» Tax time advice

Six depreciation questions to ask yourself this tax time

BMT team — Tue, 28 May 2024 05:53:56 +0000

With tax time fast approaching, here are six questions you should be asking yourself to ensure you’re getting the most out of your investment property. 1. What are some common deductions I’m entitled to as a property investor? As a property investor, you’re entitled to a range of tax deductions. These will help lower your taxable income and make owning an investment property more viable, particularly if you own a negative cash flow property. Some of the tax deductions available to investors include deductions on council rates, the interest from a mortgage, property management fees, land taxes, strata fees, maintenance costs, insurance, accounting fees and depreciation. Of these deductions, depreciation is the most often missed. This is because it is a non-cash deduction. That is, the owner does not need to spend any money to claim it. In fact, research has shown that 80 per cent of property investors are missing out on the depreciation deductions they’re entitled to. However, given that investors can claim an average of $9,000 – $15,000 in deductions in the first full financial year alone, this is a deduction that should not be overlooked. A BMT Tax Depreciation Schedule outlines all the deductions you can claim for your property. It lasts for forty years and the fee for preparing it is 100 per cent tax deductible. 2. I’ve bought an investment property in the last few months – can I make a claim this tax time? If you haven’t owned the property for long and it’s only been income producing for a few months in the last financial year, you will be able to make a partial year claim. The Australian Taxation Office (ATO) allows investors to make a claim for depreciation based on the amount of days a property was available for lease. This could be if you’ve only recently purchased an investment property and only have one month to claim for, or you use your home as a holiday rental for part of the year. A BMT Tax Depreciation Schedule makes a partial year claim like this easy for you and your Accountant. 3. Do I need to update my tax depreciation schedule? If you’ve made any updates to your property in the past financial year, such as a renovation, it’s a good idea to get in touch with your Quantity Surveyor to see if you will require an updated depreciation schedule. It’s important to be aware that there is a difference between a repair and a capital works improvement as this will affect your claim. The cost of any repairs can be claimed in full in the same financial year they are completed. An improvement, on the other hand, is when you improve the condition of an item or property beyond that of when it was purchased. Such improvements are capital in nature and must be depreciated over time. For this reason, if you’ve made any renovations or improvements to your property in the last financial year, you should seek the advice of a property depreciation specialist or Quantity Surveyor to ensure it is claimed correctly. An updated tax depreciation schedule may be required after a renovation to capture all newly installed plant and equipment assets or capital works expenditure. 4. Am I maximising the deductions for my property? It’s one thing to be claiming deductions, but are you maximising them? A Quantity Surveyor specialising in depreciation will be aware of all the techniques you can make use of to maximise and accelerate the deductions you’re entitled to. As well as identifying assets that others may miss, they will make use of tools such as low-value pooling, scrapping and split reports to maximise the deductions you’re legally entitled to and put more money back in your pocket sooner. 5. Can my Accountant organise my depreciation deductions? An Accountant should recommend that you claim depreciation, organise a schedule on your behalf or refer you to a Quantity Surveyor. They will however not be able to estimate construction costs or provide you with a tax depreciation schedule. Only a qualified Quantity Surveyor can do that. Quantity Surveyors are one of the few professionals recognised by the ATO to have the appropriate construction costing skills to estimate building costs for depreciation. However, not all Quantity Surveyors specialise in tax depreciation. Only a tax depreciation specialist such as BMT can be relied on to maintain detailed knowledge of all current ATO tax rulings relating to depreciation. Once you have a Tax Depreciation Schedule completed, your Accountant can input these deductions into your annual income tax return. 6. I’ve only just found out about depreciation. Does this mean I’ve missed out on past years’ deductions? Investment property owners often enquire about a property they have owned and rented for a number of years but have not claimed depreciation deductions for. The ATO allows tax returns to be easily adjusted for two years after the initial submission. This enables property owners to recoup some of the deductions that may have been missed. It is important to note that a separate application will need to be submitted for each financial year requiring an amendment. Income, depreciation and other claims made will impact the outcome of each tax return. In the situation where an investor has missed or not maximised their claim in previous years, the depreciation schedule can be tailored within the eligible years. To start claiming or maximising your depreciation deductions with BMT, request a quote.

