[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

June 1, 2008 - 10:46 pm

I second this – the article confused me…surely we just claim depreciation when we file our tax returns, as we have done previously…unless the new budget threw a change into the works..??

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

June 1, 2008 - 10:38 pm

Well, I am now officially out of the investment property scene, for the time being.

Our first purchase, off the plan in 03 (!), was a complete disaster and after several dips , we finally sold the unit for a $65k capital loss.

Not the end of the world, but our life savings up to that point. Holding costs were going to go through the roof next year after the fixed mortgage resets to the SVR. With the market as it is, I estimate it would take at least another 5 years for the unit value to get back to where we paid for it in 03 – who said property doubles every 7 years!!

We can now go onto the next chapter in our lives without this millstone around our necks, for the first time in 5 years I now see some light.

Good luck to all those who are still in the game, no doubt the majority are doing OK.

Will be back on the forums for advice the next time we buy, though I have learnt so much since the purchase which will put us in good stead for the future.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 30, 2008 - 6:10 am

thanks for the replies, I dont believe they are part of the same lot. I purchased the storage "separately" to the unit at a later date i.e. it wasnt part of the original unit purchase. It was, however, all wrapped up in the final sale contract – i.e. I didnt buy the storage with a separate contract. any additional thoughts? thanks.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

July 17, 2006 - 3:35 am

Thanks Simon – not sure re his posting, will confirm with the agent. Not knowing a lot about the typical movements of a seaman, though I do have a friend who has a friend..and they get shipped off and about all the time, and I guess in todays environment, the chances are high. I’m not sure if the “move” would be e.g a 6 month posting e.g. to the middle east, or a base move etc…I’ll see if I can get the answers.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

July 7, 2006 - 1:16 am

hi there, I know exactly how you feel, we did the same thing, and the property has dropped upto 20% in value, a real killer blow! We are not alone. We are unsure what option to take, although most opinions point towards the “hold” option, if you can afford to maintain the property. I am confident it will turn around, but in what timeframe? I think maybe a minimum 4-5 years…though who knows. Keeping a positive attitude is essential.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

June 15, 2006 - 3:26 am

Hi – I know you cannot do this in NSW..tried it myself and confirmed via OSR.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 17, 2006 - 6:17 am

Hey Scott – what do you think to my query above?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 17, 2006 - 12:50 am

I have just had a depreciation schedule completed, and I put this to the serveyers. They said this would apply, but only to purchases after the date stated in the budget. A little too late for me though…but I have a Q…currently, our unit is a PPOR, and it will be “converted” to an IP in June. Even though the property was built in late 05, does the fact that it will effecttively be a newly acquired IP when we start to rent out the unit mean the new depreciation laws will apply?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 5, 2006 - 10:25 am

yep – sorted it…I was calculating the difference from the incorrect taxable income.

I have amended my calculations and they match the figures produced by my spreadsheet perfectly (well, nearly)

the only difference is that my SS calculates the refund at 43.5% (i.e including medicare levvy) whilst the other does not…when I take the additional 1.5% into consideration, they match perfectly…!..I know, clear as mud.

The one thing is…if a taxable income is, say 124K, and their end of year bonus is 2K…does this put them in the top tax bracket?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 5, 2006 - 6:44 am

you know what?? forget about it…I’ll see an accountant, I’m confusing myself too much!!

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

May 3, 2006 - 9:21 am

General consensus – is it best to fix now, or remain variable?

If to fix – 50% or 100% (or other)?

e.g. if Person A had a 450K mortgage…fix or not….

Not looking for financial advice, just a query about what people here would do.

Plus, how long before the banks pass on the rise in their rates? Does this differ for variable and fixed rates?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

April 29, 2006 - 10:40 am

Hi – I have the standard building insurance, which is included in the strata fees – do I need landlords insurance on top of that?

Derek – thanks for the advice re depreciation etc…I’m sure it makes sense to an accountant.. As we have been in the unit for approximately 6 months, do we claim 50% of the year 1 depreciation, even if it is rented out only for e.g. 1 month of the financial year (if we get someone in for e.g. start of june 06)??

