Why people invest in property
Thousands of people use property investing as a major part of their investment portfolio. They use property investments for a variety of aims ranging from generating a full-time income, a supplemental income to their main job, for creating a nest egg to pay for children’s university fees or to build a significant fund for their retirement. Whatever your aims, it is essential that you employ a specialist property accountant to help with your tax planning and annual tax returns.
The first step to successful property ownership
Before you agree to buy or sign a purchase agreement it is important that you have the correct property ownership vehicles set up. If you buy a property and then decide you want to transfer it to a Family Trust, you will encounter a lot of admin and significant fees. It is not a simple transfer but an actual sale at a reasonable market price.
Therefore, make sure you seek professional advice from a property accountant before you enter into any rental property purchase.
A common mistake by new property investors
As property investment has become so common in many countries, there are lots of books, training courses and property investment seminars that people can easily purchase. People new to property
Investing are often tight for spare cash and therefore look to cut as many expenses as possible. They prefer to use their limited cash resources for activities where they can achieve a quick profit or where they can actually see some result such as refurbishment of the property.
One of the last things they want to spend money on is a professional service that does not produce any tangible results. One such service relates to the accounting issues regarding property investments. People think they can simply take their financial records to an accountant at the end of the year and the accountancy firm will prepare their tax returns. That is true however the accountant can only work with the legal position at that time.
That means that many times people end up paying more tax than they need to because they do not have tax-efficient ownership methods set up.
What can a property accountant do?
Without well established property investment methods tax bills can easily become one of your biggest costs. However, if a property investor decides to engage a property accountant before they invest in any properties then they are able to create more efficient ways to own rental properties.
Often it is not possible or it is very expensive to make changes to ownership after the property has been bought so that the investor loses tax saving benefits for the entire life of that investment. If you contact an accountant who works with property investment then the investors can use tax saving ownership tools from the start of their investing adventure.
So it is very important that a property investor talks to an accountant before they buy any investment properties so that you can set up the right ownership strategies and save tax on your investments.
Avoiding tax penalties
After you have bought a rental property it is important that your meet you tax obligations. Some people may be tempted to try to hide some rental income to reduce their tax bill but this is dangerous and illegal. In many countries the tax authorities are alert to property investments so that they can maximize their tax revenues. A property accountant will help you complete your tax returns and minimise your tax bill while operating within the law. This means you can sleep at night knowing the tax man is not going to knock on your door and conduct an audit of your investments. So be sure to contact a local property accountant before you begin any rental property investments.