Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
Speaker 1: the Order Kerni Whoalbury and a waddery woman. And before
Speaker 1: we get started on She's on the Money podcast, I
Speaker 1: would like to acknowledge the traditional custodians of the land
Speaker 1: of which this podcast is recorded on a wondery country,
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
Speaker 1: and the storytelling of you to make a difference for
Speaker 1: today and lasting impact for tomorrow.
Speaker 2: Let's get into it.
Speaker 3: She's on the Money, She's on the Money.
Speaker 2: Hello, and welcome to the new financial year.
Speaker 4: Gotcha, and welcome to She's on the Money, the podcast
Speaker 4: for manials who want financial freedom. Victoria Devine is with
Speaker 4: me as always, and we're talking about something very exciting today.
Speaker 5: Yeah, you've brought a lot of energy for what could
Speaker 5: have been a very dry topic.
Speaker 4: It's not going to be dry. I have a good
Speaker 4: feeling about this. It's the Investor's Guide to Tax Time.
Speaker 5: That is so juicy, That is spicy, spicy clcy Oh,
Speaker 5: I cannot late to jump in. I am so excited
Speaker 5: about this spicy content. Tell me you're not stupidly excited, Beck.
Speaker 2: I'm stupidly excited. My favorite part about this is that
Speaker 2: you're not an investor. Everything that we're going to talk
Speaker 2: about completely irrelevant to you. I'm just glad you're here
Speaker 2: with bells on. It's new news to me.
Speaker 4: I'm a tiny baby in this episode, and I hope
Speaker 4: you teach me a thing or two.
Speaker 5: But my favorite thing about these episodes is whether you're
Speaker 5: ready or not to be an investor. My favorite thing
Speaker 5: ever is making sure you're educated and actually ready for
Speaker 5: the conversation when it does happen. So like, I cannot
Speaker 5: wait for the day that you're like, oh, v I'm
Speaker 5: investing my first fifty bars because you're going to have
Speaker 5: so much education behind you that you're making the right
Speaker 5: decision for you. I think it's such a misconception that, oh, well,
Speaker 5: maybe like this episode about tax and you know, investors,
Speaker 5: it's not relevant for me.
Speaker 2: I totally get that.
Speaker 5: But like, what if in the next twelve months you
Speaker 5: get your financial shit sorted enough that you are an investor.
Speaker 2: You're going to need this next June.
Speaker 5: You're going to need this for future You and I
Speaker 5: think that it's really beautiful in a way to kind
Speaker 5: of like give yourself that education before you need it.
Speaker 5: Like I've said it before and it's probably not the
Speaker 5: right example, but like you don't become a brain surgeon
Speaker 5: by like just going in and doing brain surgery.
Speaker 2: Right, Like you say, YouTube is yeah, oh can you
Speaker 2: do it? Buy YouTube baby again?
Speaker 3: So much cheaper than a med degree at MELBOURNI like, honestly.
Speaker 2: Quicker, quicker twenty minutes.
Speaker 5: You know what, if I ever have to have brain surgery,
Speaker 5: you best believe I want someone with a real degree,
Speaker 5: not someone who's like learn, not me, not you, You're canceled.
Speaker 5: So today we're going to be stepping through a few
Speaker 5: very important points on this huge topic to give you
Speaker 5: guys some general basics when it comes to tax time
Speaker 5: and your investments and what to do, because it can
Speaker 5: be super overwhelming and it's worth obviously bearing in mind
Speaker 5: that tax implications and beck the possible benefits of certain investments.
Speaker 5: So generally, all of your investment income needs to be
Speaker 5: declared in your tax return, all of it, every single dollar.
Speaker 2: Interests, dividends, rent, managed fun distributions, capital gains from properties, shares,
Speaker 2: and cryptocurrency.
Speaker 5: And if you're like, oh my gosh, I'm not an
Speaker 5: investor v I just have my money in a high
Speaker 5: interest savings account.
Speaker 2: Beck, that's interest, you have to declare that, Oh my gosh,
Speaker 2: exactly scary.
Speaker 5: So it's not scary, it's just about being transparent.
Speaker 2: And to be honest, guys, it's twenty twenty three.
Speaker 5: The tax system is so advanced that more often than not,
Speaker 5: you're not even going to have to do the research.
Speaker 5: It will just be in your tax return already because
Speaker 5: your bank ruty has your TFN. So it's very likely
Speaker 5: that all of this could be automated for you. And
Speaker 5: that's why so many times when I talk to people
Speaker 5: and they say, I'm not sure should I be doing
Speaker 5: my tax return myself? You could give it a crack, like,
Speaker 5: it is so much easier than it used to be.
Speaker 5: So you pay tax on investment income at your marginal
Speaker 5: tax rate, that's the rate that you pay tax.
Speaker 2: On your normal income.
Speaker 5: However, there are some special rules that apply to what
Speaker 5: we call.
Speaker 2: Capital gains, which could arise on quote, the disposable of
Speaker 2: your assets.
Speaker 5: That just means you sell them in a fancy way,
Speaker 5: right like capital gains is a tax that you pay
Speaker 5: when you sell an asset and it is worth more
Speaker 5: than what it was when you purchased it, because they
Speaker 5: look at it and they go, all right, well, beck,
Speaker 5: if you bought a share for ten dollars and it
Speaker 5: did really well and it got to fifteen dollars and
Speaker 5: you were like, well, I'm going to sell it, they're
Speaker 5: going to go okay, cool, you bought it at ten dollars,
Speaker 5: it's now worth fifteen. Capital gains will apply to that
Speaker 5: five dollars that you made because in Australia and usually
Speaker 5: every other tax environment in the world, you have to
Speaker 5: pay tax on what you earned.
Speaker 2: And you earned about five dollars. Does that make sense?
Speaker 2: That does make sense.
Speaker 5: So you're allowed tax deductions for the cost of buying,
Speaker 5: managing and selling an investment, which is really cool. So
Speaker 5: if you've been brokering shares during the year, like you've
Speaker 5: jumped on shares is and there were fees, you can
Speaker 5: claim them on your tax. That is very sexy, I think.
Speaker 5: But there are also rules around what you can and
Speaker 5: claim as a tax deduction. We'll obviously get onto those later.
Speaker 5: And I genuinely think that more.
Speaker 2: Things should be tax deductible.
Speaker 5: Like something that really grinds my gears back and we'll
Speaker 5: obviously get into more of the semantics of it, but
Speaker 5: as somebody who is an ex financial advisor, this really
Speaker 5: grinds my gears. So you obviously go and see a
Speaker 5: financial advisor if you've got some money and you want
Speaker 5: to be in the best possible financial position. And a
Speaker 5: lot of the time you'll see a financial advisor and
Speaker 5: they will say, all right, Beck, you've got you know
Speaker 5: this amount today and we're going to grow it to
Speaker 5: this amount over here, and with my advice, you're going
Speaker 5: to be hopefully hundreds of thousands, if not millions of
Speaker 5: dollars better off. You go, great, that's fantastastic. What grinds
Speaker 5: my gears is that process where you're putting yourself first
Speaker 5: sounds really sexy. That benefits our government significantly, Like the
Speaker 5: idea that if somebody an individual goes and sees the
Speaker 5: financial advisor about their superannuation, even if they are just
Speaker 5: a general employee, like we're not talking about millionaires seeing
Speaker 5: financial advisors, which you're talking about general mum and dad
Speaker 5: seeing financial advisors, they will be in a better off
Speaker 5: financial position because of that advice, which means the likelihood
Speaker 5: of them claiming a pension in the future.
Speaker 2: Far far less likely.
Speaker 5: Right, So, like, if you go and see your financial advisor,
Speaker 5: you're probably not going to rely on the government during
Speaker 5: retirement because the whole point is that you're working towards
Speaker 5: a secure individual financial future.
Speaker 1: Right.
Speaker 5: Does that not pique the government in the best possible
Speaker 5: positions sense? Why are they not letting us claim the
Speaker 5: cost of initial financial advice where you get your statement
Speaker 5: of advice on tax?
Speaker 2: Why can't I claim that?
Speaker 5: Does it not put you in the best possible position
Speaker 5: government to give me some tax back now on the
Speaker 5: probably anywhere between three and eight thousand dollars fee, which
Speaker 5: would be very sexy. Why can't you let me have
Speaker 5: that initial piece of advice with some kind of like
Speaker 5: you know, tax incentives so that more of us do it,
Speaker 5: so less of us down the track actually claim pensions
Speaker 5: and actually need government support.
Speaker 2: But you won't do that.
Speaker 5: Isn't that insane when you like extrapolate it out and
Speaker 5: go hold on, the government would actually be better off if
Speaker 5: more of us got advice. And the amount of times
Speaker 5: I saw people ask me questions when I was working
Speaker 5: as a financial advisor. Oh can I claim this on
Speaker 5: tax and I'd have to go, look, no, you can't, unfortunately,
Speaker 5: because it's initial advice. But what you can claim is
Speaker 5: ongoing investment advice. So like after you've got your initial advice,
Speaker 5: any monthly fee after that is claimable, but not the
Speaker 5: initial and the initials the thing that scares most people off, right,
Speaker 5: because like if I said to you, hey, beck, get
Speaker 5: financial advice, it will put you in the best possible position.
Speaker 2: You go, oh my god, this.
Speaker 5: Is such a good idea, but like it's such a
Speaker 5: high upfront. I don't mind about the ongoing monthly fee,
Speaker 5: like that's completely manageable, but the upfront scares people off.
Speaker 2: I totally. I've got thoughts. Anyway, maybe you should write
Speaker 2: a letter to the tax person.
Speaker 5: Yeah, hello, mister tax man, please let me claim this
Speaker 5: because it will be the goodest for you.
Speaker 2: Yeah.
Speaker 5: Like, it's a very very what's the word persuasive, it's
Speaker 5: a persuasive argument.
Speaker 4: It's persuasive, And really, I think that you've really thought
Speaker 4: this through.
Speaker 2: I think this is a great idea I.
Speaker 5: Actually have because do you know how frustrated I would
Speaker 5: get every single time I would have to explain to clients, No,
Speaker 5: you can't claim me on tax, like you can't claim
Speaker 5: my initial advice. But you can for your accountant, you
Speaker 5: can for any other service providers related to money, just
Speaker 5: not me because the government doesn't see me as valuable
Speaker 5: as I am.
