How to interview accountant/broker?

Hi,

I have met 3 accountants so far but they were not as useful.

My situation:
I have ppor with granny flat + 4 lands. 2 lands settled and 2 yet to settle. ppor is refinanced and 2 settled lands have substantial equity. I am planning to utilize equity from lands + cash from my ppor offset to construct 2 duplexes (to be subdevided) and two houses.

I have also made a mistake of parking equity from ppor into a separate offset and paid deposit of two settled lands from there.

Next thing I have to work out is - where to get money for each construction deposits. Equity from 1st land is not enough to fund 20% construction and equity from land 2 will have some spare equity after paying 20% for construction.

As you can see it's a fairly complicated situation and getting loan structure right is crucial in determining tax deductibility later.

First of all I am not sure if I need an accountant or broker to workout a plan for my situation.
Second, what questions should I ask to see if accountant/broker has enough knowledge in terms of tax deductibility and loan structures and legal aspects.

My problem is I don't know what I don't know.

I know there are some very knowledgeable and helpful people in this forum. If anyone has any recommendation please feel free to PM me

https://propertychat.com.au/community/conversations/add?to=Ravi

thanks.
ravi

 

You need a tax agent or lawyer for the tax side and a broker for the loan side.

What sort of advice are you seeking?

If will be difficult for you to judge the tax advisors knowledge without sitting down and talking with them and most would charge for this service. Or you could look at any written materials to see if you think they may have the knowledge.

Once you have worked out how to structure things you can then talk to a broker say this is how you want the loans structured and they will then find a loan to suit your needs.

 

I recommend you go and see the people you need to see, ask them the questions you need to ask and pay the fee you need to pay.
This is Australia, user pays, don't expect a free solution.

 

How do you know I have not paid the people I have met?

 

Because you would have whinged about that as well if you had.

 

I would hazard a guess and say the fee they would have requested.

 

@Ravi take it from me, it is best to question your accountant or broker whilst you have them in the headlock position....you get less BS.

 

From what I can see is you need to talk to a good accountant about tax issue and talk to a good broker about your lending structure.

In general, keep spare cash/equity in your PPOR loan, since PPOR loan interest expense is normally not tax deductible. Talk to an accountant about it.

For loan, you need to work our with your broker what your maximum borrowing capacity for the next borrowing. It can be depending on number of factors such as your employment situation ( or self-employed),current income level, current asset and debt amount, family living expense,....etc


Don't be afraid to ask the wrong questions, because it's all part of property investing journey

 

I guess the first question is how much does it cost to talk to you Mr/Ms accountant or Mr/Ms broker

 

A good broker who understands the tax side of things will be able to sort this out for you.

It's actually fairly straightforward from what you've stated above.

 

I havent met a broker yet that understands the tax side of things. Few accountants understand either. Brokers should avoid mentioning tax when structuring loans as they are not qualified or insured and tax is more complex than they think.

 

I'll word it this way then - speak to a broker who knows what a mixed-purpose loan is, and how to not have one.

 

Hi @Ravi
From what you have described I believe the scenario isn't too complex. Sounds like you have a few basic questions and you require a good team around you to help you move forward the best way.

A few things to remember;

All tax advice needs to be done via an accountant, not your finance broker.

Loan structure to be done by your finance broker, not your accountant. The advise on tax deductibility comes from your accountant, then your broker will structure them so they will comply.

Legal issues are looked at by a lawer.

If you are looking for one professional to be accross all of these three aspects you will not likely find it and each professional should be very careful about advising on aspects which they are not qualified to give advise on.

How to interview your accountant?

This is difficult because you don't know what you don't know. And often we discover too late that the accountant isn't up to scratch.

I would be asking the accountants how much experience they have with clients buying and developing land. Given that is what you are doing. I think a good accountant can offer you more assistance than what you have initially inquired about also, things like purchasing entities, GST and tax planning.

I wonder if it's not too late to pay yourself back your cash and have a deductible loan arranged to pay the deposit. I have known of this being able to be done when loans have not come through in time and there is a paper trail to show that personal cash was used initially and then reimbursed once the loan was set up. I don't know the time frame for when you first placed your deposits, perhaps it would be worth checking with your accountant once you locate someone you are satisfied with.

i would say that looking up the accountants that post here may short cut your process. If they are actively posting on this forum regularly and helping others here it's a good indication they have a passion for property related tax issues and may already have a lot of experience working with similar scenarios to yours.

Good luck with the search.

 

And get tax advice separately.

 

All tax advice needs to be done via an accountant, not your finance broker.
.[/QUOTE]

I disagree with this bit. Tax advice needs to be done via a tax agent who may or may not also be a accountant.

Lawyers can also give tax advice too.

 

The loan structuring issues with this one are rather complex from a tax perpestive. Ppor with a granny flat. Will the granny flat be rented and if so can the loan be apportioned and if so how. How can the cash ise be avoided. Is it best to pay down the ppor loan and reborrow? Or if the land will be in different names can spousal loans be employed. Interst capitalised? How to borrow to maximise deductions.

All this is tax advice. In addition there are the usual gst and cgt issues.

On the legal side there are issues with names on title, spousal transfer strategies, deeds of partition, stamp duty issues, succession issues, contract issues etc.

The broker side will be relatively easy once the structure is worked out by the tax advisor. This wi probably involve IO loans on everything with an offset o the non deductio portion and a Loc or 4 on the rquity access.

 

I thought tax agents and accountants are the same people.

 

They are.

As Jess said, use a broker like her who knows what mixed purpose loan is, what cross collateralising is and what proper loan structure looks like.

Or use @Corey Batt like I mentioned in Chatroom earlier.

 

No they are not. Some accountants are not qualified in tax. And many tax agents are not accountants. It is the tax agent registration that allows a person to give tax advice.