Australia’s economy?  

 

TPC Gold | Can You Use Your IP’s Equity to Pay Off Your Home Loan Early?

This snippet is from one of our previous episodes: Q&A – How to Avoid Poor Loan Structure 

It’s a question we get all the time from property investors: “Can I use the equity in my investment property to pay off my home loan faster?” 

In today’s TPC Gold soundbite, Bryce and Ben unpack this exact scenario—and explain why it’s not as straightforward as it seems. 

Spoiler alert: It all comes down to how the ATO views the purpose of your loan. 

In this short but powerful episode, you’ll learn:
💸 What the ATO considers a private (non-deductible) purpose—and how that affects your tax deductions
⚠️ How redraws and lines of credit can accidentally “pollute” your loan structure
✅ Why having separate splits and clean offsets is crucial for clarity and compliance 

Want to Avoid Costly Mistakes in Your Property Finance Strategy?

If you’re thinking about refinancing, using equity, or paying off your mortgage sooner, make sure the structure is right from the beginning. 

Book a free initial appointment with an investment-savvy mortgage broker from our sister company, Empower Wealth.

Need Personalised Tax Advice?

Tax deductibility depends on your personal circumstances and how funds are used. For advice specific to your situation, book an appointment with a qualified tax accountant from our sister company, Empower Wealth.

Remember: No mortgage broker should be giving tax advice. Always speak to a registered tax professional to get it right. 

__________________

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Transcript

Bryce Holdaway
We’ll go on to another sort of related question as we get all these segues. This is from Dean. “Hi guys, my question is can you use equity in your investment property to wipe out your principal place of residence mortgage? Cheers, Dean.” I’ll have a go at that. 

Ben Kingsley
Yeah. 

Bryce Holdaway
I’ll have a go at the answer, and you’re the mortgage broker, so you come and tidy up the edges…but the answer is you can do it. This is a common question. So people say: If I secure against an investment property and then pay off a non-tax deductible debt like a principal place of residence, can I do it? The answer is you can do it, Ben. But the tax department looks under and they go: What was the purpose of the loan? And if you secure against your investment properties to use a loan to pay off a private non-tax deductible debt, the tax office just goes “I see what’s going on under here. The purpose of the loan wasn’t for investment. It was actually for a private purpose, therefore we will not allow the interest to be deductible.” So to answer the question, you can do it, but it’s not gonna give you any benefit.  

Ben Kingsley
No, effectively you’re going to have the same debt and it’s still going to be in the same position where it is effectively non-deductible debt. The other classic one that people do here, Bryce, is they release equity from their investment properties or their family home or whatever it may be, and then turn that into an investment property and then say: oh, no, no, no, that property’s an investment property now and I release the equity out of that to put a deposit down for my new upsized family home. Surely I can claim that because it’s against that investment property. No, purpose of funds test – in terms of what it does, that money is still non-deductible. So be very careful. People just think that they can pay loans down and then release the money against all that, and that’s going to be deductible? Not true.  

Bryce Holdaway
Love it. Ben, beware of pollution. So this is often something that people don’t think about. So for example, let’s say you do everything by the book. You set up a loan, it’s for investment purposes only. You’ve got a redraw facility Ben, and what happens is you think: well, with that redraw facility, I’m going to put all of my income into the redraw facility, and for five days, I’m going to have all the interest benefits of that. And then on a Thursday, I’m going to pull my cash out and pay for the groceries.  

Problem: The pulling out of the money just changed the purpose of the loan. You have just fully polluted that loan. So it was initially set up with an intent for investment, and the fact that you parked some money there and pulled it out for groceries at the end of the week; you have just polluted the loan. You’ve just made that loan very complicated, which is why an offset facility is cleaner and avoids the pollution over a redraw facility.  

Ben Kingsley
And while we’re at it, Bryce, and we’ve talked about this before, the other great pollution killer, or basically the interest deductible killer, is lines of credit. I get $100,000 line of credit, I use $80,000 for investment purposes, and $20,000 to buy a car. 

Bryce Holdaway
Ooh I like this one. 

Ben Kingsley
I then start paying off that car thinking that I’m paying off that portion that I took out for the car. Tax office doesn’t see it that way at all. The first $20,000 that you put in there is actually paying off the $80,000 investment debt. So this is another example of where an investment-savvy mortgage broker will separate out potentially a small amount for personal use and separate that in a different loan split for investment use. You can have multiple splits. It obviously requires a little bit more understanding and management, but ultimately it’s as simple as using your MoneySMARTS. Everything goes into that primary cap.  

Doesn’t matter if you’ve got a hundred loans under that; if one of those loans is for personal use, you’ve obviously got to pay that off. But it’ll be drawing that money from the primary account, exactly like all of the rental income you’ve got coming from all your properties will be going into that primary account. So there’s one central transactional account in which all of that money is going to be serviced from.  

Bryce Holdaway
Don’t pollute, Ben.  

