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If I had my time again I wouldn’t of made all the mistakes of listening to my accountant 20 years ago.
DON”T put into a Company name. You do not get 50% CGT deduction. A real killer when u want to sell a property 20 years later and you have a profit of say $1,000,000 (this can happen if u invest in property long term). Guess what —- you pay tax on $1,000,000 (do your own maths) instead of paying tax on $500,000 (if in your own name or Trust).
Putting in in a trust – OMG LAND TAX is a killer tax. You pay this every damn year and you don’t get the threshold. For example – just one property of mine I pay $2,900 per year. 10 yrs = $29,000. Do the maths over 20 yrs.
Because of this I now prefer purchasing properties in my own name in different States—- just saying!
Talk to good property expert like the ones on this site.
I’m no accountant or financial adviser, but who would like to be paying $48K to Mr Abbott. I could go on a round the world cruise 1st class with that. Mate I would tell him to buy a few good waterfront and/or beachfront properties in the Eastern Suburbs of Sydney like Coogee, Maroubra, Clovelly sort of places, blue chip locations. Must have awesome views (around the $900-$950K). The property will usually be negative geared, BUT that’s okay as he can afford it. The positive is CAPITAL GROWTH. In my opinion nothing beats good capital growth. These places always rent very quickly (if your renting it in the middle of summer). I have invested in both cash flow positive and negative geared, but gold is struck when you buy LOCATION, LOCATION, LOCATION. And in case something goes wrong he can sell these places very quickly. Just my 2 bobs worth.
Cheers for that. I will definitely call you. Just one thing I will say so the forum can read is the biggest difference in USA compared to Oz is there is no “tall poppy” in the USA. I drove a nice car in OZ and people would come up to me and say “you must be ripping someone off” and even spit on my car. In America I also a drive a nice car (SO CHEAP IN US) and American’s would compliment me on my wheels and congratulate me for being successful.
Also, when doing business in USA you are dealing with 300 million people (not counting the illegals) , whereas in OZ you are doing business with 20 million, this is why the USA is the land of OPPORTUNITY!
Engelo, have you said these Auzzie phrases yet : ‘So small you can’t swing a cat’ and ‘flat-out like a lizard drinking’, watch the face of an American when you say it – funny, funny.
Actually after hearing your podcast I have got off my backside and rang the Mortgage broker to get to work on getting me some more money. Thanks for the boot up the ass Engelo. I haven’t done anymore buying since 2010. I travel to LA & San Francisco every year as I love the USA. I have an investment property in Pac Heights. I admire what your doing over seas. I’m a seasoned investor for the past 30 years and one thing that has worked for me is buying properties for LOCATION, LOCATON, LOCATION. Most of the properties I bought are either Harbour front, beach front or close to a University. I know it costs more to purchase and most of the time it’s negatively geared, however every 5 years I manage to cash-out more money from these prime assets as they appreciate so quickly. The normal suburban (cheaper) houses that I purchased have just sat on the fence for years, but they are slightly positive geared. I would love to contact you when I come over in June 2015. I use to have a business in SF and will give you a run down on many funny stories about being an Auzzie in the USA. Good Luck
I use a Postal Box service in San Francisco, $375 per year plus costs of her forwarding my mail to Oz, contact is; [email protected]
They accept Credit Card or I just send them a Check each year from my BOA checking account.I own a condo in Pacific Heights San Francisco. I've owned it since 9/11. I do not use an Agent to find my tenants or manage it. I use Craig's List. At the start I was renting it for $1500-$1800 p/m, incl utilities, but in the past 18 mths I'm now renting it for $3,000 p/m + utilities. it's now plus, plus cash-flow for me. I have tenants every 12 mths and at the end of the lease, always June 30th, I fly over using freq flier miles and have a July 4th holiday for 2-3 weeks with my kids. The apartment is a junior 1 b/r fully furnished and equipped (it has everything) and I keep the electricity, phone, Internet and Cable TV in my own name and the tenants pay me approx $200 p/m for this. The only problem I have ever had was with one tenant. I admit I was a bit desperate as I was 2 days away from leaving and I rented it to a young guy. 3 weeks later I was receiving complaints from all the neighbours. He trashed the place with drugs, loud music etc. I employed a lawyer who served him with an eviction notice and he left. I flew over there to access the damage and the bill came to US$8,000, including my costs of flights etc. He paid the full amount. He also had to pay the rent until I found a new tenant. The biggest costs was the damage he did to the outside of the building. My condo is on the top floor and instead of using the toilet he would do it out the window. The building had to be re-painted. I take a 2 month bond because of the place being fully furnished. There is NO rental Bond Board in California, so you just bank it in your own account which I have in the USA. Not like in OZ where there is a max bond that you are allowed to take —- too many rules in Auzzie. While I'm in SF on holiday's I advertise the property and have ALWAYS rented it for another 12 months. In the US, you can do credit checks online and your tenants have to pay a non-refundble $25 application fee. If during the year I have any problems which do occur occassionaly I just search Craig's List for a suitlble tradesman to go and fix. So my experiences in the USA have been great and in the past 18 months my rent has gone up 50%, so I'm loving it. I am the perfert example of a sub-prime mortgage. I borrowed 80% from a US bank with no employment and no US residency. It was the easiest money I ever borrowed. The loan is now 4% fixed through BOA. I'm now in the process of sourcing for another SF condo.
