Forum Replies Created
Question 1:
I understand what happens when changing PPoR to IP. You agree on value, you do not pay tax, you keep equity to that value but you do not enjoy tax advantages because of low construction cost etc..
But changing IP to PPoR is not as straight forward. Say you buy IP for 400k and in 10years it is 800k and than you decide to change it into PPoR. I assume you have to pay TAX ON IT either cash (if you have) or in form of equity so the agreed value will be 800k minus tax. Now. The question is how much tax (33%?) and is it possible to minimise it by say who owns it, maybe trust, … ? Is it one way as how some people move into house of their dream that they can not afford as PPoR but can afford as IP and over years you move in once you can afford PPoR?
Answer
You are referring to capital gains tax – You only pay this if you sell the property or transfer its ownership to a different structure like a trust or company later in the future
However it would be prudent to record its value at the time it changes from ip to ppor so that you can not pay capital gains tax from PPOR time to eventual sale in the future. Also it is a CGT event so recording the value is important to do.
Talk to an accountant on what best structure suits your financial situation.
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In Victoria – My tenant pays for water usage but the way water is setup in Victoria the service charge is much higher than the water usage component.
Can we pass on the increased costs to the end user being the tenant ?
(with no explanation as we are not allowed to say due to carbon tax rather due to the suppliers of services used to provide accommodation have increased charges to the Landlord which have to be passed on to the end user)
My rates last year went from $400 up to $600 due to my property value increasing. That is a 50% increase in rates.
How would the tenant react if I increased the rent by 50% ?
trusts depend really on your needs – Just had a discussion on the best set up from my accountant
It depends on if you need negative gearing or not as the wrong trust may not allow negative to flow through to the beneficiary.
so talk to your accountant to match you needs..
I am currently applying to move my security and loans to another bank as I have had difficulties with how much they will lend me and even had an account put on hold without my knowledge. Been a customer for 17 years up until the recent takeover of the bank.
was in bunnings today they have modular buildings – might be worth a look at
Go to an accountant and get some advice on what is the best structure to have to minimise CGT and what your GST implications will be also.
my advice is go visit potential lender of extra required loan to buy any future additional properties and find out what you can borrow.
Serviceability may be an issue on one wage
You may have to wait till your wife is working again.Also another very important consideration is can the property in question be subdivided as new rules have come in on protecting certain suburb areas from losing backyards to development.
Do not change the carpet until you finish the painting
What I did was reno while no one in house but had it advertised for rental with a future date for start of lease (ie when you think renovation will be finished)
It can take some time to get a tenant depending on time of Year
And write into the lease that an en suite will be installed in whatever room it was ( tenants do not believe it will happen otherwise)Also consider built in wardrobes if you do not have them.
Check with your accountant –
the renovation may be considered to be an improvement and would have to depreciated.
A quantity surveyor could be a good source of depreciation advice on your renovation!!!!!!! keep receipts !!!!!!
on renovation costswhat is a good idea is finding out what the stamp duty is going to be for a $400,000 house.
this is a cost as well you will incur and can be found out from your State Revenue office web page.
in WA it will be $13,015.Some rough figures to go on
A mortgage broker can work these figures out for you if you use oneSo Borrow 321,713.50 with a deposit of $91,301.50 to reach LVR 80% borrowing also $13,015 stamp duty cost
compared to say as an example 10% deposit stamp duty WA
so borrow $361,879.50 (90%) then $56,877.50 deposit (10%) and estimated LMI of $5760 stamp duty of $13.015
LMI and stamp duty is borrowed ) deposit amount to be a little higher for lvr 90% to cover stamp duty and LMIhttp://www.genworth.com.au/homebuyer-centre/tips-for-homebuyers
If it is an investment property you want to use other peoples money not your savings to get more leverage
Also you can capitalize the LMI and borrow for the stamp duty alsowhat is a good idea is finding out what the stamp duty is going to be for a $400,000 house.
this is a cost as well you will incur and can be found out from your State Revenue office web page.3 months is a tiny amount of time to wait compared to 30 years.
You are not changing to IP for 2 years so it won't be to big a problem to wait.
If you were buying another IP then the repayment saving may have been useful for cash flow to help repay a second IP
but if this is the only house you own then reducing the principle while it is your main residence is not a big problem as the interest component is not tax deductible when it is not an IP but is your main residence(PPOR)..I used Nixon Robert J when I was living in Forest Hill
Accountants & Auditors – Burwood East, VIC
(03) 9803 3504There is also an accountant at Brentford Square but I have not used them so I do not know how good they are.
