Forum Replies Created
Are there any “portable” homes in the area people want to dispose of (ie give away – most give them away but you have to pay for transport), depending on your CGT liability, if someone was to dump an old house on the land, check what services you have to have connected (living without grid connected electricity isnt illegal is it?), move into it and sell the block… you may get lucky and find someone who will take it with the house, otherwise you may have to pay to have it dismantled and disposed of… if you CGT liability is 50k it wouldnt be worth it as that stuff isnt exacly cheap even for one of those houses, if it was 500k this strategy would save you the cost of a house (literally!)… obviously you would have to do enough to “prove” to the ATO that you actually lived in it if they came snooping… just an idea though.
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This reply was modified 8 years, 7 months ago by
aussieguy2000.
Hi Chattaway,
This is one that I have look at for years, nearly 6 years actually, as I am coming up to the 6 year mark for my own PPOR in sydney since we started renting it out and we are looking at selling to capitalise on this, as to continue renting it out would be a huge hit to the hip pocket between capital gains and what we would be exempt for.
Two things to note: you can only have one PPOR at a time, and cant swap at convenience, once you claim a new PPOR residence the old is no longer and it is an investment whilst the latter is the PPOR, however from how I understand it, this election is made when selling one of the residences rather that when purchasing (assuming both meet the 6 year rule and the PPOR rule, then you can choose which to claim as the investment and which to claim as the PPOR).
The other is that the 6 year rule is 6 years RENTED in total between you occupying it, so if you rent it for 3 years leave it vacant for 2 years and then rent it for 2 years, this is only 5 years, and if you move back into it at any stage it resets the 6 year period so if you move for work again (such as Military people are likely to move in and out of a particular location a lot) you can rent it indefinietly as long as you live in it between each 6 years worth of renting – even to the point of you know you are going to live in it in 6 months time and it is almost at the 6 year mark, you leave it vacant for the 6 months so that the clock stops on the 6 years as it is vacant (as long as the 6 month vacancy is worth the loss of rent vs actual proportion of capital gain for the 6 year period).
For more info on the facts rather than my less than expert interpretation above the ATO web site explains it well:
– John
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This reply was modified 8 years, 7 months ago by aussieguy2000.
So just to clarify, are you looking at selling as you want to find a new direction, somewhere else to live, or are you just wanting to gamble, hoping that prices will drop and you will pick up the neighbours house at a later date for a smaller price?
If you are planning on retiring or a sea/tree change, then perhaps selling may be a good idea, it is a good time to sell, and I don’t see house prices going up much in the near future – but rental prices may, to catch up to the price surge. If it is the later you are hoping for, then I suggest you sell your house, take your small fortune to the casino and put it all on black… I like black more than red… as you are only gambling in doing so. The current market would be like a roulette wheel with a complete history board of reds – but that doesn’t guarantee a black spin and there is always zero – that out left field spin – that virtually no one predicted coming up, no one can predict what will happen. If you read posts for the last 10+ years across forums the nay-sayers have been “predicting” a bubble burst for the entire time (and even before these forums this was the case)…
What I believe is that you may see a small price correction at some point, maybe 1-5% (possibly up to 10% in some Sydney areas) of property values, this is normal, then – unless the government has a magic wand to make thousands of houses magically appear over night – it will probably simply be a long period of flat prices for the next 5-10 years with a small increase at or below CPI. Noting that if you sell and then buy again, this 1-5% will quickly be eaten up by selling prices and stamp duty, so your chance of coming out in front is slim.
That said, if the economy takes a dire downward spiral, that causes large unemployment figures and FORCES people to sell their homes on mass, then we will see a collapse in prices, but if prices drop slightly, and people aren’t forced to sell, then why would they? So the few that do sell for personal or lifestyle reasons will hardly push supply above demand, especially with a constant shortfall in available properties across the country – particularly Sydney. I for one am looking at selling in Sydney, but this is because the prices are great and I want to sell my home that is coming near to its end as my principle place of residence, so I can buy where I am currently living and renting – it doesn’t make sense to hold it.