Speaker 2: Oh my gosh, yeah you need to write. I've just
Speaker 2: got a lot to say about that process.
Speaker 5: But then also the part where financial advisors basically undersell
Speaker 5: themselves completely, Like you guys are so magical and put
Speaker 5: people in such good financial positions. But like if I
Speaker 5: busted in the door and said, all right, Beck, we're
Speaker 5: gonna sit you down. I'm going to put you in
Speaker 5: the best possible financial position of your entire life, You're
Speaker 5: going to be so financially secure. See, your subranuation might
Speaker 5: be sitting at eighty thousand dollars right now, but when
Speaker 5: you retire, it's going to be well over a million.
Speaker 5: Because of my advice, You're going to be literally millions
Speaker 5: of dollars better off. You'd be like, oh, I'm in
Speaker 5: You sound like a sales queen, whereas financial advisors don't
Speaker 5: do it that way. They like are a lot softer
Speaker 5: and a lot more gentle with the process because obviously
Speaker 5: you don't want to scare people off.
Speaker 2: But then clients have the audacity.
Speaker 5: And come back and be like, oh, four thousand dollars
Speaker 5: is a fee that's insane. Absolutely not paying that. I'm like,
Speaker 5: you're literally going to make more than a million dollars
Speaker 5: because of me. But okay, no worries.
Speaker 2: Jeez. Anyway, there's just a lot to be said on
Speaker 2: that topic. Yeah.
Speaker 5: That so this episode is about but get financial advice.
Speaker 5: Now's a good time to think about your insurances as well.
Speaker 5: So if you haven't got that advice, yes, I would
Speaker 5: be going and actually, you know, putting yourself in the
Speaker 5: best possible position. We obviously have a recommend Phil from
Speaker 5: Skywealth is who you should be going and talking to
Speaker 5: about your situation. And his fee is not thousands of dollars.
Speaker 5: It's like three hundred and ninety five for a consultation,
Speaker 5: which is wild, Like for all advice, you can't claim
Speaker 5: it on tax I AM really sorry. But given his
Speaker 5: fee is only a couple of hundred dollars in comparison
Speaker 5: to thousands, to put yourself in the best possible decision,
Speaker 5: I think that's really good money when you.
Speaker 2: Had to go anyway, Soling Advice.
Speaker 4: So V, I want to know when it comes to
Speaker 4: investing in tax returns, what do you need to have prepared?
Speaker 2: Everything? Everything, every single thing.
Speaker 5: Yep, you should have like a Manila folder, one of
Speaker 5: those light yellow ones that give me anxiety from the
Speaker 5: amount of times I used to use them.
Speaker 2: To write that down. Get Manila folder on my shop list.
Speaker 5: If you could get like a label maker and label
Speaker 5: it as well, that would make it feel a lot
Speaker 5: more official.
Speaker 2: Really stucking up place. Yeah, label maker, yep, yep, you're
Speaker 2: writing this down.
Speaker 3: I like it.
Speaker 2: You're taking this very seriously.
Speaker 5: What you want actually is your investment income as a report.
Speaker 5: Most investment platforms will automatically generate this for you and
Speaker 5: email it to you. So misconception is that it will
Speaker 5: be available on the thirtieth of June or the first
Speaker 5: of July. That is not true, and it's not not
Speaker 5: true because they're lazy and haven't done the reporting. It's
Speaker 5: because we actually need the date to pass so that
Speaker 5: we can actually look at the historical changes and what
Speaker 5: actually happened in your portfolio. And reporting is actually quite
Speaker 5: intricate in in depth. So investment reports usually come out
Speaker 5: from I would say the middle of July. So anywhere
Speaker 5: between the middle of July to the end of July
Speaker 5: is when I usually see them hit my accounts. So
Speaker 5: if you're one of those people like Beck Beck wants
Speaker 5: to get her tax returning asafety right, yes, Like, once
Speaker 5: you start investing, that process has to be pushed off
Speaker 5: a little bit because you're waiting for these reports. So
Speaker 5: you want your investment income, you want to make sure
Speaker 5: that you're claiming all the deductions that you're entitled to.
Speaker 5: So this is really hard.
Speaker 3: If you get to the point where you're like, oh
Speaker 3: my gosh, I've got to do my tax return.
Speaker 2: You haven't been thinking about it.
Speaker 3: You're like scrambling to work out what you can and
Speaker 3: can't claim.
Speaker 5: I've said it before on the show. The Ato actually
Speaker 5: have an app where you can keep track of things
Speaker 5: throughout the year. But if you're like me and you
Speaker 5: just don't want another app on your phone, you can
Speaker 5: actually just put a folder in your photos and just
Speaker 5: take photos of things as you go along. If you
Speaker 5: looked at my albums in my photos section, BEG, you'd
Speaker 5: be like, this woman's unhinged, Like I have a folder
Speaker 5: for everything. I have a folder for tax I have
Speaker 5: a folder for business tax I have a folder for
Speaker 5: all of the outfits I've worn historically that I really like.
Speaker 5: I have a folder for all of the expenses i've
Speaker 5: incurred trying to make a baby with my husband. Wild
Speaker 5: Like you would literally look at my phone and be like, Victoria,
Speaker 5: why have you got? Yeah, But when it comes to
Speaker 5: tax time, you best believe I just flipped my phone
Speaker 5: around and I'm like, hey, beck, look at all these costs.
Speaker 2: I can claim that is so good, makes Victoria.
Speaker 4: If the ATO needed like proof or receipts, a photo
Speaker 4: of a receipt is it's absolutely sufficient.
Speaker 5: Okay, great, because you will have to provide that to
Speaker 5: the ATO anyway, if you get audited and they're just
Speaker 5: going to ask for a quote the original receipt, but
Speaker 5: a photo of that attached is much easier to go
Speaker 5: back in email than going, oh hey, yep, misster tax man,
Speaker 5: let me just go under my bed to the shoe
Speaker 5: box where I keep all of those receipts. Also, something
Speaker 5: that you probably haven't considered, but I've seen happen far
Speaker 5: too many times is receipts fading. So receipts more often
Speaker 5: than not are printed.
Speaker 2: On Thermo paper.
Speaker 5: Thermo paper means that when the receipt comes out, it
Speaker 5: doesn't have ink. It actually heats up and it prints
Speaker 5: that way. So if you leave a receipt in your
Speaker 5: car on a hot day, it is very likely that
Speaker 5: that receipt loses all of the information that was on
Speaker 5: it because it's overheated.
Speaker 2: Do you remember those.
Speaker 5: Pens where you could like rub them out but they
Speaker 5: were pen, Yeah, that actually disappeared because of friction, not
Speaker 5: because of the rubber doing it.
Speaker 2: It was actually friction and heating it up.
Speaker 5: So one time, I used to be obsessed with like
Speaker 5: eraisable pens because I'm a lefty and I mess everything up,
Speaker 5: So a raisable pens they don't smudge, So I loved that.
Speaker 5: But then also I loved that I could just like
Speaker 5: eraise my mistakes and my notes would always look perfect.
Speaker 5: Like I don't know if you've noticed this, but I
Speaker 5: like being organized. I like everything to look perfect, Like
Speaker 5: I used to write everything in these like erasable pens.
Speaker 5: Notebook car hot day, lost every note I ever had
Speaker 5: for a client. And now I've never used an eraisable
Speaker 5: pen ever again because I'm triggered. Yeah that makes sense,
Speaker 5: that's but that is why, in a very long winded
Speaker 5: way of saying, it's actually better to take a photo
Speaker 5: and save it because the likelihood of your receipt disintegrating
Speaker 5: whether you look after it or not, is very high.
Speaker 4: Now, I wonder if I had a piece of paper
Speaker 4: that may or may not have once been a receipt,
Speaker 4: sent that to the ATO and said, I'm so sorry.
Speaker 2: This is not kind of fly that you don't have proof.
Speaker 1: Ah.
Speaker 5: Yeah, it's kind of like when the police come to
Speaker 5: get you, and it's like innocent, indelatable, innocent until proven guilty.
Speaker 5: But also you've got to prove that you're innocent, right,
Speaker 5: you know, like if you get accused something, they'll be like, well,
Speaker 5: prove you didn't do it, and you're like, oh, well damn,
Speaker 5: I don't know how I'm going to do this. Yeah, honestly,
Speaker 5: TLDR of this conversation, take photos of your receipts, save
Speaker 5: them somewhere important. It could be a folder, it could
Speaker 5: be the a tier app, it could be anywhere. But
Speaker 5: that's going to mean that all of your tax deductions
Speaker 5: are much easier to one claim because it's just in
Speaker 5: the one space. But also, remember, like I forget all
Speaker 5: the time. I'm a business owner as well as somebody
Speaker 5: who claims on my personal tax. So these small things
Speaker 5: add up. Like if you're going to pop past office
Speaker 5: works and pick up some last minute things or some
Speaker 5: like pens or some notes, or you know, I buy
Speaker 5: a million sharpies and post it notes, like take photos
Speaker 5: of those receipts, because they're the ones that if it's
Speaker 5: for work purposes, you can claim. So just make sure
Speaker 5: that throughout the year you're just keeping track of stuff,
Speaker 5: my friend. It will also mean that when you have
Speaker 5: to like calculate any capital losses or capital gains when
Speaker 5: you sell an investment, like just keep everything in one place.
Speaker 5: It'll make it so much easier, whether you're doing it
Speaker 5: individually or you're handing that information over to an accountant.
Speaker 5: My accountant loves me, he really does, because I'm so
Speaker 5: organized that I make his lafe so much easier.
Speaker 4: I can imagine that would be very nice, exactly, love
Speaker 4: to see Victoria walking through those doors.
Speaker 2: Yeah, I mean that's how I feel.
Speaker 5: I mean, it's probably just my ego telling me that
Speaker 5: that's it. He's probably just like, yep.
Speaker 2: Another cut paste client, no worries, But I think of
Speaker 2: course you can. You can see it in his eyes.
Speaker 2: Yeah yeah, Now, V what.
Speaker 4: Do we actually need to keep records off to show
Speaker 4: the ato erroiting erroting errooting? Okay, so if you are
Speaker 4: claiming something, you must have a receipt for that, even
Speaker 4: if it's under the.
