Any advantage/disadvantage to buying in a new financial year?

Hi all

We are looking at buying another IP and I was wondering if there was any advantage/disadvanntge to holding off until the new financial year, particularly from a tax perspective? And is the date of purchase the date of exchange? We are in NSW and buying in NSW.

Thanks!

Cambridge

 

I can't think of anything other than to possibly save on extra tax return costs by delaying for contracting after 1 july - but probably not worth the bother.

 

Thanks @Terry_w. I couldn't think of any either but thought it best to check. Ta!

 

@Rolf Latham can you explain more please? Thanks!

 

From a tax perspective paying interest in advance would have no benefit if your income for 2018 is going to be the same as your projected income for 2019.

However from a cashflow perspective you will be better off. If you prepay 2019 interest in 2018 then you would receive a deduction this financial year and as your rent would be low a largish refund. That cash refund could then be used to pay down non deductible debt or have in an offset account to reduce interest on debt

Big caveat you will need to keep prepaying interest every year thereafter for that strategy to work.

 

Thank you @MikeLivingTheDream I get it now

 

Buying now may incur minor deductible interest on deposit proceeds offset v's other income prior to actual acquisition. An early start to neg gearing. Minor indeed since interest in normally charged after each month. So between now and 30 June would be one month maybe.

Typically for a property eligible for QS deductions incl Div 40 depn the first year deduction can be high - But its pro-rata any way. Same with almost all other costs.

One issue I see a bit of is taxpayers who buy a IP that settles in June. They are surprised how little is deductible eg nil interest, small rates etc from settlement, 1/60th borrowing expenses, no agent costs maybe ? and so on.