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  • Profile photo of ducksterduckster
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    Either governemtns stop taxing the golden goose – the landlords who provide housing to renters. (taxes charged atm SRO – Land Transfer Fee, SRO – Land Tax, ATO- income tax on rent if positive , Provisional Tax on Rent, Removal of depreciation on old recently purchased house fittings recent sneak law change, Deeming of negative income as income by Family Office , Capital Gains Tax – ATO , Capital gains resulting in losing Family Payments HELP payments , HECS repayment from Capital Gain.

    Why have I mentioned this well in Hobart there are people living in tents as no one in Hobart offers long leases for rental.

    or
    Government pays to provide adequate public housing .

    I used to be a landlord .

    Profile photo of ducksterduckster
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    in victoria rookie developer

    Profile photo of ducksterduckster
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    @duckster
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    My plan is to purchase land in fringe industrial zones in victoria

    You have a buy mentality !

    build low-cost warehouses to establish an income stream

    Hold mentality

    I am now fairly close to the limits of my serviceability

    Your buy and hold train of thought goes against the serviceability problem
    While you are waiting for approval for a D.A. how much bank interest , council rates, electricity, water will you incur ?

    Read some books on development and see how developers sell most of their developments and may keep one property in each development project . Rather than passive income they usually rely on capital gain on selling their final projects.

    http://www.rookiedeveloper.com.au/

    food for thought
    http://www.yourinvestmentpropertymag.com.au/buying-property/how-to-buy-property-when-you-dont-have-money-175455.aspx

    Profile photo of ducksterduckster
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    also check the council / area’s local paper for smaller trade people who might be eager for any work rather than the bigger tradies that tell you they might be able to fit it in in 4 months time .

    Profile photo of ducksterduckster
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    @duckster
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    You can’t borrow money from your investment property and then use it for private use and then try and claim the increased interest costs as an investment expense used to earn investment income. The tax office will notice the increase in interest costs and will ask you to explain or (tax audit you) why the loan has increased and what the purpose of the loan was for. The ATO has programs that check for these common mistakes that taxpayers try to claim.

    Here is a link you might find useful to read

    https://www.ato.gov.au/General/Property/In-detail/Rental-properties/Rental-properties—claiming-interest-expenses/

    As I do not know your specific financial situation and do not hold a financial adviser license I can only give general advice and would advise you to seek professional advice.

    • This reply was modified 5 years, 11 months ago by Profile photo of duckster duckster.
    Profile photo of ducksterduckster
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    Hi All,

    I was just hoping to get a better understanding around a certain scenario i am considering.

    Just quickly I am about to start a build at the rear of my property and once completed in about 9 months time I will be moving into the property for 1 year to avoid the capital gains hit.

    Are you subdividing the land ? if yes then Firstly, CGT will be applicable as the newly subdivided area is no longer part of your main residence.
    Secondly, GST will be applicable.

    To recap on a previous article…

    GST is applicable if you are running an enterprise and have an expected turnover of ‘taxable supplies’ in excess of $75,000 per year.Subdividing and building with the intention and expectation of a profit is considered an enterprise, plus any profits derived from a new residential build are a taxable supply.
    see http://propertyupdate.com.au/tax-implications-of-subdividing-the-family-home/

    Once a year passes I will be selling the property and then moving back into the front property which is going to be my main family residence for the foreseeable future.

    During the 1 year I plan to live in the rear property though I will be renting out my front property which is an old 1950′s brick that I will be drastically renovating when I do move back in after the rear property is sold.

    You can only claim cgt exemption on one property at a time.
    So while you live in the back property you have to value the front property and then value it later when you move back into it.
    This time period has a cgt event as far as if you sell the front property you have cgt to pay for the time period you rented out the front property fpr the increase in value of the front property.

    So now you know my plan I have two questions. Firstly I am considering renting out the property to my mother who is in the process of selling her home and just wants to rent for a couple of years. If my mum was to rent the property then firstly I would know its in great hands so I could rest easy knowing my family home is being taken care of. Secondly though it will allow me to do work on the house whilst she is the tenant, unlike if I rented it out to an unknown tenant. So firstly is there any legal/tax issues with renting to family members? Or in the eyes of the ATO are they seen as a normal tenant?

    you have to be careful http://law.ato.gov.au/atolaw/view.htm?DocID=ITR/IT2167/NAT/ATO/00001 section 14
    you have to rent out the property at market rental rates.

    My second question is around depreciation of assets. As the front property is my family home I want to make some updates and thought the best time would be when the property is being rented so i could get the tax benefits. I want to add ducted heating and a split system and also a new hot water service. All these are required for the home to be rented as all the existing units are basically useless. So my question is If i was to purchase and install all these whilst the property is being rented, how would that affect my tax? Remember I only plan to rent out the home for 1 year so could I write these off over a single year or would they need to be over say 10 as a depreciation? And if 10 then do i only get 1 year depreciation as after that point it is no longer a rental property?