Speaker 5: Do I say in my office this is terrible. I'm
Speaker 5: going to get in trouble with the environmental hippies. When
Speaker 5: in doubt printed out like we need it, And I
Speaker 5: don't actually mean to print it like on hard paper.
Speaker 5: Sure you know when you like get emailed like a
Speaker 5: receipt or something. Love that I say, when in doubt
Speaker 5: printed out, because if you hit print, like the invoice
Speaker 5: that you've been sent or the receipt or whatever, you
Speaker 5: can actually save it to PDF and put it in
Speaker 5: an album.
Speaker 2: And that's what I do.
Speaker 5: I'm not actually printing it, but I'm saving it, filing
Speaker 5: it away, because I guarantee the last thing small business
Speaker 5: owners want to do, or anyone wants to do, is
Speaker 5: troll through their emails trying to find an attachment for
Speaker 5: an invoice that they paid back in January?
Speaker 2: Right, how do you want to do that? How can
Speaker 2: you remember? Also?
Speaker 5: Oh my gosh, the amount doesn't line up because there's
Speaker 5: lots of different invoices that get paid. Honestly, just file
Speaker 5: it away. We use an accounting system at the moment,
Speaker 5: we're using zero, so it's all just like tracked in there,
Speaker 5: and it makes it so much easier that small business
Speaker 5: side of things. But when it comes to being an individual,
Speaker 5: like just file it away. Even in your emails, have
Speaker 5: a little like separate email folder that you can just
Speaker 5: click and drag things that you think might be relevant
Speaker 5: to tax time. Call it tax time and call it
Speaker 5: tax time twenty twenty three or twenty twenty four, because
Speaker 5: I promise you you're not going to want to look
Speaker 5: at all your old tax stuff next year. And at
Speaker 5: least it's all kind of like folders. So I've got
Speaker 5: tax time twenty twenty, tax time twenty twenty one, twenty
Speaker 5: twenty gen know what I mean. Totally Just be organized,
Speaker 5: it will help you.
Speaker 4: I unfortunately, do have twenty maybe thirty emails because I,
Speaker 4: you know, want to sign up for Netflix and have
Speaker 4: a free trial doneary every month. Yeah, so for me
Speaker 4: it's going to be a bit of a nightmare trying
Speaker 4: to find all the invoice.
Speaker 5: But if you were doing it as you were going, Yeah,
Speaker 5: were very much easier, right.
Speaker 4: Absolutely, So you know what I might do if i'd
Speaker 4: start doing Yeah.
Speaker 5: When it comes to investments, though, what you're really wanting
Speaker 5: to keep track of is kind of the start and
Speaker 5: the end of the process, like the middle ground. It's
Speaker 5: fun for you, but the tax man isn't going to
Speaker 5: care as much. What they want to know is how
Speaker 5: much would you pay for that asset? How much did
Speaker 5: you sell that asset for? Or how much is that
Speaker 5: asset worth today? Like what is it worth when we
Speaker 5: do our tax return? Right, so, like we also want
Speaker 5: to understand how much income are you getting from that investment.
Speaker 5: Make sure that you're just keeping record of all income
Speaker 5: payments like your distribution statements or like your rental payment
Speaker 5: receipts and dividend statements. And then also Beck, we want
Speaker 5: to make sure that we are keeping track of any
Speaker 5: expenses that you incur while owning that asset, so receipts
Speaker 5: for payments to manage. So if you're engaging a property
Speaker 5: manager claiming it, we are making sure that we are
Speaker 5: tracking any cost that we incurred to maintain the property.
Speaker 5: So say something happened to the front door, and you
Speaker 5: needed to replace it on a rental claimable because it's
Speaker 5: an improvement or a maintenance thing for your property. We
Speaker 5: also want to make sure that we're claiming any cost
Speaker 5: that was incurred to improve your investment. So like as
Speaker 5: I said before, you're not able to claim first initial
Speaker 5: advice with a financial advisor, but you can claim ongoing
Speaker 5: which is improving your investment, So there's lots to it.
Speaker 5: You also need to keep your records for five years.
Speaker 5: That's why I didn't say delete that folder when you're done.
Speaker 2: Don't do that.
Speaker 5: You need to keep it for five years on record
Speaker 5: because that's the period of time that they could potentially
Speaker 5: audit you for and you'd have to prove it. So
Speaker 5: just important to make sure that it's all filed away
Speaker 5: and then you can delete it after five years if
Speaker 5: anything Like me, you still have your tax return information
Speaker 5: from twenty sixteen.
Speaker 2: It's all good. Like I don't delete.
Speaker 5: Anything because I'm not going to go back through that,
Speaker 5: but at least it's biled away for future use.
Speaker 4: Yeah, yeah, I love that. Okay, this is interesting about
Speaker 4: the landlord thing. Sorry, the landlord thing, not the landlord thing.
Speaker 4: If you have an investment property.
Speaker 5: Yeah, because it's an investment and you're paying for things
Speaker 5: to improve the property.
Speaker 2: Yeah, so you can claim it. That is really really cool.
Speaker 5: It's one of the sexy reasons why people who have
Speaker 5: investment properties, you know, might choose to buy an investment
Speaker 5: property and then renovate it or make substantial improvements to
Speaker 5: it while it is still an investment. Obviously, you need
Speaker 5: to talk to an accountant and get some advice on
Speaker 5: this because there are like, you know, regulations and things
Speaker 5: that you need to abide by. But if you wanted
Speaker 5: to improve the property and you know, change the bathroom
Speaker 5: or update the bathroom, if it's an investment, you can
Speaker 5: claim some of that.
Speaker 4: What things can you claim on and what can you
Speaker 4: not claim on? So I'm assuming if you like live
Speaker 4: in a house, it's not obviously an investment. So if
Speaker 4: you're you know, fixing up your own house that you
Speaker 4: have maybe purchased, you could be able to claim that.
Speaker 5: No, no, no, because it's not an investment and it
Speaker 5: has to like they're asked, And that's why I said,
Speaker 5: get advice on it.
Speaker 2: You can't just listen to a podcast.
Speaker 5: And be like, well, Victoria Device said, because babe, that's
Speaker 5: not going to fly with the ATO, Like I'm pretty
Speaker 5: close with them, but all that close, like don't name
Speaker 5: drop me, you know, like they're probably gonna side, are
Speaker 5: you all? Victoria's said, okay, Victoria, Well in that case,
Speaker 5: like give me who this woman again?
Speaker 2: Like we're so sick of her. Anyway.
Speaker 5: What you can claim is interest income expenses, so claiming
Speaker 5: a deduction for like account keeping fees that you incur
Speaker 5: on an account held for investment purposes, like a cash
Speaker 5: management account. So like, for example, I have a separate
Speaker 5: bank account with McQuary because I invest with six Park
Speaker 5: as well, So like not recommendation, I'm just sharing some information.
Speaker 5: I invest through six Park and through them, I have
Speaker 5: a cash management account with mcquarie, and that's where essentially
Speaker 5: I direct debit cash to that account and then six Park,
Speaker 5: which is the investment platform that I use, They actually
Speaker 5: have authorization to take money just out of that account,
Speaker 5: so I move into that account so that then when
Speaker 5: I say, yep, I would like you to invest X
Speaker 5: amount of my money, they just take it out of there.
Speaker 2: And we need that account.
Speaker 5: Because I'm not going to give them authorization on my
Speaker 5: daily transaction account, right like I want that middle buffer
Speaker 5: where they can only touch that money that is in
Speaker 5: that cash management account. That account has fees, so I
Speaker 5: can claim those fees on tax which is kind of cool,
Speaker 5: but a lot of people would just like dismiss it
Speaker 5: and not think about it because they're like, oh, that's
Speaker 5: just some structure that I've set up to invest whatever.
Speaker 5: Don't think about it again. You can claim that, and
Speaker 5: you need to claim that because you're entitled to it,
Speaker 5: Like we need to claim what we are entitled to.
Speaker 5: So don't throw away those like fees statements when they
Speaker 5: come through. If you have a joint account, you can
Speaker 5: only claim half, like or whatever your joint amount is.
Speaker 5: So obviously you can only claim your share of the fees,
Speaker 5: not like the total fees. You can't double dip. I'm
Speaker 5: really sorry because I know some people might be like, oh,
Speaker 5: I'm going to double dip you in. My partner will
Speaker 5: do it and I will do it. No, no, no,
Speaker 5: you can't do that.
Speaker 2: Sorry.
Speaker 5: You can also claim on charges or taxes on that account.
Speaker 5: So for example, like if you hold an equal share
Speaker 5: in an account with your partner, you can only claim
Speaker 5: half of that allowable account keeping fee. It's kind of rude,
Speaker 5: but also like it makes sense. Yes, suppose to this
Speaker 5: second part of your question. You were asking about what
Speaker 5: you can't claim. So you can't claim a deduction for
Speaker 5: the interest you incur on personal tax debt.
Speaker 2: Sorry, I need to absorve that so that at that time.
Speaker 5: I just stopped when I said that the interest that
Speaker 5: you incur on a personal tax debt. So like, if
Speaker 5: you've got a personal tax debt, yes, and you owe
Speaker 5: the atos and casholer ah, and then you're occruing interest
Speaker 5: on that debt. You can't claim that interest because in
Speaker 5: another circumstance, so like say you bought a house back,
Speaker 5: you are able to claim the interest on that property, oh,
Speaker 5: because it's for investment, But you can't claim the interest
Speaker 5: on a tax debt.
Speaker 2: For example.
Speaker 5: This is coming up because a few people have asked
Speaker 5: me that question, because you might be like, oh, they,
Speaker 5: why are you mentioning that that that doesn't make a
Speaker 5: lot of sense for an investment. You can claim the
Speaker 5: interest on the money that you borrowed because it's a
Speaker 5: cost of investment.
Speaker 2: Okay, I taxed it. That's not the same.