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Tax time 2021 and tips for the new financial year

BMT team — Thu, 13 May 2021 01:30:42 +0000

In this article we will explore: Maximise your tax return Understand loan interest and how it can be claimed at tax time Borrowing expenses Repairs, maintenance and capital improvements Don’t forget to claim depreciation at tax time Stay compliant at tax time Prove it all with records Maximise your tax return The Australian Taxation Office (ATO) performed a review of individual tax returns last year and found that an astounding 90 per cent of investment property owners were making mistakes in their tax return. The most common errors were around loan interest, borrowing expenses, repairs and improvements. If you’re a property investor, here are some tips for the new financial year that could help you avoid mistakes and save you thousands next tax time. Understand loan interest and how it can be claimed at tax time If you obtain a loan to purchase an investment property, the interest charged on that loan can be claimed as a tax deduction. However, there are some rules around this: the property must have been rented, or genuinely available for rent, in the income year the deduction is claimed. if the property was used for private purposes at any time throughout the year, the interest will be apportioned accordingly. if the loan was used for more than one purpose, such as to buy the property and a car, the interest must be apportioned into deductible and non-deductible amounts. Don’t forget, you can deduct interest on loans for other purposes including: financing renovations repairing the property purchasing assets, such as air conditioners. You can also pre-pay next financial year’s interest in a lump sum and claim it at tax time this financial year. Tip: Ensure you can provide proof that the property has been genuinely available for rent for vacant periods for your investment property. Borrowing expenses Borrowing expenses are those you directly incurred when taking out your investment property’s loan. If over $100, they can be claimed over the course of five years. If under $100, the full amount can be claimed in the same financial year. Borrowing expenses include: lenders mortgage insurance stamp duty charged on the mortgage title search fees mortgage broker fees valuation fees loan establishment fees costs for preparing and filing mortgage documents. They don’t include: capital costs involved in buying your property such as conveyancing fees, legal fees, title search fees, valuation fees, pest and building inspection fees incurred when purchasing the property and stamp duty the principal amount you borrow for the property loan balances for the property interest expenses (these are claimed separately). For more information on what can and can’t be claimed at tax time as a borrowing expense, visit the ATO website. Repairs, maintenance and capital improvements When it comes to tax deductions, there are differences between repairs, maintenance and capital improvements. Repairs are generally made to fix the wear and tear or damage that occurs to your rental property. An example of a repair is fixing a broken kitchen cupboard. Maintenance generally involves keeping the property in a good condition. If you’re preventing or fixing deterioration of an item, it’s likely to be maintenance. An example of maintenance would be painting an interior wall. Capital improvements occur when the condition or value of an item is improved beyond its original state at the time of purchase. Structural additions and renovations like adding a wall are considered capital works deductions. Adding removable or mechanical items like carpet, hot water systems and stoves are considered plant and equipment. Repairs and maintenance costs may be fully tax deductible in the year they were paid, so long as the expense occurred as a result of your property being genuinely available for rent. Capital improvements must be depreciated or claimed as capital works deductions, or as plant and equipment deductions, over time. If you made an initial capital repair or improvement to a property after purchase but before renting it out, you can’t claim the cost as a standard tax deduction. These costs instead will be classed as capital works and claimed at 2.5 per cent per year over forty years. Don’t forget to claim depreciation at tax time Research shows 80 per cent of property investors fail to take full advantage of property depreciation and miss out on thousands of dollars in their pocket. Depreciation is often missed because it is a non-cash deduction, meaning you do not need to spend any money to claim it. Last financial year, BMT found residential property investors an average first year deduction of almost $9,000. For those who haven’t been claiming depreciation, a BMT Tax Depreciation Schedule can help you claim back missed dollars and amend your tax return for the previous two financial years. Stay compliant at tax time The ATO audited more than 1,500 taxpayers with rental claims in the 2017-18 financial year and issued penalties worth $1.3 million. From 2019, the ATO plan to extend its program of audits and reviews of rental properties and more than double the number of property investor audits to 4,500. With the focus now on ‘over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others and omitted income from accommodation sharing’ it’s wise to ensure you are complying and working within the parameters of ATO legislation. Given depreciation is such a large deduction, it’s important that it’s claimed while maintaining full compliance. When completing a tax depreciation schedule, BMT’s specialist site inspectors complete a physical site inspection. This substantiates any depreciation claim you make. Prove it all with records Maintaining accurate records is crucial. The standard rule is that if you can’t verify it, you can’t claim it. MyBMT provides the perfect tax time solution, making it easy to track property income and expenses throughout the year. MyBMT can be used by property investors, accountants and property managers. MyBMT allows you to track your rental income and property expenses such as loan interest, insurance, rates, body corporate fees and more. You can notify […]

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Smart tax tips for the new financial year

