Investment Property

What should be entered as a Property

In Pathfinder, an investment property is any property that is not your principal place of residence. That is, it can be an investment unit or commercial property, but it cannot be your family home. It is important to distinguish an investment property from the family home as it has a different tax status for associated mortgage repayments and for capital gains, if the property is sold.
Investment Properties can be owned by:
- An individual or individuals - In the Ownership field, you can enter a property as jointly owned and nominate what percentage is owned by each individual.
- An SMSF
- A Trust - however, if you have an Trust, it is recommended that you use the Optimo Financial SDS
Do not enter under Property:
- Your Family home - This should be entered as a Family home

How to add an Investment Property

To add an existing property:

If it is directly owned, go to the Current situation step (top menu), then the Assets & Loans sub-step. And then click the +Add Assets button (on the left menu).Then choose Investment property.
If it is owned by an SMSF, go to the Current situation > Super & Trusts step, add the SMSF, then click the Add investment to SMSF button and select Property
If it is owned by a Trust, go to the Current situation > Super & Trusts step, add the Trust, then click the Add investment to Trust button and select Property

Note that for existing properties, the value you enter in the 'Property value $' field is assumed to be the start-of-financial-year value (1 July), and property growth is applied from the start of the year.

To add a new property:

If it will be directly owned, go to the Cash flows & Goals step (on the top menu), then the Review Assets & Loans sub-step.
Then, click the Add new Assets & Loans button (at the end of the page), and choose Buy a new investment property
If it it will be owned by an SMSF, go to the Cash flows & Goals > Review super funds step
If it will be owned by a Trust, go to the Cash flows & Goals > Review trusts step.

Note that it is assumed that properties are bought and sold mid-financial-year (1 January), and the value you enter in the 'Property value $' field is assumed to be the mid-year value.

Modelling options for Investment Properties

Sell an existing Investment property	Enter the property details under the Current situation > Assets & Loans section Set the sale details: For a directly owned property, go to the the Cashflows & Goals > Review Assets & Loans step (top menu) For a property in an SMSF, go to the Review super funds sub-step (under the Cash flows & Goals step on the top menu) If you want the Property to be sold for the value you entered at the current situation step, then in the Change price indexation field, put '0' zero
Buy a new, direct Investment property	Go to the Cashflows & Goals step (top menu) and choose the Review Assets & Loans sub-step Click the Add new Assets & Loans button (at the end of the page) and choose the Buy a new investment property option. Note that it is assumed that properties are sold mid-financial-year (1 January), so the value you enter in the 'Property value $' field is assumed to be the mid-year value.
Buy a new Investment property in an SMSF	Go to the Review super funds sub-step (under the Cash flows & Goals step on the top menu) Click the Add new Investment to SMSF button, (at the end of the page) and choose the Buy a new investment property option. Note that it is assumed that properties are bought mid-financial-year (1 January), so the value you enter in the 'Property value $' field is assumed to be the mid-year value.
Set a value for property growth	To set a value for property growth, on the 'Property value $' field, use the series builder field to edit the 'Index by' field. For more see How to use the series builder.
Include land tax and/or stamp duty	Pathfinder does not calculate taxes that vary by state, such as land tax and stamp duty, but they can be included in the modelling if you can calculate these values yourself (or do an internet search for another online calculator). The fields to edit on the property are: Acquisition costs For properties that will be purchased, this field can be used for any one-off payments in the year the property is purchased (e.g. stamp duty). You can enter it as either a percentage of the property value or as a dollar amount (or both, if needed). Running expenses - this field can be used for any expenses that are applied for every year the property is owned (e.g. land tax). You can enter it as either a percentage of the property value or as a dollar amount (or both, if needed).
Sell an investment property without any transaction costs (e.g. disposal costs or CGT)	For some workarounds, you may want to sell a property without any transaction costs (e.g. disposal costs or capital gains tax (CGT). To do this, when you add the property, choose the profile called ‘House - No disposal costs of CGT’, this will fill in: The 'Disposal costs %' field with zero The ‘Capital gains exempt %’ field with ‘100’ (i.e. it is 100% exempt from capital gains tax) If the property is existing, then you can edit these fields yourself (with any property type), however for proposed properties, it’s not possible to edit the fields, so you can choose the specific type. In the results, the easiest places to check the above are: You can see the disposal costs aren’t being applied in the action item for the property. It will say ‘disposal costs of $0’. You can see the property capital gain is not being counted towards their capital gains tax under the following report: (owner name) > Tax > Capital gains
Set options for mortgage repayments (e.g. pay off the mortgage early)	See instructions on the Secured loan help page.
Additional options	How to convert a family home to an investment property (or vice versa) - a workaround How to enter a loan that is secured by one asset and financing another asset (e.g. home equity loan) How to estimate an affordable property purchase value

Results for Investment properties

See Investment Property results.

Related items

Other items related to Investment properties:

Strategy Development Service (SDS) and Background adjustment options

If the case includes complex analysis that you are not able to do in Pathfinder yourself, Optimo Support may be able to do some background adjustments to help you get the results you need. Depending on the complexity, this may be included as part of the standard support or additional charges may apply. For more details, please see Modelling outside the scope of Pathfinders' standard modelling.

Some examples of things that are outside the scope of Pathfinder's modelling and how Optimo support can help, are listed below:

Adjustment

Details

Information required by Optimo Support

Examples where additional charges may apply

Specify a different property value for different years. e.g. if the property value has increased as a result of a renovation.

The value for investment properties and family homes is based on an initial amount that is indexed over the years. It can’t be modified year-to-year.

Please tell us:

The scenario(s) you want to apply it to
The name of the property
The financial year the property value increases
The new property value in unindexed/present values, since Pathfinder will apply the indexation.

If we just need to to do a one-off adjustment, then this can be part of standard support.

Purchasing or selling an investment property on a date other than 1st January

By default, property transactions occur mid-financial year (that is, 1st January). This means that when a property is bought, savings made in the first half of the financial year may contribute to the deposit and loan repayments to be made in the second half of the financial year. And when a property is sold, loan repayments are assumed to be made in the first half of the financial year, with the proceeds of the sale available in the second half of the financial year.

Please tell us what you would like to see, and we can advise whether a workaround is feasible.

Options for borrowing

See Secured loan | Strategy-Development-Service-(SDS)-options