Speaker 5: You can't claim the interest on a loan that you
Speaker 5: take to pay your personal tax dep yep. Okay, So
Speaker 5: if you say borrow money to put into literal investment,
Speaker 5: maybe like superannuation or something that can be considered not
Speaker 5: necessarily superannuation, but you can do it on property. So
Speaker 5: you might go get a mortgage to buy an investment
Speaker 5: property and then you'll pay an interest rate to borrow
Speaker 5: that money that is claimable and then also something that
Speaker 5: you're probably not have going to come across before, but
Speaker 5: I've covered on the podcast, just kind of like topically,
Speaker 5: you can actually borrow money to invest in the share market,
Speaker 5: so you could claim on that as well. So it's
Speaker 5: not something that a lot of people in our community do,
Speaker 5: especially in this economy. I don't think it's you know,
Speaker 5: the wisest decision ever because obviously, as you know, interest
Speaker 5: rates for borrowing money are quite high, but then the
Speaker 5: stock market is I wouldn't say returning low. It's not that,
Speaker 5: but it's not as good as it could be. So
Speaker 5: having a leveraged portfolio, so leveraged portfolio just means I
Speaker 5: have borrowed money to create my portfolio is not something
Speaker 5: that I assume a lot of financial advisors are recommending
Speaker 5: at this point in time.
Speaker 2: Sure, it is.
Speaker 5: Something that financial advisors do use. It is something that
Speaker 5: I have recommended, is something that I have worked with
Speaker 5: with my clients before. It's also something that I've used
Speaker 5: personally and owned before, but I don't currently own at
Speaker 5: the moment because the market just started to not make
Speaker 5: sense in that aspect and I sold it and got
Speaker 5: rid of it and just said, yeah, the market's not
Speaker 5: performing the way I would want it to see for
Speaker 5: me to take on that risk. Sure in saying that,
Speaker 5: if you're listening to this, just as a side note,
Speaker 5: and you do have a leveraged portfolio and you're like, oh,
Speaker 5: Victoria doesn't have hers anymore, I should get rid of mine,
Speaker 5: That's not the case at all. I am just very
Speaker 5: risk averse. The second there's any lack rocky waters, I'm like,
Speaker 5: God right away, So I talk to your financial advisor
Speaker 5: about that, because I can almost guarantee that you have
Speaker 5: a financial advisor if you have a leveraged.
Speaker 2: Portfolio, that is a very strong assumption.
Speaker 5: Strong assumption, and not many people go get their own
Speaker 5: investment loans and diy the whole thing. Like, if you're
Speaker 5: going to take on that much risk back and you're
Speaker 5: willing to, you know Moorrow one hundred grand to get
Speaker 5: into the share market. Like very likely that you also
Speaker 5: see the value in paying for personal advice on.
Speaker 2: That, right, Like, just the math is mathing in that city.
Speaker 2: The math is Mathan, the math is mathing. So V,
Speaker 2: how about dividend and share income expenses?
Speaker 5: I like that you're reading that out in a way
Speaker 5: that you're like, I've just been pondering my dividend and
Speaker 5: share income expenses. Not I've just been beck and I
Speaker 5: did some research and I wrote down these questions to
Speaker 5: ask Victoria.
Speaker 2: Yeah.
Speaker 4: No, I've just been sitting here wondering. Yeah about dividend
Speaker 4: yield sealed?
Speaker 3: Yeah?
Speaker 2: Wow, impressive. So you're right.
Speaker 5: You can claim a deduction for costs that you incur
Speaker 5: to invest in shares, as I said before, obviously borrowing money,
Speaker 5: but that's probably not going to be that popular right now.
Speaker 5: But ongoing management fees are retainers, financial advisors and such
Speaker 5: fees for advice about changes to your investment mix or
Speaker 5: your risk profile. It's kind of like if you're paying
Speaker 5: somebody to rebalance your portfolio, you can claim that. Yeah,
Speaker 5: but then you're also able to claim the expenses if
Speaker 5: you wanted to go to the annual general meeting of
Speaker 5: a company that you hold shares in. And I've seen
Speaker 5: people do this before. In fact, our friends over at
Speaker 5: Equity Mates, I believe they did this and went to
Speaker 5: the US to attend a meeting, and I thought that
Speaker 5: was so cool. They didn't talk about whether they were
Speaker 5: able to claim it on tax or not, but I
Speaker 5: can almost guarantee that they were able to, and I
Speaker 5: think it's just real cool, like so ye, But I
Speaker 5: am also a stock and share nerd and like that
Speaker 5: would be my dream to be like able to be
Speaker 5: in on one of those like can you imagine going
Speaker 5: to Wall Street?
Speaker 2: Like you go to an annual general meeting?
Speaker 4: Like oh yeah, well if I buy like shares in
Speaker 4: like McDonald's.
Speaker 2: Our producer is literally laughing at me and I get it.
Speaker 2: Sit down, she's been to Wall Street. You know what.
Speaker 3: I'm going to Wall Street later this year and I
Speaker 3: have never been more excited, Like what are you going for?
Speaker 2: I'm going to become your Wall Street girlie? Like anyway,
Speaker 2: I actually have.
Speaker 5: A finance conference in New Orleans, which is very cool.
Speaker 2: I'm so excited.
Speaker 5: Yeah, I think concin New Orleans this year and a
Speaker 5: Lisa you gotta be in it to win it. So
Speaker 5: we're going to New Orleans. If you know anything about geography,
Speaker 5: you would know that New Orleans is not even close
Speaker 5: to New York, but it is close enough for an
Speaker 5: Australian to justify the additional travel to New York.
Speaker 1: Oh.
Speaker 2: Absolutely.
Speaker 5: So I'm like, oh, is that a really long flight
Speaker 5: from New Orleans to New York?
Speaker 2: Absolutely? It is. How long of it? Oh, it's like
Speaker 2: four or five hours.
Speaker 5: Away, which is like it's not like a Melbourne to Sydney, sure,
Speaker 5: but like it's definitely a moody on the.
Speaker 2: Other side of the world as well. I may as
Speaker 2: well go see Wall Street as well.
Speaker 5: I'm gonna look at that little bull and like REBT's
Speaker 5: little nose and be like, hello, little bullfriend. If you
Speaker 5: know I'm talking about I don't kind of say a
Speaker 5: aalsa is part of the bull.
Speaker 2: What is this ball? It's a brass bull. So like
Speaker 2: the brass bull.
Speaker 5: Yeah, So there's a bull and a bear because like
Speaker 5: we talk about a bullmarket and a bear market. A
Speaker 5: bull market is where the market's being really aggressive and
Speaker 5: you know, it's kind of like waving a red flag
Speaker 5: to a bull and everything's going up and everybody's happy
Speaker 5: and there's a lot of excitement. And then the bear
Speaker 5: market is a market where it's relatively bear so like yeah,
Speaker 5: kind of like in a hybernation zone, right, So like
Speaker 5: a bear is obviously a little bit more chilled than
Speaker 5: a ball with a red flag. They're more likely to
Speaker 5: go into a cave for a little while and have
Speaker 5: a little nap. Anyway, those are the true like mascots
Speaker 5: of Wall Street, and your girlie is gonna pat them,
Speaker 5: but they're actually just brass statues that are on the street.
Speaker 5: And I'm just really excited, And to be honest, I
Speaker 5: think I'm going to be excited until I get there
Speaker 5: and then I realize it's just like standing on Colin
Speaker 5: Street in Melbourne and it's actually really boring.
Speaker 2: But boring and overwhelming people everywhere tell people about it, Yes, exactly,
Speaker 2: I can gloat about it. I'm like, well, have you've
Speaker 2: been to World Street. Yep, it's going to be a
Speaker 2: storytell for a bar. I stood on the street and
Speaker 2: did absolutely nothing.
Speaker 5: I padded the ball, the brass ball. I'm very excited
Speaker 5: about it for you. All right, let's get back to
Speaker 5: talking about tax on your investment. Yes, please, because you
Speaker 5: best belief my trip to the US is an investment.
Speaker 2: Actually it will be because it's for a finance conference. Oh,
Speaker 2: she's on the money. The team's going.
Speaker 5: Yeah, it'll be good anyway. What else can you claim
Speaker 5: a deduction for? You can claim a deduction for specialist
Speaker 5: investment journals and subscriptions, so you best believe. I claim
Speaker 5: my Australian Financial Review subscription every year. Borrowing costs and interests.
Speaker 5: We covered that. The cost of internet access. Oh, because
Speaker 5: you've got to have the internet to invest. Yes, the
Speaker 5: decline in value of your computer that you used to invest.
Speaker 2: Do you have to be investing to claim these things? Yeah? Yeah,
Speaker 2: that's a real shame. Yeah, I mean it's cute that
Speaker 2: you tried. It's so cute, just said, yes, this is
Speaker 2: about investing. So I'm sorry. I obviously know you're my favorite.
Speaker 2: You are my favorite why we're here. I love you.
Speaker 5: And you can also claim fifty percent of the listed
Speaker 5: investment company or l C capital gain amount if you're
Speaker 5: an Australian resident where a listed investment company paid you
Speaker 5: a dividend and the dividend included an LIC capital gain amount.
Speaker 5: That's going to mean nothing to you, Beck, but if
Speaker 5: you are listening and you do have an l C,
Speaker 5: that is something that you should absolutely consider.
Speaker 2: Beck.
Speaker 5: It's just another form of investment and it will be
Speaker 5: on your annual statements.
Speaker 2: Okay, A lick A lick.
Speaker 5: I mean, we call them LICs, but we really should
Speaker 5: be calling them licks.
Speaker 2: It's a bit it saves time, you know, life is sure.
Speaker 5: Yeah, and also it's just way more fun. Like we
Speaker 5: already think that the investment world is, you know, overly
Speaker 5: capitalized when it comes to complexity of acronyms.
Speaker 2: Yes, but might as well add another. Why not just
Speaker 2: call it a lick? Exactly right? Anyone, any context.
Speaker 5: No context that when we're investing in shares, here are
Speaker 5: some things you can't claim the fees you incur for
Speaker 5: drawing up an investment plan. So, as I said before,
Speaker 5: that's the thing that I get frustrated about unless you're
Speaker 5: carrying on an investment business. Okay, you're probably not, so
Speaker 5: don't worry about it. Some interest expenses where you borrow
Speaker 5: money under a capital protected borrowing arrangement to buy shares
Speaker 5: units in unit trusts and stapled securities, the interest is
Speaker 5: treated actually as the cost of the capital protection feature.
Speaker 2: Again not going to mean a lot to you. You
Speaker 2: just can't claim it. No, you're not, don't lie. How
Speaker 2: did you know that?