BMT team — Thu, 12 Jul 2018 23:20:23 +0000

For most people, a new financial year means time to prepare an income tax return. They’ll lodge their return, hopefully get a refund (or maybe have to pay some extra tax) and then forget about it until next tax time rolls around. For property investors, it has added meaning. It’s a great time to take stock of how your investment is performing and set some things in place to ensure you’re in an even better position next tax time. Here are five smart tax tips for this new financial year. 1. Visit your Financial Advisor If you haven’t visited your Financial Advisor in a while, make this financial year the time to do so. They’ll be able to assist in reviewing the performance of your investment and advise on whether you should set new goals or adjust your current investment strategy. It’s also a great way to get a holistic view of your finances, which can be hard to do on your own. A good Accountant or Financial Advisor will also ensure you’re claiming everything you’re entitled to as an investor. Speaking of which… 2. Make sure you’re claiming all the deductions you’re entitled to As a property investor you’re entitled to a range of tax deductions, one of which is depreciation. Considering depreciation often sees residential investors get an average of $5,000-10,000 in deductions in the first financial year alone, it’s important to take advantage of these deductions if you want success as an investor. Combined with all the other deductions you’re entitled to for your investment property, such as repairs and property management fees, these deductions really do add up and shouldn’t be overlooked. Visit BMT’s tax depreciation calculator for an estimate of the deductions you may be entitled to. 3. Be smart with renovations Are you planning on renovating your investment property in some form this coming year? If so, you should be smart about it and realise that the assets you choose can maximise future deductions. Selecting which assets to replace during a renovation can make a difference to future deductions. This is because each asset’s rate of depreciation is calculated based on its individual effective life. For example, deductions available in the first full year depreciation claim for carpets, floating timber floors and tiles differ. You can use BMT’s depreciation rate finder to calculate the effective life and depreciation rate for various plant and equipment assets. Furthermore, if you’re planning a renovation this year, you should contact a specialist Quantity Surveyor before starting work. This is important during the removal or demolition of any existing structure or fixture onsite that would have been eligible to claim deductions for depreciation (division 40) or capital works deduction (division 43). These removed and scrapped assets could entitle the owner to additional claims. An updated tax depreciation schedule may be required after a renovation to capture all newly installed plant and equipment assets or capital works expenditure. 4. Keep accurate records and receipts Your Accountant would have told you time and time again to keep receipts of things you need to claim. This advice still stands. One exception to this is if you’re ordering a tax depreciation schedule from BMT. In this case you don’t need receipts for work completed or new assets installed – this is what our site inspections are for. Accurate record keeping is essential for investors – it’s a good idea to jot down conversations you’ve had and agreements you’ve made with your Property Manager or with your tenant if you self-manage your property. This is particularly important for owners of holiday rentals, who need to have accurate records of exactly how many days their property was available for rent in the past year to make legal claims. 5. Consider how you can re-invest your tax return There’s no doubt that the best part of tax time is getting a tidy tax return. While it’s tempting to put that extra cash towards a holiday, a car or even put it into your savings, as an investor you should consider if there are better ways you can use this extra cash. For example, you could choose to reinvest this in shares, put it towards a deposit on a new investment property to grow your portfolio, or use to it renovate or update your existing investment property, which could result in a higher weekly rent and increase the overall value of the property.

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Be careful of these depreciation mistakes this tax time

