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ELECTION PREDICTION: NO MATTER WHO WINS, CHANGES ARE AFOOT


By William Callaghan

Regardless of who wins this election I’m predicting big changes in the taxes around property

With the Boomer generation set to transfer trillions of dollars (assets) to their children and grandchildren -there is no way the government (whomever it be) won’t want a piece of that action.

Maybe it will be lowering the threshold on Land tax and upping the land tax rate. Meaning the beneficiaries pay taxes through the nose.

Maybe it will be scrapping the CGT grace period when you inherit and on-sell a property

Could even be both!

​…or the Death Tax may ​be back.

Who knows what exactly- but it will be something.

​It probably won’t happen in this election cycle but definitely within 10-years ​

​…as the government ​(of any creed or colour) will not let all that wealth transfer without getting their slice.

I really hope I’m wrong about this so​ let’s see how well this prediction ages.

William Callaghan


THE NIGHT I MET KURT COBAIN


By William Callaghan

WARNING: bad parenting moment ahead

Between getting arrested for continually forgetting to pay the bus fare on the Brisbane public transport network – my eldest brother was also a mad keen Nirvana fan. Along with Iron Maiden, Deaf Leppard and many more.

He was in fact a drummer in one of those heavy-heavy metal bands where the singer just screams like a banshee into the mic.

Well, back in 1993? Mum and Dad were on vacation and 17-year old Tom was left in charge.

Knowing Nirvana were playing on the Coast (big day out I think) and desperate to see Kurt he had a plan.

Not one to be put off by having no licence, no car and living nowhere near the coast, he dragged me along to stalk Kurt’s hotel and to ride the elevator.

Sure enough the unshaven Kurt Cobain eventually stumbled into the lift for a night out on the town -for what I’m sure was just relaxed, upstanding entertainment.

There I was, face to face with the great man himself.

What did he say you may ask?

“Am I larger than life?”

To which I said nothing!
I was 12 afterall. In the lift of a highrise building somewhere on the coast well after dark – and confronted by a huge American and his heavies.

My brother on the other hand said “Not really”

And that was that.

What does this have to do with Tax Depreciation you may ask?

Nothing.

But if your clients ever buy an investment property in a Gold Coast highrise, be confident in knowing I know how to get there.

William Callaghan


THE EEEDIOT INVESTOR: AND HIS WIFE (MY HUGE FAILS AT INVESTING)


By William Callaghan

Rule #1:

Don’t ask me for investing advice.

Here’s why:

Back in 2001 my brother offered me his 100% original HK MONARO 307 V8 GTS for $7,000

My then girlfriend said “TAKE THE MONARO!!”
I said nah, I need a Ute.

Idiot.

I could have since sold that car for $200k maybe more.

Instead I bought a dumpy Hilux for $7,000 spent $5,000 on the motor when it blew up and sold it for $4,000 three years later.

Idiot.

Then in 2005 (now my wife) she told me we should buy a $64k house on the Main Street of Beenleigh.

I said what the hell do I want a rundown old post war home in beenleigh for?

Idiot.

It got rezoned high-density and sold jsut 4 years later for $1,000,000
And since sold again for close to $2m

Idiot.

Then there was the house we actually bought.
She said “no, no, no, NO!”

So I bought it!

$150-$200k in renovations and holding costs and 10-years living in a ‘difficult’ house we sold it for slightly more than what we paid for it.

2-years after we sold it the new owner doubled their money.

Idiot.

So when we pulled the trigger on a brand-new build I wiped my hands of it.

I said to Tami “you choose the land, you design the house (with the help of her award winning architect cousin) and I’ll choose the builder”.

Surely I couldn’t stuff that up…?

Happy dayz!

It all worked and I learnt my lesson:

Listen to your wife when it comes to investing

Clearly I am NOT the person to ask about maximising Capital Growth – on any type of investment.

But I can depreciate the heck out of any investment property!

So if you’ve got another rental and you want to pay less tax – just shoot me an email here https://wrcqs.com.au/contact-us/ and I’ll do my thing.

But… if you want to know WHAT to buy just ask my wife.

Just don’t expect a glowing response if you don’t listen to her 😉

William Callaghan


NIGHTMARE ON RENTAL STREET


By William Callaghan

What happens when a tenant refuses to leave​?​

I’ve come across a few in my time and it ain’t pretty

​Here’s​ the short version of​ what happened to one​ client​:
​”​We purchased our first property interstate (QLD)​ to be our PPOR but it came with existing tenants​.​
So we gave 3-months notice.

But the date to vacate had come and gone and the tenants refused to move.

Our PM ​followed protocol and l​odg​ed for a tribunal​ – but received ​no end of abuse from the tenants.

The tribunal process was set to work – though it meant 3 more months of the tenants ‘squatting’ – us losing money and stressing out big time (if it really did take 3-months, then we were also up for Stamp Duty…because it would be over the 6-month threshold for PPOR stamp Duty concession).

So we offered them $4,000 cash to get out by the end of the month and they took it…eventually”

Yikes!

​The thought of offering a huge cash incentive to nightmare tenants just to kick their asssses out of your own home doesn’t sit well with me.

but…as my grandmother would say “do you want to be right or do you want to be happy?”

​Now:

Some of my clients already have landlord insurance. Typically through TerrySheer.

So I checked them out and saw they actually cover you for up to 28 weeks rent if tenants fail to ​vacate and fail to pay the rent, after a court order.

