The average annual percentage rate (AAPR) wraps up interest payments and fees and expresses all these costs in one rate. It is designed to reflect the total annual cost to a borrower of a loan. All lenders must disclose this benchmark rate in their advertising of home loans and personal loans from July 2003. In Australia, the AAPR is officially called the 'Comparison Rate'.
Negative gearing is a tax minimisation strategy where you have a net tax loss due to receiving less rental income from your investment property than the costs of maintaining that property. This net tax loss is offset against your salary income, so you pay less tax on your income. Thus, whilst your property is generally increasing in value over time, you are reducing your taxable income.
When selling an asset, the profit is subject to capital gains tax. There are some exemptions, such as your primary residence or motor vehicle. However, when selling an investment property, if the value of this property has increased, you will pay capital gains tax on the difference. This amount will then be added to your regular income and you’ll be taxed at your marginal tax rate. Your holding entity and how long you own the property will also have an impact.
You will deal with many professionals in your real estate purchase and ongoing management. These include: the real estate agent, the buyer’s agent, the solicitor, the building inspector, the pest inspector, the accountant, the strata manager, the rental manager and your financial planner are paid for the services they provide. In most instances mortgage brokers are also compensated for facilitating an introduction to a lender and assisting the client – that’s you, in the ongoing maintenance of their loan.
However some professional mortgage brokers who specialise in offering more do charge a fee, these brokers are usually very experienced and specialise in a particular area, ie investors, developments, construction, overseas expat purchases or even Trust and complex ownership strucutres. In addition to assessing your current loan requirements, they will look at your future financial needs and looks at your goals and the path to achieving those by making sure your current loan structure works with your long term strategy not just your short term needs. Many find that when they get their tax done or they go to buy subsequent properties that the structure either prevents them from making a purchase, creates many issues or that they can not claim the tax deductions they thought they could. Getting your structure set up correctly is imperative.
In addition, some mortgage brokers also offer even more resources, assistance and services to assist you with your purchase and to achieve your goals. You will find that the mortgage brokers who are in high demand, and who offer additional services and benefits for their clients will also charge an engagement fee or fee for their advice.
At ICM we have a number of packages that may suit you that have been designed to assist you with your property purchase. You can choose which service suits you best, we just want to give you the opportunity to get the right loan to allow you to buy the right property at the right price and we have many tools and resources to assist you. That is why we go the extra step in giving you access to courses, Q&A group calls, resources, software, valuation tools, discounts worht thousands with trusted professionals and much much more. You just decide how much, or little assistance you need.