BMT team — Tue, 03 Jul 2018 02:21:39 +0000

Depreciation can be a rather complex area with specific rules, qualifying dates, depreciation rates, methods for claiming and pre-determined effective lives of assets. As such, claiming depreciation deductions can be a confusing task for many property investors. For this reason, it’s imperative that investors get a depreciation specialist to prepare their tax depreciation schedule. This will ensure investors get maximum depreciation deductions and that all claims are legally compliant. The last thing you want is a fine from the ATO for incorrect claims on your tax return. To help property investors ensure their deductions are claimed correctly, here are four common depreciation mistakes to avoid when claiming deductions for an investment property: 1. Not making a partial year claim Rental property owners should only claim deductions for the periods their property is rented out or is genuinely available for rent. Holiday home owners in particular should be aware of this to ensure deductions are claimed correctly. Similarly, if an investor has only owned their property for a few months of that financial year, they can still make a partial year claim for these weeks or months it was income producing. To ensure deductions are correctly claimed for the portion of the year a property is income producing or available for rent, investors should request a tax depreciation schedule. A BMT Tax Depreciation Schedule will outline all qualifying deductions from the date of settlement and include a partial year claim based on the time the property is rented. 2. Claiming capital works and plant and equipment deductions incorrectly Investors who lodge self-assessed deductions often make the mistake of incorrectly allocating plant and equipment assets as capital works deductions and vice versa. This can result in two issues for the investor. Firstly they could over claim, resulting in unwanted attention from the ATO, or secondly they could under claim and miss out on receiving the maximum deductions available. These depreciation mistakes generally occur because investors do not have the knowledge of depreciation legislation necessary to separate items appropriately. Furthermore, it’s because they have not sought adequate advice or requested a tax depreciation schedule. To ensure all deductions are correct and maximised, a specialist Quantity Surveyor will complete a site inspection as part of the process of arranging a depreciation schedule. This inspection allows a depreciation expert to take photographs and note every asset within the property. They will also perform the necessary searches to find any details required to estimate construction costs, including those for any renovations which have taken place, even if completed by a previous owner. A depreciation schedule will outline all deductions available for capital works and separately itemise all deductions for plant and equipment items. 3. Not splitting deductions correctly as co-owners Many co-owners make the mistake of calculating depreciation first and then splitting the deductions based on ownership percentage. However, depreciation legislation allows co-owners to split an asset’s value by ownership percentage first, potentially qualifying them for higher rates of depreciation, meaning more money back in both owners’ pockets sooner. Co-owner investors should request a split depreciation schedule to ensure deductions are outlined based on each owner’s interest in the assets contained within the investment property. 4. Incorrectly claiming repairs, maintenance and capital improvements Expenses for repairs and maintenance are claimed differently to capital improvements. The ATO provides clear definitions of each to help investment property owners to ensure these claims are made correctly. Repairs (work completed to fix damage or deterioration to a property) and maintenance (work completed to prevent deterioration to a property) should be claimed as an immediate deduction in the year an expense occurred. However, any capital improvements (work which improves the condition or value beyond its original state at the time of purchase) must be claimed as a capital works deduction or as plant and equipment depreciation. If you’re preparing your tax return, it’s important to seek advice from an expert. Quantity Surveyors are recognised by the ATO as one of a few professionals with the necessary knowledge to calculate construction costs for depreciation purposes. Alongside your Accountant, they can provide guidance to steer you on the right path to ensure your claim is correct and you receive the best possible deductions. This also means you’ll have the adequate evidence necessary should the ATO question any of your claims.

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Tax time tips for commercial property owners

BMT team — Fri, 01 Jun 2018 04:54:09 +0000

With tax time quickly approaching, many property investors will be preparing to visit their Accountant to complete their annual income tax assessment. Getting your tax in order can be a confusing task at the best of times, but when you’ve got a commercial investment property, it can get even more complex. Here are five tax time tips for commercial property owners, to help ensure you’re claiming everything you’re entitled to. 1. Claim for new and old properties Both new and older commercial properties will attract some depreciation deductions. It is a myth that older properties do not attract a claim. Although the Australian Taxation Office (ATO) places restrictions on claiming capital works deductions (depreciation for the structural elements of a property, such as roofs, walls and floors) there are no date restrictions for depreciating plant and equipment assets. The ATO advises that the owner of any commercial property in which construction commenced after the 20th of July 1982 can claim capital works deductions. On the other hand, depreciation deductions for plant and equipment assets are calculated based on the individual effective life for each item set by the ATO. Deductions for plant and equipment are also dependent on each asset’s condition and quality. As these items are rarely the same age as the property, generally having been updated over time, there are often significant deductions available to the owner for plant and equipment depreciation claims. So in a nutshell, if the building itself is too old for a depreciation claim, the owner can generally still claim for the plant and equipment assets contained within. 2. Claim renovations completed by previous owners Any renovations completed to an investment property can also be claimed, even if they were completed by a previous owner. This includes items which may not be obvious such as new plumbing, water-proofing or updated electrical wiring. For capital improvements of a structural nature to qualify as a capital works deduction, the renovation must have commenced within the qualifying dates set by the ATO. Recently installed plant and equipment items are also likely to receive higher depreciation deductions. This is due to the increased costs involved in purchasing and installing these assets and the condition the assets are likely to be in when a specialist Quantity Surveyor makes their assessment. 3. Both tenants and owners are entitled to claim depreciation for any fit-out Commercial tenants can claim depreciation for any fit-out they add to a property once their lease commences. This includes items such as desks, blinds, shelving, carpets, vinyl, fire fighting equipment and security systems. If lease conditions mandate a tenant return the property to its original condition, they may also be able to claim a write-off for any remaining depreciable value available on scrapped assets. This 100 per cent deduction must be done in the same year as the item is removed from the property. Any assets a tenant leaves behind after the tenancy has ended can also be claimed by the commercial property owner. Deductions for fit-outs can become very complicated, so it is important to consult with an expert. 4. Don’t wait if you have only just purchased a property Property investors will often wait until the next financial year to claim depreciation deductions if they have only just purchased a property. However by doing so, they are missing out on valuable cash flow that can be particularly beneficial so soon after outlaying substantial funds to secure the property. Specialist Quantity Surveyors use legislative tools, for example immediate write-off and low-value pooling, to make partial year claims more beneficial to property owners. It is worth consulting an expert to find out what claims are available. Investors can also claim the tax depreciation schedule fee straight back in the same financial year if they arrange the schedule before the 30th of June. 5. Previous year’s tax returns can be adjusted If a commercial property investor has not been claiming depreciation, the previous two financial year’s tax returns can be amended. A tax depreciation schedule can provide the details of any deductions missed for the investor to make a claim and recoup these deductions. To order a schedule so you can start claiming depreciation deductions this tax time, apply online now.

