Always be open to exploring different solutions if you’d like your money to go the extra mile. That is the first step towards getting your finances in shape.
These are some resolutions Australian expats or property owners should make sure to write up for 2019.
Lodge Your Tax Returns
Many Australian property owners don’t realise that they must lodge an annual income tax return in Australia even if their property rental doesn’t cover their expenses. Failure to lodge can cost you A$1,050 per person, per year, so it is an expensive exercise if you forget to fulfil your obligations.
But it’s a simple process to lodge your annual returns and ATS’s professional team is available to assist and take the burden off your shoulders.
Resist Reducing Your Loan
If you have an Australian property, it is always a strong temptation to reduce the loan. However, paying the loan down prior can be a big problem, as it is likely to increase your tax cost, which starts at 32.5 percent, and diminish your overall return on investment. It could also mean that you are trapping your cash in a property that is purely for investment, which means you may be stuck with a higher personal mortgage on your eventual home. If you do insist on debt reduction, make sure it’s targeted at a property you intend to live in rather than one in which you never will.
Relook Your Interest Rate
There have been a few changes to interest rate policy from Australian banks, increasing the rate for investors. This obviously impacts all expats, as being abroad means we can’t live on our property at the moment. There are a number of special discounts that may be available to you and it is also worth considering fixing your interest rate, as interest rates are currently at 50-year lows. Most people make the mistake of waiting until rates are rising to fix their interest, which usually means they lock in a higher cost. Fixing when rates are low or falling usually assures you of the lowest, or near lowest level of cost, which can be enjoyed through the fixed period.
Review Your Property’s Value
Many properties in Australia have risen in value in recent years, so you may find that you have built up some additional equity in your property that can be used to assist with your next purchase. This means little or no cash outlay on the property you have been thinking of buying. It is well worth checking the value with your property manager and seeing what your budget may be. It might be a very pleasant surprise and will allow you to acquire your next Australian property sooner than you thought. This may also help your overall financial performance and tax position, so it is well worth considering.
Schedule an appointment with SMATS to find out what’s important to do now here.
From The Finder (Issue 296), January 2019
More on The Finder:
Ask The Expert: Is It True I Can’t Get A Loan To Buy Australian Property Unless I Live There?
Should Australian Expats In Singapore Worry About The Recent Removal Of Tax-Free Statuses For Australian Homes?
3 Things Expat Couples In Singapore Should Do When Planning Their Finances
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