[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 26, 2016 - 5:17 pm

hi Benny

Thx a lot for your comprehensive answer. for my calculation of the CGT i think i made it wrong of the initial 25% as CGT. however of the number of come out right partly is due to the coincidence lol.yep thanks for the tip of the PPOR :)

Cris

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 26, 2016 - 1:29 am

Benny wrote:

Hi Cris, Keep in mind that many times the seller may not need to pay ANY CGT. Main one is if they are selling you their PPOR. It is probably important that you know just how a sale affects the seller, so you can create a deal that they can say “Yes” to, eh?

Hi Benny

thanks for the information and the tips! btw, what is PPOR mentioned above means? sorry if it is a basic question as i m new to these things… And how does this PPOR works exactly to keep the seller not paying ANY CGT?

Benny wrote:

Re CGT and its calculation, you are right in that the total profit is taxed appropriately depending on the seller, and will often be less than 25% of the total profit gained (based on the 50% discount if owned longer than 12 months, and then taxed at the seller’s Marginal Tax Rate). So, the amount paid could be quite different for each seller.
Good luck with your hunting down of the information you need,
Benny

Then my next question here is, the calculation of CGT.

R u saying with my example above, the actual CGT that the seller will be paying after 5 years lease finished if i end up buying the property at $400K (the initial cost of the property is $300K for the seller), and if my monthly rent is $500.

he will be paying CGT of:

$400K-$300K – $500 x 60 months = $70,000 (subject to CGT of 12.5%, as 50% discount of CGT after 12 months, and initial CGT is 25% of capital gain)

So $70,000 x 12.5% = $8,750 will be paid as CGT in this case?

is my caculation correct ? pls correct me if any number is wrong here… I need numbers to throughly understand ur theory…

thanks heaps Benny

Cris

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 25, 2016 - 11:29 pm

hi Terryw

Thanks a lot for the comprehensive answer.So if in that case, can they get LMI so that they can get extra finance? if yes, how much more they can get if thru the LMI?

Millions of thanks again

Cris

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 25, 2016 - 11:17 pm

hi Terry

thanks a lot for your information. so u will b able to assist me in Tax then in the area of lease option? for example how am i going to structure the deal in the best way to avoid a big tax bill within the law ? or should i form a trust or any legal entities to these deal instead… will you be able to help me on those? R u based in Melbourne?

Cris

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 25, 2016 - 7:47 pm

hi Huilo

thanks for your prompt reply. I m looking to get into the lease option business but want to know the business from all perspective, e.g. how does the rent to own tenants get their finance in this case? since a rent to buy tenants are not able to buy a house thru the normal channel due to not enough money for deposit and they can’t get the finance thru the bank, i was wondering in this way, they are not limited by the big amount of deposit that they have to pay, because the bank is not the mortgagee of the house anyway. however, just because the bank is not acting as the mortgagee of the house, when the rent to buy tenants show them the rent to buy deal they have signed and the deposit that they have already paid, will the bank still approve the finance in this case?

Cris

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 25, 2016 - 6:26 pm

hi huilo

thanks for your reply. As for the first question’s answer, when u mentioned saving a deposit then show to a bank to get the finance, and assume that only 2nd tier banks would allow this as deposit, the deposit that u mention here do u mean the premium rent that the seller asked for from the rent to buy tenants? lets say a 5 year lease option on a $500K house, usually they will ask for a premium rent of maybe 5 or 10% of the sale price say $25,000 before the rent to buy tenants to move in? so do u mean when i paid the $25,000 as the premium rent to the seller, can this be a proof of the deposit to show to the bank to get traditional finance or do i still need to have extra savings in my account in order to get the finance approved?

and as for 2nd question, a caveat registration for restricting the vendor to sell/refinance the property, the not allowing the vendor to refinance is understood. but as for the selling part, isn’t the lease option already means that the seller has to sell to me within the lease period? if i put a caveat to restrict the vendor to sell as well, is it overlapping or is it also an important component as well? for i m new to this n i don’t understand how this lease option is working. thanks a lot again for answering Huilo.

Cris

• This reply was modified 7 years, 11 months ago by  Cris.

[CrisParticipant@cristineyangJoin Date: 2016Post Count: 10]

May 24, 2016 - 8:54 pm

Property Trader wrote:

Hi Nu2oz,
When I started 15 years ago we use to assign contracts (on about 20 deals) … however it is difficult these days. We currently use call options (on about 100 property deals) as it allows you to secure the property and prevents any funny business occurring with onselling it (the rights to purchase) either from the seller or potential buyers cutting you out of the deal. Remember in these types of deals you are the middle man in the deal.
Tip: If you get a significant discount on a property then secure it with a normal contract.
All the best.
Jason Moore

hi Jason,

i have 2 questions for you

1, u said it is difficult these days of assigning contracts, why is that? i m new to this area and have no experience
2, do u know any good lawyers or tax accountants based in Melbourne who are specialized in the lease option field? i want to work with the experienced ones…

Many thanks in advance

Cris