Speaker 5: I just know you well enough by Naive Beccer Rooney
Speaker 5: sit down. Also, you can't claim brokerage fees and other
Speaker 5: transaction costs, but you can include these in the costs
Speaker 5: to work out your capital gains tax when you sell
Speaker 5: the shares. So there's just honestly, I feel like I
Speaker 5: am talking a lot and over complicating it. It shouldn't
Speaker 5: be that complicated. It is twenty twenty three. Your investment
Speaker 5: platform that you're investing on is going to provide you
Speaker 5: with all of this information. It will either be automated
Speaker 5: or it will be something that you're able to go
Speaker 5: into your platform and automatically generate if it's not an
Speaker 5: email that you get, and it will be I promise,
Speaker 5: far less complicated than what Beck and I am making
Speaker 5: it sound right, right, Like all of this talk about
Speaker 5: like borrowing costs and interest and laics and licks, and
Speaker 5: you know management fees and you know whether you can
Speaker 5: claim travel. All of that makes sense, but it's far
Speaker 5: less complicated if you are just a general investor and
Speaker 5: you've gone on like I don't know. Raise do it,
Speaker 5: Spaceship does it. Let's not even start on Spaceship or
Speaker 5: Raise at the moment.
Speaker 2: But you know shares is do it self, Wealth do it.
Speaker 5: Every other investment platform that you are using, they are
Speaker 5: all going to have reporting for tax time because they
Speaker 5: are based in Australia.
Speaker 2: Yeah, okay, so don't stress. Good. I just don't want
Speaker 2: people to be overwhelmed by going, oh.
Speaker 5: My god, I became an investor and now it's all
Speaker 5: so confusing when it comes to tax and I don't
Speaker 5: want to screw myself over. You're not going to screw
Speaker 5: yourself over, I promise, because it's not that complicated. Yes,
Speaker 5: And if you're feeling like it's complicated, it's probably because
Speaker 5: you haven't looked at the investment reports yet. It's not
Speaker 5: because you're silly. It's just because you haven't seen it. Yes,
Speaker 5: exactly right, exactly.
Speaker 2: I'm so afraid.
Speaker 5: No, don't be afraid, because it can be really easy,
Speaker 5: and it's only easy once you learn about it. But
Speaker 5: you've never learned about it, so that's why it's not
Speaker 5: making a lot of sense.
Speaker 2: A little bit scary. I think we need to go
Speaker 2: to a break.
Speaker 5: I do want to go google tenant rights so that
Speaker 5: I can talk about how much I can claim on
Speaker 5: my rental property and whether I can move in with
Speaker 5: my tenants over Christmas.
Speaker 2: That sounds very exciting for you and your tenants. Well,
Speaker 2: let's doo lucky. I have no tenants. Perfect. All right,
Speaker 2: there we are back.
Speaker 4: Now let's jump straight back into it. I want to
Speaker 4: know about rental and holiday home expenses.
Speaker 2: Yeah.
Speaker 5: Is it because you have a rental or holiday home
Speaker 5: that you haven't spoken to me about before? So many
Speaker 5: I've got at least ten rentals, at least ten holiday homes,
Speaker 5: and I just want to know what I can claim on.
Speaker 5: Oh well, the Internet's now going to come for you
Speaker 5: and be like, what suck? Did you know you suck?
Speaker 2: I did know I suck.
Speaker 4: But also for anyone listening, I am joking, I promise.
Speaker 2: Yeah. No, she actually doesn't have any hosts.
Speaker 5: Yeah, but you will get yet yet. Yeah is the
Speaker 5: operative word here. We are optimistic about it. But yes, Beck,
Speaker 5: you are correct. You can claim interest expenses that you
Speaker 5: incur on the loan that you used to And here's
Speaker 5: the summary. Buy a rental property, buy a depreciating asset
Speaker 5: for the rental property. What's a depreciating asset.
Speaker 2: Beck, I'm going to say air conditioner. Yep, air conditioner.
Speaker 4: Why because once you buy it, Yeah, it won't go
Speaker 4: up in value. From there, you're is it exactly anything
Speaker 4: that's going to decrease in value?
Speaker 5: Yes, So air conditioner great example, because if you bought
Speaker 5: it today, it's probably insanely expensive and you're probably not
Speaker 5: feeling that good about that. Having to buy a new
Speaker 5: air conditioner for a property that you don't even live
Speaker 5: in cost you what two grand or something, But if
Speaker 5: you went to sell it tomorrow, it wouldn't be worth
Speaker 5: two grand, and in ten years, I guarantee there's a
Speaker 5: way better version out there.
Speaker 2: Yeah, right, Like that's exactly what it appreciating us.
Speaker 1: It is.
Speaker 5: You can claim expenses for making repairs to the rental property.
Speaker 5: So for example, if the roof broke during a storm,
Speaker 5: you could claim that. So a couple of years ago,
Speaker 5: I lived in a property that had a really big,
Speaker 5: beautiful skylight. I mean I thought it was beautiful, but
Speaker 5: it turns out it was just perspex because a couple
Speaker 5: of years ago we had a massive hailstorm. Do you remember,
Speaker 5: Like I think it was like twenty twenty just pre
Speaker 5: COVID where that massive hailstorm came through and everyone's car
Speaker 5: was absolutely ruined.
Speaker 2: I think I remember there were like golf the size size. Yeah,
Speaker 2: it was absolutely insane.
Speaker 5: So our skylight just got trashed, like we were having
Speaker 5: hail come straight through the skylight into our hallway and
Speaker 5: like we ended up having to like go state my
Speaker 5: parents house for a couple of days because it was
Speaker 5: just like so ruined.
Speaker 2: Track.
Speaker 5: Anyway, that didn't cost me anything because I was a tenant.
Speaker 5: All I had to do was move out. But my
Speaker 5: owners or the owners of that property, they had to
Speaker 5: pay to replace it, and that's fine, but they could
Speaker 5: have claimed that on tax because that was a cost
Speaker 5: of maintaining the property.
Speaker 2: Wow, that is so cool. I mean I think the
Speaker 2: hail wasn't cool. No, it wasn't cool, kind of sucked.
Speaker 2: It's just unreal. You can claim that, I like.
Speaker 5: It finance renovations to the rental property, so like you
Speaker 5: can claim to you know, obviously, as I mentioned before,
Speaker 5: pop a new bathroom in for your tenants, which in
Speaker 5: turn would add a value to your property because you know,
Speaker 5: updating it. And you can also claim interest expenses where
Speaker 5: you have pre paid for up.
Speaker 2: To twelve months in advance.
Speaker 5: So that is important because you're I see your little
Speaker 5: glazed over eyes, so what. But essentially, let's say you've
Speaker 5: got a service and you're paying for insurance, or you're
Speaker 5: paying for something for your rental property, and it was
Speaker 5: cheaper to pay for it all at once, Like you know,
Speaker 5: how we've spoken about on the podcast before, how it's
Speaker 5: one of those things that I think wealthy people forget
Speaker 5: they have the privilege of, and that's being able to
Speaker 5: pay things in advance for a significant discount. So like
Speaker 5: whether that's insurance or health insurance or whatever. So if
Speaker 5: you're prepaying anything for your rental property or for your
Speaker 5: investment in advance because it gets you a sweet discount,
Speaker 5: you can still claim that amount, even if it's for
Speaker 5: the future. You can claim that on your tax return
Speaker 5: now because if the payment was made within this first
Speaker 5: financial year, Okay, so.
Speaker 2: You can't claim if you're doing the month by month.
Speaker 5: Payment, no, but you could claim the month by month
Speaker 5: payments that you've already made. But if you've prepaid into
Speaker 5: the future, you can claim that. That's a whole conversation,
Speaker 5: and I think we should do a whole podcast about
Speaker 5: like wealth privileges, like discounts you get because you're wealthy.
Speaker 4: I mean it does sound a little bit like that
Speaker 4: if you have money to invest, you can claim.
Speaker 5: Well, it's kind of like you know, we're talking about
Speaker 5: this on the podcast, probably a couple of months ago now,
Speaker 5: because Beck, do you know it's July?
Speaker 2: Oh my god, do you know what that means? What
Speaker 2: does that mean? You passed your shoes on the money
Speaker 2: probation period? Look at you go? Did you joink in here?
Speaker 2: I knew you get here? Ah, that's so nice. I
Speaker 2: didn't know. What do you mean you didn't know? I've
Speaker 2: been begging you to come on the show for so long,
Speaker 2: and now I win. I win. She's here. Haha, we
Speaker 2: both win. We both win.
Speaker 5: But anyway, essentially, I think we should do it whole
Speaker 5: episode on this idea of wealth privilege, because it's like
Speaker 5: the shoe concept that we're talking about a couple of
Speaker 5: months ago, where you know, you were saying that you
Speaker 5: colored in a pair of shoes with black text. Honestly
Speaker 5: ten points for innovation, gryffindor thank you. But if you
Speaker 5: hadn't colored your shoes in, you probably would have gone
Speaker 5: to like Kmart or Target or something and brought, you know,
Speaker 5: a reasonable pair of shoes that would have lasted three
Speaker 5: months and then you would have had to replace it.
Speaker 5: But if you had significant wealth behind you, or you know,
Speaker 5: any type of financial privilege, you maybe would have just
Speaker 5: gone and bought a more expensive pair of shoes that
Speaker 5: would have lasted two or three years. Yes, and I
Speaker 5: think that there's such privilege in being able to buy
Speaker 5: those higher ticket items. Like with insurance, people who have
Speaker 5: significant savings behind them can go, oh, it's health insurance
Speaker 5: twenty percent cheaper if I pay it in Bolk right now.
Speaker 5: Oh great, I'll just pay that. That's a discount that's
Speaker 5: not then passed on to, from my perspective, the people
Speaker 5: who need it. So it's this concept that you know,
Speaker 5: wealthy people continue to get wealthy, but they also have
Speaker 5: a number of different privileges afforded to them because they
Speaker 5: can put their money where their mouth is, and we
Speaker 5: can't do that right now, Yeah, that makes sense anyway.
Speaker 5: What you can't claim though, let's go through that. So
Speaker 5: you can't claim interest for periods of use for the
Speaker 5: property for private purposes, even if it is a short term.