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 28, 2006 - 12:38 am

Hi Colin – thanks for the kick up the pants…I’ve been taking on board a lot of peoples advice, I have a meeting with my accountant on Thursday to discuss the impact on our cashflow if we rented the unit for 12 months. Our plan is to try to keep the unit, and reassess after a year. I feel the market is about to make a solid movement, one way or the other.

Spoken to a few more agents, and the message is generally the same, big loss, and the general consesnus is to keep hold and ride the slump.

I am currently negotiating a better deal with my bank for the mortgage, will let you know how that goes.

I have been looking down a lot of avenues, it just takes a bit of time to do, collate all the outcomes and make a decision.

I read with interest a post similar to ours, though this person had another property which would make a good CG and offset his loss.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 23, 2006 - 2:28 am

yes – thats why I’m probably forced to stick with current lender – my banker said they wouldnt need a new valuation if I changed products…so I may have no choice…though I need to decide which of their products I would choose if I did change. I do think rates are on the up, maybe just 0.5% over the next 18 months, and from the valuation of the unit, we would be renting for at least 3 years to get any sort of value back, so thats why I’m thinking fix for 3? I/O?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 16, 2006 - 12:20 am

Hi Derek – the OSR said that for the buyout I would propose (we own 250K each, so I would buy about 200K from her?) would be $9000 + $.450 for every $100 on top of that! – so about $18K??!!

Cant understand that – thats the same duty you would pay on a 500K purchase?!!

I’m going to call Nick M. (accountant) – see if he has some time to discuss our situation.

I’d like to say a big thanks to all – Jarrah / Depreciator / Derek / Alistair and everyone else who has contributed. I promise to keep you all up-to-date with my progress..this really does show that working together, helping each other and just being a good person can really make a difference to one, two..many peoples lives…keep it up!

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 15, 2006 - 12:58 am

Bad news – we would have to pay duty on the portion transfered.

Just confirmed with the OSR, NSW. No such thing as a love and affection exemption between spouses on a PPOR transfer.

Give me a break! Anyway, thats a big blow to renting out the unit, as the tax breaks would effectively half.

Back to the drawing board.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 13, 2006 - 7:05 am

Depreciator – yes, selling would be last resort, as this would wipe us out completely. I’m going to call the agent who sold the properties to find out what they went for, but I need a stiff drink first.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 13, 2006 - 12:36 am

Hi – well, I feel a little overwhelmed! Thanks for all the feedback, I will get back to each and everyone who has requested details from me, it may take time but I’ll get there (this week is the week from hell at work, and my home PC has gone caput..typical..).

One note: We did get an independent valuation prior to signing the dotted line (although we were already commited)..as we were thinking then it may be better off walking away from the deal and losing the deposit. The valuation came in at 500K (6 months ago)…so we thought we’d go ahead, and not face any legal battles etc. I’m suprised the house has dropped so much in value in just 6 months. The estate agent who valued the property has good knowledge on the value as they have sold about 15 of the units recently, though I really believe its worth more.

One thing I will do (and please let me know if this is a no-no) is to ask our neighbours what they paid (the units to the left and right of us)..they have slightly larger units but it should give us a good indicator?

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 10, 2006 - 6:36 am

Guys, it’s great to get this feedback from you all..I was just thinking last night that I am the happiest I have ever been in my life (apart from the unit..). I guess I’m an old fashioned guy who wants to make sure his family want for nothing, are happy and have long term security. I know this is probably nothing like the situation many people are in right now, its just the first time this has happened, and getting off on the wrong foot just makes the road seem a little longer…I know all will work out in the end.

I have sent Derek my “plan” for renting the unit – as I said to Derek, I need assurance that my calculations are correct, I haven’t missed anything and it is a fairly accurate representation of where we would sit if we rented the unit….to be honest, it doesnt look that bad! (but maths was never my strongest, and I dont even know what building allowance is or how to estimate depreciation)..once I am happy with all the facts and figures, I can make the decision.

I can’t tell you how much it means to me (us) for the advice – it can feel very isolating, but you all have really helped.

[andymitchellParticipant@andymitchellJoin Date: 2005Post Count: 67]

March 10, 2006 - 2:07 am

Thanks Derek, I will take you up on that – I am trying to work out the total cost of renting i.e. what it will cost per month after all deuctions etc..though I need guidance on depreciation / building allowance / other deductions.

Hope you dont mind if I call you sometime next week? Cheers.