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A property investor’s guide to preparing for tax time

BMT team — Thu, 23 Jun 2016 04:27:38 +0000

As a property investor, tax time isn’t simply a matter of lodging a return based on your group certificate. It is a more complex process that requires careful records keeping and the help of a qualified Accountant and a specialist Quantity Surveyor. Getting it right isn’t just a matter of making sure you aren’t breaking the law, but also to ensure you are receiving all the deductions and allowances to which you are entitled. Property investment is Australia’s most popular form of wealth creation and to successfully get the yields you desire, you need to ensure accuracy and efficiency at this time of year. Get organised It is far simpler to lodge your tax return if you have been keeping your records up to date since the beginning of the last financial year in July. Keep your receipts organised, not just in a shoebox and maintain a ledger of all your incomings and out goings that relate to your property. Often your Property Manager can help you with this by providing a report on the rental income and any expenses incurred throughout the year. Regardless of whether you plan to do your own tax return or use a professional Accountant, if you’re not conscientious throughout the year, you will almost certainly miss things. Being neglectful can cost you money, or, even worse, put you in danger of being audited if you have lodged an inaccurate return. Ask your Accountant for any checklists you can use to stay organised throughout the year. Understand what you can claim The Australian Taxation Office (ATO) readily makes all the information you need to find out what you can legitimately claim available. However, they aren’t going to hold your hand through the process, so it is up to you to learn the ins and outs of taxation and how it relates to you and your investment. Interest If you draw a loan, you can claim on the interest charges if the finance was for the purchase of: A rental property An asset for the property Repairs on the property Renovations Land where you intend to build a rental property These deductions require careful records as you cannot claim for interest incurred when the property is used for private purposes. If the property is only used to generate an income for a portion of the year, then you can only claim on interest charges for that same portion. Depreciation A property that is used to generate an income is eligible for a depreciation claim. This includes both capital works for the structure of the building itself and plant and equipment assets contained in the property, for example the oven, dishwasher, curtains or blinds, carpets, air conditioners, hot water system and any furnishings that are included when letting it. To claim depreciation, you need a comprehensive tax depreciation schedule that breaks down the property and assets into different categories. This schedule can only be compiled by a Quantity Surveyor. These professionals are skilled construction cost estimators who accurately detail the differing rates at which items depreciate and at which the original building can be claimed. The rate of each individual asset in your property is determined by an effective life set by the ATO. For example, in a residential property the carpet has an effective life of ten years and rangehoods an effective life of twelve years. For the building structure itself, residential property investors can claim capital works deductions at a rate of 2.5 per cent per year for a total of forty years. There are restrictions however dependent on the construction commencement date of the property or any additional works that have been completed during structural renovations of the property. Examples of items which are considered to be capital works include the external bricks, walls, doors, windows, roofs and tiles as well as internal fixed items such as bathtubs, toilets, kitchen bench tops and cabinets. To complete a tax depreciation schedule, a Quantity Surveyor will visit the premises, photograph every asset contained, take detailed measurements and complete the relevant research necessary to contact local councils and other relevant bodies to ensure that depreciation deductions are accurate and maximised. Expenses When you spend money on your investment property, you are entitled to claim these expenses back. Fees such as rates and water levies, strata levies, insurance, repairs and maintenance and travel expenses incurred in relation to your income generating property can all be included in your tax return. It is vital to keep ongoing, accurate records to ensure you have proof of the expense and the time frame in which it occurred. Once again, these claims are only valid for expenses that occurred when the property was being let or used to generate an income. If you used the property as your own private residence for three months of the year, then you can only claim for expenses for the other nine months. It is possible to claim a deduction on expenses paid in advance, such as insurance or interest. This means that you will prepay for the next year, then claim it back in the current tax year. This can be a good tactic to offset a capital loss, however you must be careful to keep clear records to prevent it being claimed on in the next tax year. Stay on track throughout the year Tax time doesn’t have to be stressful. Provided you have maintained accurate records throughout the financial year, it will pass without too much extra work. Your Accountant is a great source of information and they, like Quantity Surveyors are happy to provide advice all year round. To avoid the frantic rush to lodge your tax return by the end of October, obtain a depreciation schedule immediately on settlement of an investment property and if you are planning on completing any major renovation work to a property with an existing schedule, find out what implications this will have on the deductions you can claim. Your Accountant can also help you with […]

