Why you can’t forget to do your paperwork
Do you follow the trend in housing? According to the Australian Bureau of Statistics, the trend estimate for building approvals in Queensland went up 2 per cent in August, which indicates we're still sitting nicely on a growth curve for new homes.
Fresh property can be a real gem in your investment strategy crown, creating capital gains in the long term and potentially supplying positive cash flow in the short term. But to really maximise on this, it's important to get all of your paperwork in place. It might be an annoying task, but here's why it's so important.
Investment property can be a source of income
Sounds great, right? It really is – statistics from SQM Research show that asking rents have edged up slightly in Brisbane over the last 12 months, a better performance than the national average. Positive cash flow tops up your day-to-day budget while capital gains are accrued, but important admin work has to be done to secure it.
"Cash flow from a rental property counts as income"
This is because cash flow from a rental property counts as income. And as the Australian Taxation Office (ATO) points out:"If you make a net profit from renting your property, you may need to make pay as you go (PAYG) instalments towards your expected tax liability for an income year."
That's why it's important to keep the documents recording the short-term cashflow you make!
Get the tax deductions
While the services of a financial professional will likely be required to determine the exact details of your deductions on an investment property, it's certain that you will need the right documentation to back it up. This could include receipts and payment slips for renovations, or even insurance documents.
The paperwork from your first contract signing is also important. The ATO states that capital gains tax on investment property is paid using the date you sign the paperwork on a house, rather than the actual date of settlement of the real estate.
When you buy investment property in Queensland, you sign on for a long-term wealth creation process. However, that doesn't preclude you from certain financial benefits between today and, say 20 years on. With the right professional advice and well-organised paperwork, there can be great windfalls in the pipeline.
For more information on creating wealth through property, make sure to get in touch with the team at Think Money. We specialise in helping people create wealth that lasts.