Ben Kingsley
Don’t pollute, Bryce. At the end of the day, no mortgage broker should be giving tax advice. And here, we’re not giving advice, we’re just sort of saying these are the pitfalls. These are the challenges around that, so no one should be sitting here saying I heard this and I’m going to action this without actually seeking independent advice from a tax accountant. 

Bryce Holdaway
Foundational underneath that discussion Ben was cross security versus standalone, so the good thing is we were talking then about standalone options.  

Ben Kingsley
Yes. 

Bryce Holdaway
But making sure you don’t get the wrong standalone option, particularly for pollution. So great question Dean, thank you for that. Let me quickly get another one for us Ben. 

 

518 | The Costly Mistakes Property Owners Make in Their Tax Returns (and How to Avoid Them!) – Chat with ATO Assistant Commissioner Rob Thomson

Folks, in this special episode we’re becoming a fly on the wall to reveal the inner workings of the Australian Taxation Office (ATO)!

Allowing us to do so is Rob Thomson, Assistant Commissioner – Experience, Government and Case Leadership – Individuals and Intermediaries, and the official Tax Time spokesperson at the ATO!  

With over a decade of experience, including a stint as Minister Counsellor at the OECD in Paris, Rob brings a wealth of knowledge on the ins and outs of the Australian tax landscape. 

Today, we’re picking his brain to give you a sharp look into the world of property tax, compliance, and the latest changes to regulation that every property investor needs to know. 


Here’s what we cover:  

  • The ATO’s Latest 2021/22 Data 📊 — How many Australians are investing in property, average income reported, and the most common deductions!  
  • Self-Assessment 🧾 — What it means, and how the ATO audits your tax return. 
  • Data Matching & Audits 🔍 — How the ATO tracks rental income and expenses, and the surprising mistakes landlords make. 
  • Foreign Resident Capital Gains Withholding 🌏 — Upcoming changes on 1st January and what you need to do to avoid a hefty 15% withholding on property sales. 
  • Claiming Borrowing & Interest Expenses 💰 — The ATO’s latest tools to help you claim accurately and avoid over-reporting deductions. 

For Rob’s expert advice into navigating the complex world of tax and staying compliant, tune in to this episode now! 


Free Stuff  

  • COMING SOON: Moorr’s greatest evolution!
    Over 11 million data points are set to be released early November in Moorr, your all-in-one, free money management solution. Login or create your account now >>
  • Australia’s first property AI to be released next week!
    After months of hard work, we’re launching Australia’s first property AI. Ask your burning questions and our AI assistant will pull up all the relevant episodes, courses, books and more related to your query! Stay tuned for its release next week 🙂  
  • Latest ATO’s tools and articles: Stay informed and maximise your tax savings with the resources below…  

     

  • Guests & Episodes Mentioned:   
    Bradley Beer: Chief Executive Officer, BMT Tax Depreciation  
  • Resources from Ben’s “What’s Making Property News”:  
    Eviction of a tenant from a rental property 


    Timestamps  

    • 0:00 – Chat with ATO Assistant Commissioner Rob Thomson
    • 1:08 – Moorr’s greatest evolution and Australia’s first property AI!?  
    • 8:50 – Mindset Minute: “The rules are not there to restrain you, but to reveal new paths for growth and opportunity.” 
    • 10:17 – Welcome Rob Thomson!  
    • 11:55 – Money Story: Festival or drum kit? 😉  
    • 17:33 – The pivot from not-for-profit to the taxation office  
    • 20:13 – The headline figures from the Australian Taxation Office (ATO) 2021/22 data 
    • 24:24 – Why do these numbers matter?   
    • 25:52 – Lag data EXPLAINED 
    • 26:20 – Self Assessment: How does the ATO review your return?  
    • 30:03 – What data does the ATO have on rental properties?  
    • 32:45 – The most common mistakes property investors make  
    • 38:48 – What is the difference between repairs and improvements?  
    • 41:04 – Folks, the timing of when you repair matters! Here’s why.  
    • 43:25 – How to break up the cost of your depreciating assets  
    • 48:15 – The 1st January changes that will affect ALL Australians 
    • 51:03 – What happens if you don’t get a clearance certificate?  
    • 55:48 – How the ATO’s new Borrowing Expenses Calculator can help you!  
    • 58:28 – The $420M problem: Over-claimed interest  
    • 1:01:51 – Everything you need to know about the tax gap  
    • 1:04:15 – Pay As You Go (PAYG): Automatic vs. Voluntary entry  
    • 1:06:57 – Why use PAYG? 
    • 1:08:52 – Rob’s top tax tips and comments  

    And… 

    • 1:12:54 – Thank you, Rob!  
    • 1:15:55 – Lifehack: Embrace the toolkit available to you! 
    • 1:17:40 – WMPN: What do the NSW ‘No Grounds’ Evictions actually mean??

     

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