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In This Issue
Seminar 11th September 2012 at Parramatta RSL at 6 PM
New Product - Div 7A Loan Agreement
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HOW TO PURCHASE 10% RETURN PROPERTY IN YOUR SMSF

  

  

 

Many people think that negative gearing can be tempered by capital growth; however, it is not a good strategy for the future for several reasons.

 

Firstly, investors should focus on income rather than capital growth as it has the most benefit in the long run. It's the surplus income over interest cost over a long period of time - by having regular rent increases - and by investing that income and earning more income (income on income) which makes property investing profitable and in the process make you rich.

 

 

Click here to learn how SMSF can borrow to purchase property

 

 

Secondly, capital growth is a distant possibility which may or may not happen, in comparison, high income is embedded in the investment at the time of purchase. Negative gearing should be used as a short term strategy to get into property investment rather than a long-term strategy.

 

Also, the longer you are negatively geared, the longer you will pay more out of your pocket to recoup from the property after sale. Assuming that you get growth, that growth is really just making up for your losses, you're not actually really moving forward.

 

Why you should earn 10% return from property

 

  • Security - since you own the property
  • Predictable regular income of double that is available from a bank deposit
  • Prime property locations and tenants
  • Diversity of tenant mix, lease expiry
  • Your trusted & competent management
  • + Potential Capital Growth

 

Seminar :      How to Purchase 10% Return Property

When:          11th September 2012

What time:    6 PM Registration Refreshments: 6.30 PM Start 7 PM

Where:          Parramatta RSL Club Corner Macquarie and O'Connell Street Parramatta

Cost:             $35 (Tax deductible to you or your SMSF)

How to book:  Visit http://www.trustdeed.com.au/seminar or phone 02 9684 4199

 

Click Book now 

 

 

 

Sometimes growth is nothing but inflation, the cost of building going up rather than genuine appreciation. Appreciation happens due to rarity & demand and where there is abundance, values do not go up. When value (rarity & demand) does not go up, you are merely holding an asset which will only cost you every year to hold, in other words you are paying a bank, so that your tenant can live in your property. Discounting the tenant to afford living in your property, remember you get nothing.

 

Thirdly, negative gearing strategy rarely works for those who are on low income, due to tax considerations. An investor on the highest marginal tax, earning $180,000 + rate gets back 45 cents per $1 spent on negatively gearing property, every body else gets less.

 

 

Click here to learn how to set up a SMSF

 

 

So if the formula to richness is high positive returns, why is everybody doing the wrong way and why public offer super funds are not able to offer high returns to their members. The answer is simple; everybody is chasing growth and not returns. And to change this psyche is like teaching a new trick to an old dog, it just does not happen.

 

 

To explain the concept of high income, let us look at an example of two families earning say $100K each and one family has a negative gearing strategy in place and ends up with only $75K after tax refund where as the other family has positively geared investments ends up with $120K after paying tax - it is clear which family will get rich first. Remember, at the time of purchase of investments, both families have equal growth expectations.

 

 

Click here to learn when your SMSF will need an Actuarial Certificate

 

 

If the key or answer to richness is just in four words "Earn Income on income" - and the secret of rich people - you wonder why everyone does not have multiple sources of high income, after all, no one would mind paying $45K in tax provided there is additional $100K income. 

 

You will never see a rich person in a negative gearing strategy seminar because that rich person knows that you cannot become rich by losing money each year - you become rich by earning money and that money earns more money - income on income. Simple.

 

 

 


Imagine a property purchased via SMSF with 70% gearing, earning 10% + return at age say 45, with regular rent increases and salary sacrifice contributions the debt is retired and by retirement age of say 60, it is possible to earn 20% + return on investment when the income becomes tax free as the investor moves to pension phase. 

 

And what about growth, frankly, if the investment makes 25% return, how many of us would really care what the investment is worth, as we are not selling, or are we? Because when you sell, what are you going to do with the money, remember at retirement, it is all about high disposable income to have a smash of a time after a life time of saving "for tomorrow".

 

 

Click here to learn on how to move your SMSF to pension phase

 

If you agree to any of the above your next question should be: Where are these 10% returns properties? The answer is very simple: Everywhere. But, the problem is that you cannot see them as you may not have the skills to find them.

 

Fortunately, we have found two gentlemen who buy these properties all the time and are happy to share their stories with you.

 

Mr Paul Flynn: who appeared on Channel 9 "A Current Affair"

Visit http://aca.ninemsn.com.au/video/ and look for a story on "HOME BUY BARGAINS" dated 16th March 2012

 

Mr John Dalley: of www.benlee.co who has mastered the art of acquiring 10% returns properties

 

If you want these two men to reveal their secrets and do what they are doing and learn how your self managed super fund can get involved in borrowing by our Superannuation technical director Mr Manoj

 Abichandani SMSF Specialist Advisor        

 

These two hours are a must attend and if you own negatively geared properties, get ready to be dazed.

 

 

 

When:         11th September 2012

What time:   6 PM Registration Refreshments: 6.30 PM Start 7 PM

Where:         Parramatta RSL Club Corner Macquarie and O'Connell Street Parramatta

Cost:            $35 (Tax Deductible to you or your SMSF)

How to book: Visit http://www.trustdeed.com.au/seminar or phone 02 9684 4199

 

 

 

 Click on button below to register now

 

 

 

New Product Announcement

Division 7A Loan Agreement
$55


Division 7A is part of the Income Tax Assessment Act 1936 which relates to loans made by companies or trusts to shareholders or associates of shareholders. It is an anti-avoidance provision which aims to prevent tax free distributions of company profits as loans which either remain outstanding or are forgiven altogether.


If a shareholder or an associate of shareholder borrows money from a Pty Ltd company or where a Pty Ltd company has an unpaid present entitlement to income of a trust and the trust makes a loan to a shareholder or an associate of shareholder and such loan is not fully repaid by the lodgement or the due date for the lodgement of the company's income tax return, whichever is earlier then such loan can be caught in the provisions of Division 7A.

Such loan will be treated as unfrankable deemed dividend and this situation can entail double taxation of the income. However loans made under a written agreement executed within the required timeframe, meeting the benchmark interest rate *and maximum term criteria and which provide minimum yearly repayments can avoid being caught in the provisions of Division 7A.



Our 'Divsion 7A' loan agreement conforms to above criteria and this 'Division 7A' loan agreement can be used in the following circumstances.


  1. Where a Pty Ltd company makes a loan to its shareholder or an associate of a shareholder;
  2. Where a company has an unpaid present entitlement from net income of a trust and a loan is made by the trust to a shareholder or an associate of shareholder of such company.
This loan agreement will cover all the loans made by company to a shareholder.
*
For the purposes of Division 7A of the Income Tax Assessment Act 1936, the benchmark interest rate for an income year is the 'indicator lending rates - bank variable housing loans interest rate' last published by the Reserve Bank of Australia before the start of the income year.
Year of income ended 30 June...Benchmark Interest rate
20137.05
20127.80
20117.40
20105.75
20099.45
20088.05
20077.55
20067.3
20057.05
20046.55
20036.3
20026.8
20017.8
20006.5
19996.7





 

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