In Episode 27 of the Property Investing Journey, Mike is joined by Jim Vass, Founding Partner and Director of accounting firm ATB Partners, to discuss in more detail the financial and accounting elements to building a property portfolio.
Jim has dealt with a lot of property investors during 25 plus years at ATB. As a successful investor himself, Jim knows the mistakes that can be made when climbing the property ladder, and how to avoid them. In this conversation, Jim and Mike delve a little deeper into some of the pitfalls, and why it’s important to understand the end goal.
While it’s often espoused as a solid tax strategy, Jim explains why negative gearing and investing for tax reduction is not always as clever as it seems. Discussing the recent pricing surge in the housing market, Mike and Jim review why property remains a good investment, taking into account city vs regional, housing vs apartments and the long term nature of the property cycle.
As an accountant dealing with clients from a myriad of backgrounds and circumstances, Jim brings an unbiased view to the property conversation. Using clear language and relatable examples, Mike and Jim review property as a wealth creation strategy, and how it compares to other financial assets.
Regardless of where you are in your property journey, this conversation is essential listening for all astute investors. Covering ground from tax minimisation to investment structuring, you’re sure to benefit from Jim’s knowledge and experience.
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Mike is joined by Jim Vass, Accountant & Financial planner of accounting firm ATB Chartered Accountants & Business Mentors to discuss in more detail the financial and accounting elements to building a property portfolio. Jim explains why negative gearing and investing for tax reduction is not always as clever as it seems.
What we cover in this episode
- The golden rule – “what is the purpose of your borrowing’?
- Buying property for tax minimisation – is it worth it?
- The risk of negative gearing
- Investing in apartments vs houses
- The increasing popularity of regional locations
- Is the property market too expensive to buy into?
- What to consider when structuring a portfolio
“Any investment, that the primary motive is reducing your tax liability, is probably going to be flawed from the beginning because it shouldn’t be the sole driving purpose of actually investing. You could invest in something that’s so bad that it’s going to be vacant for 50% of the time, and yes it’s going to give you a huge tax deduction but it’s also going to give you a huge headache.“ Jim 2:30
“If you’re buying (a property) to be negatively geared in order to provide you with a tax benefit, then you’ve got to be expecting to see some substantial capital growth.“ Jim 4:05
“Land appreciates, buildings depreciate” Jim 6:00
“It’s a long term game. I don’t anybody that goes into building a property portfolio to say ‘everything is tick and flick’” Jim 12:38
“The unfortunate thing about superannuation, or any equities, or any investment outside of property is, it doesn’t have the same emotive appeal.“ Jim 19:03
“You can’t assume that people are always driven by a dollar and it’s wrong to assume that people are driven by a tax deduction. Everybody has their own drivers.“ Jim 19:40
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