Profit from our experienceCertified Practising Accountants providing a comprehensive range of financial services to personal and business clients.49 Brentford Sq, Forest Hill VIC 3131
ph: (03) 9877 7117ps I hope you meant forest hill 3131 victoria as there is also a forest hill in NSW
You need to check with an accountant what the tax implications are of negative gearing Australian Property while being a non resident
(it is complicated not straight forward)Get the house valued or note its value when you move in have a record of it for CGT purposes.
Time line
Purchased – – – – move to uk 8 years – – – —move to Aus into house
sell in future
$$$$$$$$$$ CGT liable $$$$$$$$$$
Valuation done >>> Exempt CGT >> >>>>> 2020
eg $150,000
$300,000 >>>>>>>>>>>>>>>>>>>>>>>>$600,000150,000 capital gain taxable
$300,000 in future say in (2020) in 8 years timecgt exempt as an examplemake sure 3 inch nails are not used a picture rail like above is a brilliant idea as it can be used over and over and over
I cannot advise to but have a look at these link for information and get some advise from a lawyer or financial planner on if it suits your situation
http://www.vendorfinancelawyer.com.au/rent_to_own.htm
https://www.propertyinvesting.com/strategies/lease-optionswealth4life.com wrote:Hello all and an interesting read,I know Mark personally and have been dealing with him for over 4 years … Mark has found deals for my group and we have made great profits from them and him, without his help this would not be the case.
There is in all business people who are left out in the cold and stranded, and this is sad to have happened via Massland as some have found from reading above. I would say that Mark is taking this on board as I believe he has a good character and high values to rectify this for the sake of his future reputation.
Not everybody likes you in this business when you chose to become a leader and a prophet. If you ask Donald Trumps staff what they think of him I am sure you will get a mixed bag of reply. or "you're fired"
When you attend $49.00 seminars you will find $49 dollar people and when you attend $5k events you will find different people. You also have the choice to network with people and build your own company like Massland, which is what it's all about, 5k is cheap in this business of property developing. My solicitor just did a new put and call agreement for me which cost $8,800.00
A call option contract costs 8800 and marks course costs less than this so given you get a call option contract you can use you are
aheadQuote:Marks business has grown very quickly and as a result of this some pressures in administration have emerged, anyway he's a good bloke with good intentions in my humble opinion and I've made money from him. My strategy is a little different as I enjoy optioning the properties doing the conceptual planning then revalue and on selling without becoming a builder with the head aches.Good luck with your choices, I would recommend doing his one day event to get a taste of the bigger picture. Kindest Regards to all PS.
You won't find leaders amongst the crowds, they fly out in front.
Considering I have been billed $16,000 in HELP debt by the Government for a degree that I found did not result in employment I think $6,500 for Marks course is a better deal and doesn't rely of someone employing you at the end of the course to make money.
my advice
1. Contact local council (yes it sounds like you have done this but did you find out all the costs involved)
find out zoning of land (sounds like you have done this part )
find out if you have sewerage – (you may need to run a main sewer pipe and even a possible pumping station
(you may need to contact local water authority to find out if this is needed )
find out if you need to provide any roads or widen any roads as a condition is the subdivision'I was looking at a 91 acres property and council wanted a road built through adjoining properties to the main road that goes to the highway. Then sewerage has to go under a highway and a railway line and then an existing road needs to be widened and a roundabout put in at the developers expense.
2. If council doesn't help you may want to employ a town planner to find out what requirements council does have.
Sewerage, Water, Power , gas , telephone what is required ?As an example I saw a 2000 sqm property for private sale that was advertised as development STCA but having a chat with the town planner from the council I was informed that a special low density overlay exists there that makes 2000 sqm the minimum size. So I asked the planner what is the zoning of the large farm land on the other side of the road and was told it had a overlay known as a bush fire buffer zone and that nothing could be built on it.
Then a couple of weeks later I noticed a property development up for sale with subdivision plans and the location of it was the big land I just enquired about. (BUYER BEWARE)Another example I saw a property for sale in Traralgon that was land but I know that this land is sitting in a flood zone and has recently been under water. (BUYER BEWARE) So also check flood zones .
I have not got to using a surveyor yet as my preliminary investigations have told me to stay away from particular properties I have been looking at.
also check dial before you dig before digging any of your land up and as a side note be careful ramming steel fence posts into the ground as they cut fiber optic cables efficiently
1100
http://1100.com.au/defaultWhat I am trying to convey is find out what other costs are involved ie hidden costs there may also be an infrastructure cost per site sometimes called head costs that are paid to council.
