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Finance Tips

Finance tips on purchasing your new condo or home in a common interest development (CID)

When buying a condo or into a CID development it is imperative to include into your mortgage repayment figures the cost of the any monthly maintenance expenditure. This sounds like common sense doesn't it, but the amount of times purchasers of new condos and apartments find themselves in trouble and having to over stretch their budget is alarming, and with the ever increasing shift to Common Interest Style Development in this country, it is no wonder that we have seen an increase in failed mortgages as families haven't done a few basic checks and put aside the initial emotion and excitement of moving into their new apartment.

Another thing that is common to home buyers whether its a condo apartment or coop or buying property in general, is the devaluation of the dollar in the purchaser's mind. The agents are great at helping you not fully appreciate the value of what you've worked so hard for. Maybe they come by their money a little easier than most. Getting you up in your offer in 2 and 3 thousand increments is a common ploy. Before you know it, the property has cost you another 1 to 5 years repayment. Don't be fooled, remember that each thousand dollar has to be paid back with interest, and in the beginning of a loan a few thousand dollars extra on the price of your loan can end up being very expensive. You work for most of your life for your home. Don't be fooled by emotion, pressure, or slick salesmen. The decision is yours and so educate yourself.

Superannuation tax reduction

Although most tax-advantaged investments must be held for 12 months in order to claim the full benefit it is not too late to look at reducing your tax through superannuation.

Superannuation is one of the most effective ways of saving and investing to support yourself in retirement. Contributions to personal, portable superannuation scheme are tax-deductible up to the level of 3,000 a year, provided you do not already have an existing scheme through your work or another source.

The government is clearly concerned about the fact that women make up almost 70 per cent of aged pensioners and is taking steps to encourage more women into superannuation schemes to ensure their security in retirement. The government offers tax incentives to people to save and invest through superannuation.

You will need to convince yourself that the management and returns on your superannuation fund are competitive and will remain competitive in the long term. The security of your funds is also an important consideration. a licensed investment adviser will be able to help you with this queries.

Share investment tax reduction

Investors who invest in shares may be able to claim tax credits through "dividend imputation". The dividends from company shares which have been taxed at the full rate are not taxed again in the hands of the investor.

Where the rate of tax paid by the company over and above your personal tax rate. Divedends which attract these tax credits are called"frank dividends".

Not all share investments produce "franked" dividends. Ask your financial planning adviser to prepare a portfolio that suits your needs.

property investment tax reduction

If you hold property or property trust investments, a component of the income on your investment will be tax-freethrough an allowance you are given for depreciation.

This compensates for wear and tear on your investment. The rate of depreciation allowance varies significantly according to the type of investment you hold.

Many woman are attracted to property trust investments because they can invest in prime commercial and residential property, by pooling they money with other investment.

insurance bonds and tax reduction

For investors who do not require income from their investments, Insurance Bonds and friendly Society Bonds, offer you a high level of security as well as tax advantages. This are long term investments and provided you hold your bonds for ten years, the returns are tax free in your hands.

There are still tax advantages if you redeem your bonds in the later stages of their maturity.

warnings

the most common mistakes with tax returns are:

forgetting to claim a rebate or deduction
wrongly calculating a medicare levy exemption or reduction
giving the wrong file number, or no file number at all.
not telling the Taxation Office of your change of address.
Forgetting to include income from dividend and interest.

Forgetting to include all groups certificates, tax stamp sheets and statement of earnings.
Remember, if you are an employer-sponsored superannuation scheme, you cannot claim a deduction for your contributions to that scheme. The same also applies if you are in both an employer-sponsored scheme and a personal superannuation scheme. You can claim a deduction only if you are solely in a personal superannuation fund.

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