Hi Wayupnorth,

Is this a single house or unit or a block of units?

Derek

derekjones1@bigpond.com

Hi Leswon,

Notwithstanding the slight deterioration in home affordability I suspect your comments were made equally vehemently 10 years, 20 years and 50 years ago and they will again in 20 years time when people discuss both buying and renting property.

It’s all a matter of relativities.

Interestingly enough first home owners face a similar…[Read more]

Hi Dreamergirl,

Unfortunately there is no easy, legal way to transfer the debt from your new PPOR over to your current property as the deductibility determiner is the purpose of the loan.

Do not combine use your LOC for PPOR deposit and IP loans as the accountancy trail can become very difficult at tax time. You are better off having split…[Read more]

Hi all,

From the outset – I am not a cashflow investor but I get the impression that a number of readers of Steve’s book have only heard the cashflow mantra – he also says the fundamentals need to be there too (using other words) for a long term view and as a risk minimisation process.

Insurance companies do not have to take on your risk. They…[Read more]

Hi Yack,

I can assure you that valuers are not as consistent as we sometimes think. Remember the real estate market is largely based on human judgements, for example how many people only get one market appraisal for a property they are selling – in my case our house was market appraised at $500K, $560K and $740K – with a valuation for finance at…[Read more]

Hi WAF,

Katanning has a declining population with one of the schools recently classified down due to lower student numbers. There used to be a largish muslim community there employed in a Halal abbatoir (?) – not sure of the state of play otherwsie but many WA country towns are suffering from a rural decline.

Derek

derekjones1@bigpond.com

Hi Konmanos,

Long weekend over here hence the delay.

“Line of credit secured against your home”

When banks consider lending someone money they apply two main checks – a serviceability check (your ability to meet payents) and a security check (can their money be reclaimed should you be in default)

Typically banks will lend you 80% (with Lender…[Read more]

Hi Helpme,

I recommend you spend some time with a good broker and a property savvy accountant before you do anything.

Making such drastic moves as those you are considering
is most successfully accomplished when all factors are considered.

While you may be hurting financially at the moment – does the rest of the family know (and understand) the…[Read more]

Hi Kylie,

I suspect you are on the tail end of the stampede into Ballarat with large numbers of would be investors already in Ballarat and wanting to follow Steve’s lead.

As more and more investors are lured into cashflow dollar they are having to look further and further afield. Some investors have established relationships with real estate…[Read more]

Hi Komanos,

In your situation it is not an ‘either or’ situation. You can do both.

Set up a line of credit secured against your home and use these funds to pay for the deposit plus purchasing costs. You will need total loan of around 105% of the property – 25% comes from your line of credit and the balance from separate loan.

You can also put…[Read more]

Hi Aussies,

Check out http://www.navra.com.au

Steve Navra ran two day weekender courses which cost $286/person (basically a cost recovery charge)- seems they have become one day courses at ~$180 since last year.

Steve advocates property as the core asset in an investment portfolio because of the advantages of gearing. Be aware he is a ‘growth’…[Read more]

Hi Sis,

Assuming the following (numbers rounded for ease of explanation).

Bought $100K
Buying costs $5K
Depreciation claimed over period of ownership $10K

Sold $200K
Selling Costs $5K

Net Capital Gain = (200-5)-(100+5-10) = $100K gain

Depreciation is a subtracted under the claw back process under section 40/43 of the tax act.

As the property…[Read more]

Hi Yezzum,

“Given that the average salary in Australia is around $37K”

Not so – according to the ABS (Nov 03) the average adult full time earnings equate to an annual average salary of $48859 and the average full time adult total earnings equate to $51298 with the differential between public and private purse equating to ~$100/week.

“Surely all…[Read more]

Hi SIS,

A bit of the ‘same old same old’ though – it seems as if those items have been ‘targetted’ every year ad infinitum.

I guess it means we have all been rorting the ATO[:p]

Derek
derekjones1@bigpond.com

Hi ‘Face’

Capital gains liability is halved if the asset is held for more than a year.

The net gain (selling price – selling costs) – (purchase price + costs – depreciation claimed) X 50%.

This figure is then added to your tax return as income and treated in the same way other income sources and taxed accordingly.

Derek

derekjones1@bigpond.com

Hi Maria,

Well that threw me – a boyfriend/girlfriend not co-habiting []

Derek

derekjones1@bigpond.com

Hi Maria,

You will need to fully think this scenario right through.

Yes you will be able to use your partner’s rent as an income stream to create deductible expenses.

However, as I understand it, your deductions for costs will be apportioned against the part of the part of the property your partner uses – in other words you will not get 100%…[Read more]

PS – I wonder if these sorts or articles will become more common place as shares regain some of their recently tarnished image?

Derek

derekjones1@bigpond.com

Hi all,

“Clinton says for negative gearing to make sense, you need to eventually plan to recoup all those losses and more. The tax benefits are real, but shouldn’t be the primary focus. After all, if all you wanted to do was to save tax, you could go on losing money indefinitely. How smart is that?”

With careful property selection negative…[Read more]

Originally posted by georgisj:
Neo,

If you take interest only and take up a facility on your IP to 80% LVR, this will give you $28k to reduce the loan on your PPOP.

James

Unfortunately, as a rule of thumb, it is the purpose of the loan and the requirement that it be ‘income producing’ for it to be tax deductible that mean this arrangement will…[Read more]