Speaker 5: So like if you've got a holiday house and then
Speaker 5: you're holidaying in it and you spent two weeks, that
Speaker 5: you can't claim those two weeks gotcha any part of
Speaker 5: the loan. So like you can claim the interest, but
Speaker 5: like not the actual loan. You can't claim interest when
Speaker 5: the property was used for private purposes, when you took
Speaker 5: out the loan or refinanced it. That's redrawn for private purposes,
Speaker 5: even if you're ahead in your repayments. Can can't use
Speaker 5: it when you buy a new home if you don't
Speaker 5: use it to produce income, even if your rental property
Speaker 5: is security for that loan, And you can't on funds
Speaker 5: used to buy vacant land until the time construction on
Speaker 5: your rental property is complete, like completely completed, not like
Speaker 5: oh it's halfway there, like done and it's.
Speaker 2: Ready and available for rent. Right.
Speaker 5: So like that is something that I think a few
Speaker 5: people get a little bit stuck on when they're like, oh,
Speaker 5: but I bought land and I'm building an investment property,
Speaker 5: I should be able.
Speaker 2: To claim it.
Speaker 5: It's like, well, the land's vacant, it's not actually an
Speaker 5: investment yet. It's not like drawing any income from rent.
Speaker 5: You can't claim that yet.
Speaker 2: Right, I see.
Speaker 5: Okay, So if your loan was used to buy a
Speaker 5: rental property or something else, like say a car, you
Speaker 5: can't just repay the part relating to your personal purchase,
Speaker 5: even when you've refinanced. All loan repayments are appointed across
Speaker 5: both purposes until all the loan has been repaid and
Speaker 5: you are no longer claiming interest expenses on that property.
Speaker 5: So it's a little bit complicated. The best thing to
Speaker 5: do is obviously talk to your accountant or your mortgage broker.
Speaker 5: Your mortgage broker is going to have a complete grasp
Speaker 5: of this, like I you know again shameless plug for
Speaker 5: my own business, Zella Money. We literally finance thousands of
Speaker 5: properties a year for clients. And if you haven't already,
Speaker 5: like it is tax time now, you're probably looking at
Speaker 5: it going, wow, my interest rate really needs looking at.
Speaker 5: You're probably thinking about the fact that, oh wow, I'm
Speaker 5: about to come off my fixed period. I need to
Speaker 5: talk to someone. Go talk to Kate, Go talk to Nikki,
Speaker 5: Go talk to Jackeline, go talk to anyone in my
Speaker 5: team who can go. All right, Beck, sit down, what
Speaker 5: are we looking at?
Speaker 1: You know?
Speaker 5: What's the market look like? What's your loan look like,
Speaker 5: what's the best possible outcome and structure? Right, Because I've
Speaker 5: said it before, and this is something that a lot
Speaker 5: of people don't like to hear because we don't like change. Right,
Speaker 5: But you do not need to be loyal to your bank.
Speaker 5: I know you might have been with a particular bank
Speaker 5: since they gave you a little yellow checkbook in primary school,
Speaker 5: but that doesn't mean that that's going to put you
Speaker 5: in the best possible position. So sometimes having someone who
Speaker 5: sits down and goes, oh, well, I have access to
Speaker 5: seventy different lenders, let me show you which one would
Speaker 5: work better for your financial position, Like, go and do that.
Speaker 5: Because a lot of clients that we're talking to at
Speaker 5: the moment, especially like in June coming up to the
Speaker 5: end of financial year, were really stressed either about their
Speaker 5: fixed interest term coming up or the fact that interest
Speaker 5: rates had increased so much that they weren't able to
Speaker 5: like balance lifestyle and stuff. So a lot of the
Speaker 5: time we kind of sat down and restructured them in
Speaker 5: a way that you know, maybe some clients are moving
Speaker 5: to not paying principle and interest at the same time,
Speaker 5: they're just paying interest for a fair period of time
Speaker 5: so they can like build back up their emergency fund
Speaker 5: and you know, still have the lifestyle that they deserve
Speaker 5: while we wait for the interest rates to come down.
Speaker 5: So definitely, And I mean, do you know what, at
Speaker 5: the end of the day, I don't care which broker
Speaker 5: you see. I've got a team of great ones. If
Speaker 5: you want to see them, that's fantastic. But go and
Speaker 5: see someone who can put you in the best possible position.
Speaker 5: Because mortgage broking back it's free for you. Like it's
Speaker 5: literally a free service. Mortgage brokers cannot charge you individually.
Speaker 2: That is actually very cool.
Speaker 5: It's very cool because the main pays them. And I
Speaker 5: mean then you would think, oh my god, conditions are involved. No,
Speaker 5: like we legally cannot make more off you, Like the
Speaker 5: bank shares their profit with me, not part of your
Speaker 5: interest rate.
Speaker 2: Like the interest rate is not higher.
Speaker 5: In fact, it can be lower because of the relationship
Speaker 5: you're broker has with that bank. So it's all just
Speaker 5: a sexy process. From my perspective, that's great. It feels
Speaker 5: like a win win win.
Speaker 2: Hot girlshit. Okay, So I feel like it's time to
Speaker 2: talk about my personal favorite topic. Yeah, what is it?
Speaker 5: And something I know at about that is a straight
Speaker 5: experience of women in Australia. Yeah, that's exactly right, straight rights,
Speaker 5: all of that stuff. Also, second to that, I know
Speaker 5: a lot about obviously capital gains and losses.
Speaker 2: Oh yeah, and that's actually same. Yeah. And negative and
Speaker 2: positive gearing. Yeah okay. So I knew you were going
Speaker 2: to ask this.
Speaker 3: I was like, Oh, Beck's going to really want to
Speaker 3: talk about negative and positive gearing in this current environment.
Speaker 2: And then I wrote some notes. So are you ready perfect?
Speaker 4: Yes, I was going to say I actually, because I
Speaker 4: know so much, I fe like I'm going to sit
Speaker 4: back and let you do the talk.
Speaker 2: That's okay, Yeah, so please go ahead.
Speaker 5: Look at the end of the dayback if you personally
Speaker 5: you were thinking about selling an investment for more than
Speaker 5: what you acquired it for. So if you went and
Speaker 5: purchased an investment, we used that example of a share
Speaker 5: that was ten dollars and it went up to fifteen dollars,
Speaker 5: you're making what's called a capital gain. So your job
Speaker 5: as an individual consumer is to include every single capital
Speaker 5: gain in your tax return in the year that you
Speaker 5: sold that investment. So although capital gains are taxed at
Speaker 5: your marginal tax rates. So like if you go to
Speaker 5: work and your tax rate is thirty two point five percent,
Speaker 5: that's how much you're going to be taxed on your investments.
Speaker 5: If you've held that investment for more than twelve months,
Speaker 5: you're actually only taxed on half that capital gain. So
Speaker 5: if we look at that example of that ten dollar share,
Speaker 5: you made five dollars, it was worth fifteen dollars you
Speaker 5: decided to sell it. If you sold it in less
Speaker 5: than twelve months, so you held it for like eight
Speaker 5: or nine months, you'd be taxed on that five dollars,
Speaker 5: But if you hold it for more than twelve months,
Speaker 5: you're taxed on two dollars fifty instead. So that is
Speaker 5: a very big money win, and it's also a very
Speaker 5: big money loss if you haven't thought about capital gains
Speaker 5: when it comes to investing for the first time, Because
Speaker 5: how many people in our community have gone, you know what,
Speaker 5: I really want to invest and I'm so excited about this,
Speaker 5: and they go and they purchase their shares, and then
Speaker 5: they might get, you know, some cold feet, or they
Speaker 5: might see a really good interest rate return and they go, oh,
Speaker 5: that's really sexy. I'm just going to sell, like we
Speaker 5: need to actually have a bigger picture hat on here
Speaker 5: and go all right, well, Beck, actually you need to
Speaker 5: hold it for more than twelve months because you could
Speaker 5: end up losing a fair chunk of it.
Speaker 2: You don't want to lose stuff just because you didn't know.
Speaker 5: Yeah, a lot of that happened, and not necessarily in
Speaker 5: our community, but I've seen a lot of it happen.
Speaker 5: And let's like, you know, attack finance bros, Simmer finance Bros.
Speaker 5: Who brought crypto currency and it went out real quick,
Speaker 5: and then they sold it and then they're like, what
Speaker 5: the hell? Why am I having to pay so much
Speaker 5: tax on this?
Speaker 2: This wasn't worth it?
Speaker 5: No, because you didn't do your homework, mate, Nah, because
Speaker 5: you didn't know about capital games, did you. So right now, Beck,
Speaker 5: you are now officially smarter than a finance bro.
Speaker 2: WHOA, that's huge. You're welcome. Thank you so much, John
Speaker 2: on a bestowed to not many. That's very true and
Speaker 2: I'm very grateful for it. Yeah, you're welcome.
Speaker 5: But that discount in effect is going to have the
Speaker 5: marginal tax rate that you pay, So it is significant
Speaker 5: and needs to be taken into consideration, and it's applicable
Speaker 5: on basically everything, so property shares, you know, bonds, whatever,
Speaker 5: you're purchasing, cryptocurrency. It doesn't matter what it is. It's
Speaker 5: really important to actually do that, you know what. It
Speaker 5: doesn't apply on what cars? Oh, depreciation, Yeah, no, there's
Speaker 5: like lots of rules about it. But I think I've
Speaker 5: spoken about it on the podcast before. But if you
Speaker 5: bought a car and then sold it for a profit,
Speaker 5: that's personal, it's not actually oh yeah, it's why a
Speaker 5: lot of people buy cars and restore them and sell them,
Speaker 5: like really high end cars, Like they might buy a
Speaker 5: fancy rundown Porsche. Not that you are I could afford that,
Speaker 5: but they might by fancy run down portion to them.
Speaker 2: It's like a money win because it was like ninety
Speaker 2: thousand dollars and you're like, oh my.
Speaker 3: God, that's literally completely out of my budget anyway, like
Speaker 3: that's a house deposit.
Speaker 5: And then they restore them and sell them for like
Speaker 5: one fifty. Then they don't pay tax on that profit.
Speaker 3: Really, I have to like tell the government that they
Speaker 3: it's completely transparent process, Like they're not doing anything right.
Speaker 3: It's just that's not an asset that's deemed to be
Speaker 3: an investment.
