It’s been a very busy few weeks and my priorities have been in a tailspin. Writing here on the blog for example has taken a backseat – all of my creative energy has been put into solving problems and forecasting new ones rather than generating interesting content. I’ve had many late nights and poor rest – contributing factors to a lack of motivation and creativity needed to write these posts.
The thing is though – I haven’t stopped thinking about writing. A priority that is a drive doesn’t just go away while you’re busy – other things might temporarily overwhelm it, but like an iceberg, the tip is always poking up from the water with the bulk of the internal demand floating underneath. Scheduling the time has been difficult and at the moment, any sort of extended typing has been hard too. The issues with my elbow are improving – and while it was bad I even tried using the voice commands on the Mac to write a post but it’s not great with an Aussie accent 🙂
Now that I can type lots of stuff without hideous pain I’m back to pushing to get time to write here. The idea flow is there so now I can get to it.
One of my priorities was tax time and the inevitable examination of how things have gone. The priority being the rental properties. How much money did I actually lose on them? Well I can tell you it was around $3000 for the year. That’s the cost of real estate management, repairs, insurances, rates and water and so on. Not cheap, but not terribly expensive either. I have found a couple of things that I thought were worth mentioning. Number one is that if you have salary packaging and a FEE-HELP debt then make sure you’re taking out enough tax because I very nearly had a $2000 tax bill as a result! Even with deductions for all the money I’ve spent that is work related, without the Liberal Government’s $1080 tax refund then my total refund would have been less than $50! Number two is that the value of a having a rental property is calculated differently to what I always thought. That is – the rent covered the property costs and at the end of the day you eventually get a free house. This is not the case. Instead, if you were to sell the property, then the value is the money realised from the sale (less of course the loan to pay it out) and from this value you take out the amount you’ve contributed and whatever is left is the profit. Make sense?! So if I sell a place for $100,000 (to use a nice round figure) and over time the rent has paid this down to $50,000. I have contributed $10,000 and so the profit is $40,000. There’s no interest in this of course, and that’s another factor, although one can claim that on tax so it gets a bit complex.
The third thing is to get a professional to help. It isn’t easy to get all of this right and we don’t want cross the Australian Tax Office. Based on his advice I’ve also undertaken to alter my tax (so I pay a bit extra each pay and not get gouged next year) and I’m going to pre-pay my bigger bills like the rates on the rental properties. This was my cash flow will even out and I won’t have boom and bust months. For example, last month I received about 45% of my normal rent payment with the balance going onto some very large recurring bills – some which are quarterly and some are every 4 months. Council rates, water costs and strata costs to name the culprits. Back to my premise of priorities though – if I make paying the loans off a priority, then I risk having no liquidity and this isn’t great. The cost is greater in the long run by repaying my loans over the allotted time, but it doesn’t impact my meagre bank account level. Instead my priority is to be able to enjoy living while these things steadily work themselves out.
It was worth every penny to sit with my accountant for an hour or two and discuss finances. Mostly I think I’m on the right track and he agrees, however, he did suggest a review of spending and so that’s slated for the weekend. In doing so, I hope to discuss with my wife her priorities around money and work on our family priorities. Its going to be a careful negotiation!
Angus' Blog 