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Preparing for the end of financial year

Chan Naylor Team — Wed, 08 Jun 2016 04:31:59 +0000

Don’t leave it to the last minute Earnings from investments contribute to the overall income for many Australian households. Since such income is subject to government taxes, it is sensible to structure investments in tax effective manners. Here are some basic ways in which you could reduce your tax liability. Reallocate profits or salary package proceeds into superannuation which reduces your tax liability while planning for a dignified retirement Start a wealth creation portfolio now, using a tax effective investment with a Tax Office Product ruling Revisit your current financial arrangements to bring forward interest Salary package to minimise your overall tax position Case study: John and Karen Both John and Karen decide they each want to put a total of $5,000 away each year towards their retirement. They calculate how much they could save by sacrificing some of their salary into their super account. They also analyse and compare how much they could save by investing outside super. For the purposes of this example, the assumptions are the same for both super and non-super, using an investment return of 7 per cent pa. Summary John earns $75,000 p.a. and pays tax at the marginal rate of 31.5 per cent. After twenty years John’s savings could be: Inside super: $108,123 Outside super: $78,369 That’s a difference of $29,754 if John salary sacrifices into super. Karen earns $95,000p.a. and pays tax at the marginal rate of 41.5 per cent. After twenty years, Karen’s savings could be: Inside super: $108,123 Outside super: $62,484 That’s a difference of $45,639 if Karen salary sacrifices into super. Case study: Matthew Matthew wants to save for a home deposit. Finding a way to make his money work harder now, without restricting his financial freedom and accumulating capital over the medium to long term is his priority. Matthew’s Strategy Adviser recommends that he takes out a margin loan to borrow an additional $40,000, giving him a total of $80,000 in investment capital. That’s considered more than enough to establish a sizeable and well-diversified growth – oriented Australian and global managed fund portfolio. By investing in managed funds, Matthew can combine potential returns with flexibility. Outcomes and benefits: If he needs to access some of his capital in case of an emergency, Matthew can simply sell a portion of his account. Investing via a reputable margin lending provider means that he will have a wide choice of investments to choose from and simple, consolidated reporting. This means he doesn’t have to waste his time doing paperwork, leaving him more time to enjoy the things he loves in life. It is important to remember there are high risks associated with all margin lending facilities such as the potential to lose your entire investment. So, as with Matthew, it is important to speak to a Financial Adviser to determine whether a margin lending facility is appropriate for you. The interest is only deductible to the extent the borrowed funds are used for investment purposes. The potential result: Based on an annual return of 9 per cent, Matthew’s Adviser predicts that at the end of seven years his initial $40,000 investment could be valued at $74,195 (after the loan, tax and interest payments have been paid for). On the other hand, without gearing his account, the amount accumulated at the end of seven years could have been worth $64,166. Matthew’s strategy is also easy and tax effective. Because he is borrowing for investment purposes, he can most likely claim the interest paid on his loan as a tax deduction to offset against his income. If you would like to know more about how Chan & Naylor may be able to help you plan for your future, call on 1300 99 77 34 or email your inquiry to financialoptions@chan-naylor.com.au for a complementary initial consultation. General advice disclaimer The advice provided on this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this website, you should obtain a product disclosure statement relating to the products and consider its contents before making any decisions. Chan & Naylor Wealth Planning disclaim all and any guarantees, undertakings and warranties, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequential loss or damage) arising out of or in connection with any use or reliance on the information or advice in this article. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied.

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