Not saying you’ll be interested in that sort of protection, but if you are, here’s the link…
TerriSheer Insurance

William Callaghan


HOUSE PRICES COULD RISE 2,102%…AGAIN


If you play the waiting game

By William Callaghan

I come from a family of property investors.
-but they don’t play the buy and sell game.

They play the buy and hold and hold and hold and hold some more game.
-An interesting concept for some investors

But like Einstein says, the best way of teaching is through example

Here goes:

I spent my Easter Monday pouring over historic house sales on RpData.

Crunched a lot of numbers – it’s my vice.

And came up with proof of concept.

  • Houses owned for 20-29 years go up (on average) 878%
  • Houses owned for 30-34 years go up (on average) 1,042%
  • Houses owned for 35-44 years go up (on average) 2,102%

Yes, the media is spruiking doom and gloom for property prices.
The AFR (via Westpac mouthpiece) says property will actually fall 14% by 2024

Maybe they’re right. Maybe not.

One thing is for sure:

The news media are fear mongers

But history is a great indicator of the future. And history shows house prices only ever go up (over time).

Limitations & Parameters:

1. I have a life, so I didn’t spend more than 4hrs on this data subset analysis.

2. I only looked at free standing residential on freehold land
-so no units and no bodies corp. arrangements

3. I didn’t go back beyond pre-Aussie dollar prices
-1979 sales was as far back as i went

4. I broke the data into 3 age brackets for sales-price comparisons
20-29 years
30-34 years
35-44 years

5. I only looked at 5 suburbs (of personal interest to me) within greater Brisbane
Rochedale South
Cleveland
Greenslopes
Darra
Chermside

6. Some houses were significantly renovated – others were like time wraps.

***

This is not any sort of financial advice, merely an observation of the past.
So do with this info what you will

William Callaghan


RE: TAX DEPRECIATION REPORTING


By William Callaghan

A question came:

How do I maximise my deductions and keep you ATO safe?

ANSWER: This is one of the most asked questions of me as a Quantity Surveyor. So here’s my pre-loaded answer.

    • 1. Under claim your deductions (not ideal if you want to improve your cash-flow) but it will keep you ATO ‘safe’.

      • 2. Get the right QS and Accountant in your corner

…A QS who knows the depreciation rules backwards, forwards and sideways

…A QS who is prepared to squeeze every-last-cent of deductions out of your property, even if it means spending more time than it’s worth on your report

most importantly:

An Accountant who is every bit as good…if not better…than your Tax Depreciation Quantity Surveyor.

Oddly, that response has chased away a lot of potential clients who use mass volume ‘tick and flick’ kind of accountants.

William Callaghan


HOUSE FLOODED…WHAT TO CLAIM


By William Callaghan

Came a question from a flooded client:

“…earlier this year you did a depreciation report for me in Pimpama. Unfortunately the house was flooded and we’ve had to rip out the interior. How does this affect my new depreciation report?”

Snippet of my answer:

“…everything that was destroyed can have its remaining value written-off at 100% as a ‘scrapped item’.
So say the carpet had $2,000 worth of value left in it – you can claim that $2,000 as an instant write-off in the 21-22 FY.

Same goes for the plasterboard, paint, doors and so on.
It’s all claimable as an instant write-off.

As for the insurance part…
I can’t include the new items in the report as technically you haven’t paid for them.

…Just make sure you are claiming your insurance premiums as a deduction though.

But:

Any other items you had to buy but insurance didn’t cover can go in the report too.
Some may be deducted as per the normal deduction rates. Some may be claimed at 100% write-off as ‘repairs and maintenance’

Just let me know and I’ll sort it out for you….”

*****

If you ever have a flood, fire or general insurance claim remember the depreciation report needs adjusting.

The reason is two-fold:

    1. it will ensure it remains relevant for use by your accountant
    2. it will maximise instant deductions (so a better tax refund for you)

If you have any questions simply reply to this email

William Callaghan


RIPPED OFF $10,665,900


By William Callaghan
Last week a client warned me of how he was ripped off by an advisor.

It cost him $10,665,900

Here’s what happened:

Brad (name changed) sold a commercial property in the heart of the CBD.
A family owned investment since 1982.

His property advisor said it’s worth $9m so Brad pulled the trigger and sold for $9.1m

But what happened next was terrible, probably not ethical and definitely grey-hat stuff.

The buyer on-sold the property the very same day for a $10m profit.

More than double what he’d paid Brad for it just 4-hrs earlier.

Takeaway:

Always seek the best advice you can afford.

Be it your Accountant, your Quantity Surveyor or even your Real Estate agent.

The good ones work for ‘free’
…a lesson Brad has just learnt the very hard way

Talk soon and stay sharp
William Callaghan


HOW LATE IS TOO LATE FOR A DEPRECIAITON REPORT?


By William Callaghan
“Is it too late to claim depreciation?”

That’s a very common question I get.

…Especially when someone just changed accountants (and the old one didn’t bother to tell them about depreciation entitlements).

The short answer is it’s never too late.

One Caveat:

Wait more than 2-years and you could be losing out on big deductions.

You see:

Until about 7-years ago the ATO would allow you to retrospectively claim deductions as far back as your accountant wanted to go.

This was brilliant for life’s procrastinators.

But the ATO wasn’t a fan.

The extra paperwork and tax refunds they had to issue didn’t sit well with the bean counters.

So they stripped you of the privilege.

Now you can only claim back your tax refund entitlements for the 2-previous financial years + the FY year you are in.

So, if you’ve got an investment property that doesn’t have a report in place yet, you should act ASAP and avoid being blocked from claiming your refund entitlements.

Talk soon and stay sharp
William Callaghan