Landlord Series 06 – Recycling Deductions
Hi Brian and David here from Bugwash Property. We’re gonna talk a little bit about tax deductions and I believe you’ve got a story you want to share with us David.
Yeah, got a good story Brian. A lot of times a lot of landlords don’t realize how important a part the tax deductions play in the cashflow of their operation. An example recently where a client rang up and said “David, just letting you know we’ve had enough. We’ve got six properties they’re costing us $24,000 a year to own to hang to. And it’s too hard and we wanna sell everything.” I said well are you absolutely sure that they’re costing you $24,000 a year? Yep absolutely. I said, so, just out of interest, How much was your last tax deduction when you got your tax deductions back? and they said well that was $23,000. Well said well what happened to that? They said oh we went to Europe. It turns out the properties were actually costing them $1000 a year to hold not 24. But what a lot of clients do is say they skimp and they whinge about how much their properties are costing them per year to hold. And when the tax deductions comes in they go for holiday and then talk about how bad their properties are. So it’s really really important to understand that the money in money out thing. The money in is rent plus tax deductions. So you’re gonna take those tax deductions and put them back in to invest in property portfolio bank account because you wouldn’t have those deductions without the properties. And you can actually go one step further if you’re in a PAYG situation you can do what’s called a Tax Variation. Where you can actually get your tax deductions weekly or fortnightly whenever you get paid which helps massively with your cash flow along the way. So I’d encourage you if you can get yourself a Tax Variation done. And get your tax benefits weekly and you’ll get charged less tax along the way. Don’t go and spend that money but put it into your investment property bank account, thanks guys.