Speaker 2: That's pretty cool. Yeah, isn't it wild? I mean completely unreachable.
Speaker 5: And I mean if you're listening to this podcast and
Speaker 5: you're like, that's a good way of making money, like
Speaker 5: good luck getting in the door, Like, yes, it's a lot,
Speaker 5: but a lot of people do do that, and that's
Speaker 5: you know, a bit of a money win. I mean,
Speaker 5: I could afford a Tarago, do you reckon? We could
Speaker 5: do one of those up together back?
Speaker 3: Oh god?
Speaker 2: Yeah, love a Toarago.
Speaker 5: Yeah, we could get around Brunswick in that, yes, polite.
Speaker 5: Do you even sell it for a lot of money too?
Speaker 5: Like it pimped out chirago totally?
Speaker 4: Those are going for a lot. Maybe not a Toarago specifically,
Speaker 4: but vans that have like beds in the back.
Speaker 2: Oh no, specifically talking about it. We could do a Torago.
Speaker 2: Thanks to do it.
Speaker 5: But if you're selling an investment for less, right, so
Speaker 5: I know we're talking about profit profit profit. Sometimes you
Speaker 5: sell an investment for less, there might be a few
Speaker 5: reasons behind that. You might be selling it because it
Speaker 5: no longer serves you, it's no longer aligning to your values.
Speaker 5: You might be selling it because you need the money
Speaker 5: out asap. You might be selling it because you've looked
Speaker 5: at it and you're rebalancing your portfolio and you're like, goddamn,
Speaker 5: this investment has not paid off in a while. I've
Speaker 5: checked out all the reports, and I'm just going to
Speaker 5: get rid of it and cut my losses.
Speaker 2: There could be a number of reasons.
Speaker 5: Why you're choosing to sell an investment for less than
Speaker 5: the cost you acquire it, in which case you're making
Speaker 5: what's called a capital loss, which is the opposite of
Speaker 5: a capital gain. And these can still be sexy, So
Speaker 5: you might be losing money, okay, But we want to
Speaker 5: make sure that we're not just burying our head in
Speaker 5: the sand when we're making a loss. We're like keeping
Speaker 5: track of them because a capital loss on one asset
Speaker 5: means that you could reduce other capital gains made in
Speaker 5: the year that that loss occurs. So like all balances itself,
Speaker 5: we look at our portfolio as a whole. Or if
Speaker 5: you didn't claim it because you're like Victoria, I made
Speaker 5: a capital loss on my one investment, I've got nothing
Speaker 5: to claim it against, Like.
Speaker 2: I don't have capital gains to like offset it with.
Speaker 5: Don't worry, Beck, you can carry it forward to offset
Speaker 5: future capital gains.
Speaker 2: Oh my god, So I told you it could be sexy. Yeah.
Speaker 5: Trueever, I thought we'd have this conversation and use the
Speaker 5: word sexy as much as we have.
Speaker 2: Sexy en loss in the same sentence. Yeah, it's novel.
Speaker 2: It's no novel. It's not something you'll hear every day.
Speaker 5: It's funny because when I do speaking events, like, I
Speaker 5: am obsessed with speaking events, right like, And if you
Speaker 5: don't know that I do them, now you do?
Speaker 2: You welcome.
Speaker 5: I probably do a speaking event or two a week,
Speaker 5: which is why my voice is always cooked beck. But
Speaker 5: I go into people's workplaces and I'm like basically trying
Speaker 5: to convince them that caring about their financial wellness is
Speaker 5: a genius idea and it is just, so, you know,
Speaker 5: very easy sell. So I go in and I talk
Speaker 5: about all these things. So I'll be like, oh, here's
Speaker 5: your money story, let's talk about this, here's what the
Speaker 5: saving and investing in you know, all these asset classes mean.
Speaker 3: And then oh, let's talk about superannuation. Super is so sexy.
Speaker 5: And I literally stand in front of and a couple
Speaker 5: of weeks ago I did it, and there were two
Speaker 5: hundred people in the room, and it was like from
Speaker 5: the ages. I think they said their youngest staff member
Speaker 5: was like twenty one and their oldest was like in
Speaker 5: his late sixties, and it was like really diverse. And
Speaker 5: I'm just like, Superannuation is really sexy in front of
Speaker 5: all these people. And then after they're like, yeah, the
Speaker 5: board that was there really enjoyed your presentation.
Speaker 2: I'm like, oh cool.
Speaker 5: So I stood in front of an ASX listed team
Speaker 5: and their board were watching me go, super is really sexy.
Speaker 2: He'll let me explain it.
Speaker 5: And then I'm pretending to get all hot and flustered
Speaker 5: about it, and I was like, I've never felt more humbled.
Speaker 4: Oh my gosh, I think, but it is so hot,
Speaker 4: Like it's so sexy, totally.
Speaker 5: Have you ever heard of anything as hot as Superannuation.
Speaker 2: No, I've never seen nor heard.
Speaker 5: I think my husband and I on our first date,
Speaker 5: talked about Superannuation. I just I knew it was true love.
Speaker 2: I just knew that we were going to get married. Yeah,
Speaker 2: he was irresistible. Once you said the word super, I
Speaker 2: care about my super and I was like, oo, that's nice.
Speaker 2: Yeah all right, tell me about your emergency fun. Yeah
Speaker 2: that's basic. Let's move on. I haven't got allowed dirty
Speaker 2: talk on this show. Okay, okay, I'm sorry, I'm sorry
Speaker 2: I brought us down.
Speaker 4: This next part I'm very excited about because I actually
Speaker 4: have no idea what positive and negative gearing is, but
Speaker 4: I've always wanted to know, and I feel like you're
Speaker 4: going to explain it in such a nice, gentle way
Speaker 4: for me.
Speaker 2: It's not going to be gentle. It's going to be sexy. Whoa,
Speaker 2: she's getting very hot.
Speaker 5: So positive and negative gearing. A lot of people talk
Speaker 5: about this when they buy property, and.
Speaker 3: They're like, I'm going to positively gear it and it's
Speaker 3: going to be really sexy, or they're like, yeah, well
Speaker 3: it's negatively good. Negatively gid properties don't really exist that
Speaker 3: much nowadays because our interest rates are so high, and
Speaker 3: I'll explain why.
Speaker 5: So it's really worth bearing in mind here the financing
Speaker 5: options that you are choosing when picking an investment. That
Speaker 5: is why I harp on about the fact that you
Speaker 5: need to talk to a mortgage broker.
Speaker 2: Can you bet go.
Speaker 5: And get a mortgage or a loan on your own? Yes,
Speaker 5: absolutely you could. You can walk straight down to your
Speaker 5: bank and you can.
Speaker 2: Sort it out yourself.
Speaker 5: Okay, why would you do that when you could talk
Speaker 5: to someone who does this at a minimum of forty
Speaker 5: hours a week, day in days out, knows exactly what
Speaker 5: they're talking about to put you in the best possible position.
Speaker 5: Because I promise when you walk into your bank, if
Speaker 5: you talk to a mortgage broker that works for a bank,
Speaker 5: and I'm so sorry to any mortgage brokers that are
Speaker 5: listening to this and you're like, I work with a bank,
Speaker 5: I'd like, I get it. It's a good job. At
Speaker 5: the end of the day, nobody's better than anybody else.
Speaker 5: But as a consumer, if you walk into a bank,
Speaker 5: let's call it the Bank of Victoria, because we're not
Speaker 5: going to pick on any one bank.
Speaker 2: Go to the Bank of Victoria.
Speaker 5: The Bank of Victoria only has access and the brokers
Speaker 5: that work there only have access to the products that
Speaker 5: the Bank of Victoria is able to issue.
Speaker 2: Sure, so they.
Speaker 5: Might go, oh, well, we have two different mortgage OPTIONSPEC
Speaker 5: this is the best one for you. They're not lying
Speaker 5: that is the best option out of all the op
Speaker 5: that they're able to write for you. They go, beck,
Speaker 5: this option A is the best for you, and you go,
Speaker 5: oh yeah, why oh, because compared to b it's just
Speaker 5: not you know, as good for your situation. You go, oh, okay,
Speaker 5: no worries. But if you go down the street and
Speaker 5: talk to a mortgage broker who is independent of a bank,
Speaker 5: they're going to have access to seventy plus options, so
Speaker 5: they might go, oh, Beck.
Speaker 2: I see your situation.
Speaker 5: Actually, don't go with that original Bank of Victoria that
Speaker 5: you wanted, because you're actually going to have to have
Speaker 5: a full twenty percent deposit, or if you have less
Speaker 5: than twenty percent and you do ten percent deposit, you're
Speaker 5: actually going to.
Speaker 2: Need to pay LMI.
Speaker 5: But because of your career, because of what's going on,
Speaker 5: I actually have the Bank of Beck, and the Bank
Speaker 5: of Beck they're going to actually wave your LM I
Speaker 5: and put you in a better possible position. And you
Speaker 5: know it has all these bells and whistles that you
Speaker 5: said was really important to you. You're right, well, V
Speaker 5: I didn't know that that credit union even did mortgages
Speaker 5: go yeah, no, they're not as big, but they're really
Speaker 5: good and they're going to put you in the best
Speaker 5: possible position.
Speaker 2: You go, great, I've got the best.
Speaker 5: Outcome for me, So please make sure that when you
Speaker 5: are you know considering your financing options. You're not just
Speaker 5: going oh, I'm a smart individual and I can absolutely
Speaker 5: do this. You can, I promise, Beck, if you were
Speaker 5: going to get a mortgage, you could go on every
Speaker 5: bank website, look at the rates, look at the interest,
Speaker 5: look at the fees, and make a decision that makes
Speaker 5: sense for you. But you don't know what you're looking for, right.
Speaker 5: You know what the bank is trying to tell you
Speaker 5: from their sales pages on their mortgages.
Speaker 2: Right.
