[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 6, 2008 - 7:21 am

Hi Steve,

I have not been looking at other options simply because my existing banking arrangement is already very convenient with all direct debits and credits already in place and all accounts are in the same bank…, very convenient. The loans have redraw facility which I can do myself over the net, anytime. Also I get 0.7% off standard variable loan.

Hence there is no issue re. using the funds for other needs. Besides, I'm building my equity anyway. More restrictions on using the funds are actually welcome.

Terry, all my loans are tax deductible. I don't have any non tax deductible loan.

Ok, I'll start inquiring tomorrow.

Thanx,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 5, 2008 - 8:57 am

Nicole,

Your CGT would be:

+ Sale price
– selling expenses ie. legal & Real Estate agent fees
– all renovation expenses that has not been claimed as tax deductions
– expenses you incurred when you purchased the property ie. stamp duty, mortgage duty, legal cost, conveyancer fee, etc.
– all other expenses you have not claim.
x 0.5 (this is because only 50% of your net sale proceed is assessable)
= The result is taxable income.

The taxable income + your wage + other income = Total taxable income

The tax rate is applied as per existing tax rates ie. 15%, 30%, 40%, etc… I might be wrong with the tax rates here, but hope you get the idea.

Kind regards,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 5, 2008 - 6:15 am

Hi Chook77,

50% CGT discount is only after you have hold the property for 1 year.
0% CGT is for your principal place of residence. The other experts can correct me on this, but you can claim PPOR to a property even if you are renting somewhere else.

Kind regards,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 5, 2008 - 6:09 am

All, thank you for responding.

I know I may have bitten more than I can chew, but house prices in Sydney – where we want to live in the future – is crazy. A friend of mine urged me to just jump into it and tighten the belt for a few years. He is in much the same situation. Hopefully things will get better… 

Yes Marc, I'm saving and paying off religiously 

Terry, I am paying PI because I did not, and still have not, the background knowledge.  Besides my bank manager thinks I am precariously hanging on 3 fingers so he does not allow me to go on interest only or even fixed rate until I reach 80% LVR on my biggest loan.

Thanks a lot again… I'll keep paying off as much as possible and hopefully by this time next year I'm in much better position.

Gratefully yours,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 5, 2008 - 2:23 am

Hi Trustie,

I am answering this from my own perspective using details you provided. Hope this provides you with a different perspective to view your situation.

1. Without considering any factors like love / trust to my kids, etc. I am reluctant to go into any dealings that, if fails, would severely impact my survival in retirement. There's plenty of horrible stories where the deal fails and the parent ends up homeless as the bank moves in on the family home.

If I do decide to go ahead with hleping my kids, I'll view it as objectively as possible, complete with sound exit strategies and have the lawyer drafts it properly. For example, I'll insist of having my + spouse name on the title deeds as well

2. Determine the financial pain that I have to go through. Do a detailed financial calculations using worst case scenario and most likely scenario for the first year and repeat these for at least  a further 2 years. If the worst case scenario looks manageable then go ahead.

3. I would not decide anything just based on the potential gain. To me, the worst case scenario for the early years is much more crucial. If I can stomach this the potential gain I dream of is much more likely to materialise.

Good luck and all the best,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 4, 2008 - 9:36 pm

Hi…

I third previous comments: Putting it on the Contract does nothing.

If you have the records showing you've paid 100% of all expenses, then you can claim all tax deductions. Mind you, the records must be clear.

For example, the money to pay expenses comes from your bank account, not joint account with your wife. However, the income should also go into your account, not joint or her account.

Cheers,
Cattleya

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

January 4, 2008 - 9:17 pm

Thanx Bruxism and Marc,

Further info on my income is:
Monthly disposable income (net of cost of living)  is 5400
Monthly IP net income (for 3 IPs) is 4800
Monthly interest for 2 IP is 6500
Monthly interest for the other property should be around 1900, but I don't have to pay this until July.
I know the numbers say my IP income covers only 57% of my interest expense. Throwing other expenses, it's closer to 45%.

I have access to $50k as withdraw facility. Plus my monthly wage… if all 3 properties are vacant (touch wood), I have 9.8 months  before failing my interest payments.

Well… what do you think? Do you see brim stones and fire?

Desperately nervous,
Cattleya

 

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.