Amy Lunardi
speaker
1,235 appearances
4 recordings
1 series
first heard May 2020
last heard Dec 2022
Amy Lunardi’s voice in public audio — every appearance, attributed to the second.
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Appearances
We don't want to be relying on that to be able to afford this property.
So firstly, based on what you just said, I mean, that's crazy because what you're saying is someone's spending a dollar to save 37 cents or whatever tax rate they're on.
And I know that depreciation is really exciting for a lot of people, especially accountants, because it's like it feels like free money back.
But depreciation is basically the tax office recognising a loss.
And the best way I can compare it is the same way as when you buy a brand new car and you drive it out of the showroom, your car depreciates most at the very start.
And it's the same with properties.
The newer the property you have, the faster that property depreciates in terms of the dwelling and the tax office is recognising that.
So, you know, depreciation is...
is great in terms of your tax return, but it never needs to be the goal.
And I know a lot of accountants really love the idea of their clients buying something with really strong depreciation because of the tax benefits, but the accountant is there to save you tax, not to help you create a property investment strategy.
And when we choose to use the negative gearing strategy, because remember, negative gearing is something which is costing us money.
The only reason we negatively gear is because we're expecting that asset to grow in value.
So it's the capital growth that we get the benefit from.
Because otherwise, if we've got a property that's not growing in value and it's costing us money...
It's not achieving anything.
It's not achieving any purpose.
that is completely dependent on the investor's cashflow.
So if you've got someone who is very high income, they have low expenses and they have a lot of surplus cash, they may be in a position where they could continue to negatively gear throughout their portfolio.
So as an investor, you will potentially get to the point where you hit a borrowing capacity cap or a cashflow cap,
so you have to sort of plan out your portfolio if you plan on buying a couple of properties over time you need to forecast this and there's no point in trying to be really aggressive if it's just going to eat up all of your borrowing capacity and you can't then buy another property so that really just does come down to that investor's income and expense position so
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