Speaker 5: You go into a bank and I promise that person
Speaker 5: has been trained in sales, not in financing options, because
Speaker 5: that's just what works for that environment. It doesn't mean
Speaker 5: it's wrong, it doesn't mean it's bad. It just means
Speaker 5: that you, as a consumer, deserve to be educated in
Speaker 5: what a mortgage broker does. I'm obviously wildly passionate about
Speaker 5: it because with Kate, I own Zella Money, which is
Speaker 5: a mortgage broken company. But something that we super pride
Speaker 5: ourselves on is just this super transparent nature of working
Speaker 5: with our clients and going all right, Beck, well if
Speaker 5: that's a goal of yours, Like the amount of times
Speaker 5: we sit down with people just like you and go, oh,
Speaker 5: you're not ready. I don't want you to do this
Speaker 5: yet because you don't have enough of an emergency fund.
Speaker 5: And that's not me going, oh, you can't afford it, like,
Speaker 5: it's me going, I actually want you to be in
Speaker 5: a stronger financial position so this doesn't screw you in
Speaker 5: the future, yep. Like, And that to me is one
Speaker 5: of the hallmarks of a good mortgage broker or a
Speaker 5: good finance broker, or someone who actually cares.
Speaker 2: And that's not that common in our industry. Yeah. Sorry, but.
Speaker 5: All I could do is talk about finance all day.
Speaker 5: But let's talk about positive and negative gearing. You're going
Speaker 5: to walk away so educated. So positive is where you
Speaker 5: borrow money to invest, and the income from that investment
Speaker 5: or that property, for example, like the rent that you
Speaker 5: get is more than the cost of keeping that investment. Okay,
Speaker 5: so that sounds sexy. Positive means more than So you
Speaker 5: might have a mortgage and it is three thousand dollars
Speaker 5: a month that you pay to the bank, but you're
Speaker 5: renting it out for four thousand dollars, right, So that
Speaker 5: means that you're making quote a thousand dollars profit.
Speaker 2: Sure, you will have to pay tax on.
Speaker 5: That, but positive gearing is essentially where you end up
Speaker 5: with more money on the table than what it costs
Speaker 5: you to run that investment. So then obviously we need
Speaker 5: to take into consideration things like interest and other expenses
Speaker 5: and you know daily maintenance and you know property fees.
Speaker 5: But we're just with simplifying this down. It's where you
Speaker 5: end up with more money. Negative gearing is something that
Speaker 5: obviously it sounds very sexy and a lot of people
Speaker 5: want a negatively geared property, and I'll give you an
Speaker 5: example of why. So negative gearing is where you borrow
Speaker 5: money to invest and the investment income is less than
Speaker 5: the cost of the investment, so you're out of pocket back.
Speaker 5: So you might be paying, same example, three thousand dollars
Speaker 5: a month on a mortgage, but the tenants that you
Speaker 5: have only paying you two and a half thousand dollars
Speaker 5: a month, so you have to cough up an additional
Speaker 5: five hundred bucks.
Speaker 2: A month for your investment property.
Speaker 5: And there's a number of reasons why you might do this,
Speaker 5: and that's why negative gearing is relatively popular and not
Speaker 5: popular because you go, I don't want to put additional
Speaker 5: money in. But when you do, investors negatively gear because
Speaker 5: they can generally claim a tax deduction for investment loss,
Speaker 5: and that kind of brings down their taxable income or
Speaker 5: helps them in another portion of their life. Right, Like,
Speaker 5: the aim for that property is that it increases in
Speaker 5: value so significantly that it will offset the losses that
Speaker 5: you made in earlier years. So like, as you know,
Speaker 5: the property market over the world the last thirty or
Speaker 5: forty years has gone gangbusters, and we all know the
Speaker 5: story of the mediocre, middle aged white man being like
Speaker 5: I bought my first investment property at the age of twelve,
Speaker 5: and like you know what I mean, they bought it
Speaker 5: for like twenty thousand dollars and that house is now
Speaker 5: worth two million or something.
Speaker 2: Ridiculous.
Speaker 5: That is why they're doing it, because they might have
Speaker 5: rented it out and been making quote a loss, but
Speaker 5: now that property is worth two million dollars, right, so
Speaker 5: they're in.
Speaker 2: It for the big bank. Okay.
Speaker 5: Why I said before that negative gearing is not something
Speaker 5: that is attractive these days is because properties aren't increasing
Speaker 5: as much as they used to. Sure, so historically, beck,
Speaker 5: let's buy a property in ten years, it will be
Speaker 5: worth double.
Speaker 2: That's hot.
Speaker 5: Like that's where the real value is, right, I mean,
Speaker 5: ten years will sell that property and we'll have a
Speaker 5: whole heap of cash money win. But unfortunately, nowadays property
Speaker 5: doesn't increase in the same way that it used to,
Speaker 5: and so it's not something that is as attractive to investors. Obviously,
Speaker 5: in a perfect world, from my perspective, i'd have both.
Speaker 5: I'd have a property that's positively geared, where my tenants
Speaker 5: are paying me more than my mortgage, and also the
Speaker 5: property increases in value significantly. We're not talking about thoughts
Speaker 5: or feelings on landlords or property ownership or whatever that
Speaker 5: is right now, that's just us talking about basic economic
Speaker 5: spec Sure, not opinion. But I think it's really important
Speaker 5: to understand the difference between positive and negative gearing. And
Speaker 5: that's why if you sat down with me and said,
Speaker 5: v I've saved house to posit, I really want to
Speaker 5: buy an investment property, we would extrapolate that all out.
Speaker 2: And a mortgage broker will do that with you.
Speaker 5: So they'll sit you down and go, okay, Beck, what's
Speaker 5: the intention of this purchase and you go for investment? Okay, Well,
Speaker 5: what do you want to get out of it? Do
Speaker 5: you want to own this property until you're in your
Speaker 5: sixties and you're retiring or do you want to own
Speaker 5: this for like ten twelve years?
Speaker 2: What's that look like like?
Speaker 5: And you would share that information and we would sit
Speaker 5: down and work out, all right, well, what does rental
Speaker 5: yield in that area look like? A rental yield is
Speaker 5: just basically saying how much will the tenant page week?
Speaker 5: And so you'd work out, all right, well, the tenant
Speaker 5: will pay this month each week, and a property in
Speaker 5: this location costs five hundred thousand dollars to buy, so
Speaker 5: this is what you'd be paying on your mortgage and
Speaker 5: what that looks like. And then because it's investment, we
Speaker 5: might actually look at a few different options. So as
Speaker 5: you know, beck a lot of properties around you know,
Speaker 5: five hundred thousand dollars is probably on the low end
Speaker 5: nowadays of what you can purchase, because the average property
Speaker 5: price in Melbourne right now is about a million dollars,
Speaker 5: which is insane. Let's not talk about it too deeply
Speaker 5: because it will make us very depressed. But let's go
Speaker 5: with that five hundred thousand dollars example.
Speaker 2: You might be able to buy.
Speaker 5: An apartment in Richmond, but you also for five hundred
Speaker 5: thousand dollars might be able to buy a house in
Speaker 5: an estate an hour or so out of the city,
Speaker 5: and both of those are valid options for you, but
Speaker 5: it will depend on what your expectations of rental yield are.
Speaker 5: So you might look at it and go, all right, well,
Speaker 5: the if I spend five hundred thousand dollars on an
Speaker 5: apartment in Richmond, I might be able to rent it
Speaker 5: out for four hundred and fifty or five hundred dollars
Speaker 5: a week. Sure, But if I buy a house in
Speaker 5: the suburbs in an a state you know, might be
Speaker 5: new build for five hundred thousand dollars off, the plan
Speaker 5: might be a relatively small block, and you might be
Speaker 5: able to rent it out for three hundred and fifty dollars.
Speaker 5: So you might look at it and go, wow, the
Speaker 5: properties in Richmond to get more rent That is unequivocally
Speaker 5: true because it is closer to the city lifestyle. All
Speaker 5: of those other things come into play, But that apartment
Speaker 5: might not increase in value as much as the house
Speaker 5: will over time.
Speaker 2: Sure, the house is.
Speaker 5: More likely to increase in value, but it will depend
Speaker 5: on when and where and how what the economy is
Speaker 5: looking like. Because recently those properties they are increasing in
Speaker 5: value but not by too much sure in comparison to
Speaker 5: if you had done that exact same thing thirty years ago,
Speaker 5: guarantee that property would have made a fair bit right.
Speaker 5: So I think it's important to take into consideration, like
Speaker 5: what does that mean when it comes to purchasing property,
Speaker 5: because you might go, be, I don't think that property
Speaker 5: prices are going to go up that much more, and
Speaker 5: I can afford, you know, five hundred thousand dollars to
Speaker 5: buy an apartment, but I've realized that if I pay
Speaker 5: a little bit more, I can get a better property
Speaker 5: further out, and I might get more capital gain in
Speaker 5: the future. And at that point you might look at
Speaker 5: it and go that means I'll be negatively gared and
Speaker 5: it will cost me some money to owe, but like,
Speaker 5: that's a risk I'm willing to take. So there's just
Speaker 5: a lot to take into consideration. But essentially, positively geared
Speaker 5: is where you borrow money to invest and the income
Speaker 5: from the investment is more than the cost to you
Speaker 5: to keep that property or that asset, and negative is
Speaker 5: the exact opposite. I love that also to throw another
Speaker 5: spanner in the work for something called a neutrally geared
Speaker 5: property and that's where all of the costs break even.
Speaker 2: Ah, beautiful, It makes sense, doesn't It does make sense.
Speaker 2: The math is mathing. I think this is a really
Speaker 2: good place to leave it. Else Nope, but I am
Speaker 2: so done.
Speaker 5: I cannot fathom how we would make an investor's Guide
Speaker 5: to tax time. I'm more sexy. So we're just going
Speaker 5: to drop it here and hope that you guys enjoyed it.
Speaker 2: Awesome, that sounds great. Have a good week, guys.
Speaker 4: We will see you on Friday for you then bye.
Speaker 3: The advice shared on She's on the Money is general
Speaker 3: in nature and does not consider your individual circumstances. She's
Speaker 3: on the Money exists purely for educational purposes and should
Speaker 3: not be relied upon to make an investment or financial decision.
Speaker 2: If you do choose to buy a financial.
Speaker 3: Product, read the PDS TMD and obtain appropriate financial.
Speaker 2: Advice tailored towards your needs.
Speaker 3: Victoria Divine and She's on the Money are authorized representatives
Speaker 3: of Money. Sheirper Pty LTD ABN three two one six
Speaker 3: four nine two seven seven zero eight AFSL four five
Speaker 3: one two eight nine