    The items are depreciated from whatever the tax office determines the effective life is of each item.
    Now if you change the use of the property from income producing to private use the depreciation will continue but you won’t be able to claim it during the time the property is used for private use. So if you had ten years of depreciation life on an item you claim in year one but move in and can’t claim for year 2 and then move out and rent it out for year 3 then you most likely can claim year 3. It would be proportioned between rental income producing time and private use time.
    see https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342353n17290613.pdf

    Profile photo of ducksterduckster
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    The lender may also require that both joint owners  go to a solicitor to have the legal responsibility of this setup to be fully explained to you both. And to stamp your equity release paperwork with a solicitors stamp.

    Profile photo of ducksterduckster
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    Check with your accountant if fences are depreciation allowable.

    As you purchased the property with the fences in the state they were in the fences are not a claimable repair.

    Also replacing the fence in its entirety makes it capital improvement rather than repair.

    Keep the receipt of the costs to you for the fencing and show it to your quantity surveyor or accountant. 

    Profile photo of ducksterduckster
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    from what I have researched you need to register your copy of the book and you will then receive an email that instructs you on how to get templates

    see

    https://www.propertyinvesting.com/book4/register

    or go to home page of http://www.propertyinvesting.com and you will see a picture of  Steve Mcknight on the right hand top side just above it is a register 0 to 130 link .

    Profile photo of ducksterduckster
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    If you wish to borrow money then you need to prove you do not need the money. If you can't prove you have a J.O.B (just over Broke) to pay for a loan then borrowing money will be challenging. This is due to the credit reforms that borrowers have to be able to service the loan. Read lots of books. http://www.businessmall.com.au/.

    Profile photo of ducksterduckster
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    Profile photo of ducksterduckster
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    The reserve bank uses monetary policy to maintain the economic growth at a sustainable level. This is inflation at 3% max. If inflation gets higher their is a risk of hyper inflation. And if the CPI growth level is too low then the economy slows down which is not good either so 2% to 3% is the ideal range.

    The strength of the Aussie Dollar affects the interest rate decision. If as an example the USA interest rate was 0.5% and the Oz interest rate was 10% then US investors would invest in AUD rather than USD as the deposit rate would be better, This transfer on money into Aus would strengthen our dollar against USD and make our exports dearer to buy for other countries. This affects our balance of trade as less exports compared to imports would occur.

    Profile photo of ducksterduckster
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    It happens . I walked over to another property manager/ real estate agent  and asked them to take over the rental when it happened to me. Then the bad manager's real estate office owner calls me to ask why I did not call them which I replied I called on several occasions and was promised a call back which never occurred.

    An agent that manages a large portfolio of rentals has it is in their interest to look after rental owners rather than a real estate agent that does some rentals and relies more on sellers and buyers for their lively hood. This is how I found my excellent real estate property manager.

    Profile photo of ducksterduckster
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    You need to consider the long term cost – depreciating your building will reduce its cost base and increase capital gains tax if you sell at a later date

    Profile photo of ducksterduckster
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    ozman when you were transferred did you buy another house at the new location ?

    If you bought a second house and lived in it

    you will lose the cgt exemption  on the second house

    for six years if you claim it on the first house during the first six years.

    As you can only have one place at a time as a main residence.

    Profile photo of ducksterduckster
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    I have used hire a hubby before http://hireahubby2-px.rtrk.com.au/

    and I also used http://www.greyarmy.com.au/ in the past

    Might be worth getting a quote off.

    Profile photo of ducksterduckster
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    If the first property is not your primary place of residence you may need to also pay capital gains tax at the end of financial year if you sell it. This requires you to hold on to some of the gain to pay this at eof.

    Profile photo of ducksterduckster
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    Darkness – research Line of Credit   http://www.investopedia.com/terms/l/lineofcredit.asp

    Some banks may call it a portfolio loan..

    If you ask your bank about a line of credit they will advise you on how much you would be allowed to borrow up to.

    may be refer to as an overdraft type loan .

    Profile photo of ducksterduckster
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    I use a spreadsheet and put in a date column and interest column and a payment column and a interest charged column.  And a balance column

    then in the row calculate the interest charged for the days elasped.

    date                interest         payment       interest charge        balance

     1/07/2013        4.99                                                                       110,000

    14/07/2013       4.99            589. 84       $$$$$$$$$$$            #######

    $$$$ = 13 days of interest so divide 4.99 by 100 and divide it by 365 or it might be 360 check with bank how daily interest rate  is calculated

                  multiply balance by daily interest rate by 13 days

    at end of month another similar calculation is required

    13 days of interest so divide 4.99 by 100 and divide it by 365 or it might be 360 check with bank how daily interest rate  is calculated

                  multiply balance by daily interest rate by 13 days

    ##### = previous balance + interest charged – payment (leave the payment column empty)

    then copy the rows and alter the date row to add +1 to advance the month in the first row and then copy it down the rows and alter the dates if incorrect.

    at the end of the rows you can sum up the payemnts and interest charged.

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