No, trusts etc have been set-up years ago. I am very very fussy with providing records to accountant. As mentioned before everything is given to accountant via MYOB all reconciled for all accounts.
Accountant based in Brisbane
LC, Good intention is what my partner had when she decided to move back into her home in Melb, but 4 weeks later she did'nt like living in Melb and the weather sux's so with all good intentions she decided to move back to QLD. It's simply a LOOP HOLE that our accountant advised that we CAN do as long as we could prove she moved-in. I cannot see the ATO telling her that her good intention was not………………………there's nothing wrong with changing your mind about where you want to live!
Even if you want to move-in while on your annual leave, nothing in the act says YOU MUST live there for a certain amount of time. You could just simply at the end of your leave decide to move out and go back to work in another State.
Yes agree, hence why we had a friend go by everday and run the heater etc for a while each day.
My partner does not work, she is a housewife, however, it does not matter where you work. people work in all different states and have a PPOR wherever they want all over the world. Remember you are allowed to have 1 x PPOR where you can come and go whenever as you please. As long as you can prove you moved-in, hence electricity/gas bill, all id's to show your new address and then 1 month later change them back.
We just did this, we kicked out the tenants (did'nt renew the lease).
On the advice of our accountant upon the 6 years of owning a property in Melb, my partner (was her PPOR when purchased) moved back in for 4 weeks. But she did not actually physically move back in. This is VERY important. YOU MUST BE ABLE TO PROVE THAT YOU MOVED IN.
To do this we put the elect & gas on, changed all her Id's and mail to the Melb address, had her friend go there everyday and run the heater so the elect bill will show fluctuations and usage. Her mother would pick up the mail every week. She even went as far as flying down to Melb (we live in QLD) when the tenants moved out to prove she moved to Melb.
After 4 weeks, we advertised the property for lease and it took 2 weeks to rent. So in total she moved back in for a total of 6 weeks. The 6 years will commence again.
We lost 6 weeks rent, however the CGT would've been heaps more of a loss.
I think you are trying to ask if you could just leave it vacant so the 6 year rule will start again. We were told YOU MUST PROVE THAT YOU MOVED BACK IN and that there was no specific rule as to how long you had to live there for the 6 years to start again. .
mmmm, hang on. If you live in a property for more than 12 months you simply comply with the requirements set by the ATO, your entitled to CGT free. You can do this (buy & sell) for the rest of your life CGT free as long as you live in the property for a min of 12 months. GST is applicable to Commercial/industrial property when you sell, not residential. Again, this can be avoided also if the property is leased, no GST is applicable. Now there is a loop-hole here. I just sold a commercial property with no lease, however upon the sale the buyer signed a lease PRIOR to contract date, hence no GST applicable. Loop-holes are not only for the rich to exploit but it's there for the informed.
I have one house that is insured through EBM and the rest are with Suncorp as those properties are in QLD. With insurance for a (house) rental property, I don't take-up contents insurance as the place is not furnished. It's a question I put to my insurer last year and asked what does the contents include and it was more if the property was furnished. My insurance quote went from $643 down to $314. I also increased the excess to $5,000. I have allot of properties insured and I have saved heaps by increasing the excess on all of them. It's just a strategy I use for keeping my insurance premiums to a min.
Thanks for that, I'll give them a try.
Look up your lease. It should be stated in the lease as a special condition. Remember If your the owner going to do the work, your agent must give proper notice of entry to enter the property, even if it's just outside in the garden or you could get yourself into strife.
I just bought a place last week and offered 5% upon signing the contract & another 5% upon getting unconditional approval but on the condition I can get to keep the keys and access the place on my own accord. No one is living in the house. I'm not aloud to actually do any work but I have just spent a week getting quotes from builders, painters, blinds people etc, etc. What a difference it makes to be able to access the place before hand. I have time to digest all the quotes coming through. Its awesome and I will do it all the time now when purchasing an empty house.
When you say buying a property jointly, does this mean your putting up the 20% and he is putting up???
Paul,
I purchased a unit off the plan back in 2005. I was the second purchaser in a building of 20. It was a purchase for my mother to live in so I really did'nt look much into it except just buy it. I paid $550K. Last week I had an Agent do a valuation for me and he came back to tell me that I paid $750K for it. I was a bit amuzed about this and asked him where he got the info from. His search showed up my price of $550K, but 2 months later it recorded another sale of my placet @ $750K. The agent told me that developers sometimes do this to beef up the prices in a building at the begining to help bring up the values. It obviously worked as my value came in at $795K. The developer ended up in liquidation so all repairs are being paid by us "The body Corp" and believe me there are heaps of repairs. I would'nt buy off the plan again — too many problems after.http://au.messages.yahoo.com/finance/home_loans/1819?p=1
I know this is an old post, but check out this forum on RHG. I have been following this forum on Yahoo for a while now. It;s interesting reading.