In the end it is your own decision, but you should make it for the right reasons, and not simply to try and make a quick buck, as the future of the property market will probably shock us all, and most of us will have wrong predictions on what will actually happen. Be happy with a roof over your head and don’t gamble it away if that is where your intentions lie, as you could put yourself in a far worst situation that you are now or the situation you are hoping to achieve.
tl;dr
I am no expert by any means, and I am sure the experts can pick at what I have said, but what they can’t argue with is to do it for the right reasons and don’t do it to gamble and make a quick buck.John
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This reply was modified 8 years, 7 months ago by aussieguy2000.
Yeah, your right Terry, that would be strange. I have not looking into it much and forgot that stamp duty exemptions for transfers for equal shares to a spouse are only valid on the PPOR. So unless we were to move into this property at some stage, that is not a likely option, though as the place is positively geared and has a decent capital gain if sold, if we ever were to move to the area I would definitely consider it.
Still the stamp duty cost versus the capital gain split between two as opposed to just myself (with my wife currently at home with the kids) if we were planing to sell may be beneficial, that’s one for an accountant to do the numbers for me though, as I would hate to get it wrong.
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This reply was modified 9 years, 2 months ago by aussieguy2000.
Why not consider buying first and then getting the car lease after it, it is much easier to get the car lease, and if they won’t give it to you based on your capacity to borrow, you probably shouldn’t bother with it.
As the average IP is negatively geared from the start, the “savings” from a lease come from the savings on tax, whenever I EVER calculate salary sacrifice/packaging options for their savings I always reduce my salary to what it would be after my negative gearing and work deductions. If were to earn 85k and have 10k worth of tax deductions (all types not just NG) it would drop you to a lower tax bracket, this should be the savings your investments are making you not leases/salary packaging. The person spruiking the car lease will calculate the savings based on the higher tax bracket, when in fact you are not in that tax bracket after your deductions, so the savings he sells you could actually be a negative, not a positive, and remember at the end of the lease you don’t own the car, you still have to pay for it (usually at around the current market value -usually an “agreed” – read: set by the lessor” value at the start of the lease) if you want to keep it, or roll over to a new wallet haemorrhaging lease on another car.
If you want to estimate your “borrowing power” there are plenty of calculators you can use, work out how much you can borrow without the lease and then do a calculation with the lease, try to find one that is more than just 3 or 4 boxes to fill in, a detailed one may have separate areas to enter car/other loans and repayments rather than a simple calculator. One final piece of advice is I wouldn’t spend more than half your yearly salary on a car (lease or otherwise) if you can avoid it, preferably even less than half of your yearly net income after tax.
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This reply was modified 9 years, 3 months ago by aussieguy2000.
One thing I would say is work it out based on NOT having that money first, it is never truly a gift especially from the in-laws who can hold it over your head. (That being said, they may be the perfect in-laws and it IS a great opportunity).
One easy solution (as others have stated) is to borrow the maximum amount (80%) and put the money they give you in an offset account, that way if anything ever happens its not in the house, but just saving interest, if it ever needs to be given back it’s a simple bank transfer, this also has benefits if you need to access the cash for any reason, don’t expect the bank to extend your mortgage to help cover injury or medical costs if you can’t work, if it’s already there you don’t have to beg them to help.
As an example bought our property in Sydney in 2009 and the property has gone up about around 50% since then (60-70% if I was quoting as an overly optimistic seller), if we sell it we don’t pay capital gains and as we have a large portion of it paid off (via offset account), our interest is only around $600-700 a month. When we bought it rents in the area were around 350-500, now they are more like 500-700, so if we were renting in the area, we would now be paying almost weekly what our mortgage costs monthly, and we would not have the equity in the property. Whenever we want to use this equity for personal or investment we can.
To quote Terryw above (as long as you have considered your options)
I would:
1. Bloody oath
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This reply was modified 9 years, 3 months ago by aussieguy2000.
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This reply was modified 8 years, 7 months ago by
