[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 22, 2010 - 9:19 am

Sometimes the to die for suburb becomes too expensive for people to buy into and they get forced to buy in the other neighbouring suburb.  If you really want to know the price attend a few auctions in the suburb to make sure if this is the case.

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 15, 2010 - 10:59 am

You stated your income was too low so would you consider that you may have a cash flow problem also.

Oldish Unit in Surfers Paradise with beach views-No growth since purchase 3 yrs ago so no CGT. At least I could get my 60K (original 20% deposit) back out. This property costs me 11K per year out of pocket.

what would you do with an extra 60k cash put in an offset account or pay off as a one off repayment and the new extra  cash flow saving of 11k a year towards increasing the repayments off one of the two properties left if you sold this one.

Some say never sell but if you sell the $300,000 apartment and aim to reduce debt to aim to get to a cash flow positive situation with one of the other two properties you will find it easier to get another loan down the track and as you have just discovered

negative gearing is limited by how much you earn and how much you owe.

You are stuck because you are in a negative gearing perspective while a cash flow neutral or cash flow positive perspective may need to be considered. The $300,000 apartment may get capital growth but you might not get capital growth and it costs you 11k a year. Can you live with missing out on the potential capital growth versus increasing your LVR and reducing debt.

I sold a property myself because of having no Just Over Broke (JOB) income and that property was sold 5 years ago at $170,000 and it is now worth $320,000 but I knew I would run out of cash reserves and be forced to sell later. This however has allowed me to keep my other property and pay it off.

This is not financial advice as I have not told you whether to sell any of the properties or what their potential growth may or may not be in the future. I have merely expanded your investment knowledge of other types of property investing methods to aid in your decision that you can only make

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December 15, 2010 - 10:17 am

mucyx2007 wrote:

Thanks Again. One more question, if I do lease the old house it will be CGT free for 6 years as it has been my main res for past years? also if I decide to keep selling it till sold, it is again CGT free as it has been my main res? Thanks all, I will follow the law Cheers

You can apply for the old house to be regarded by the ATO as your primary residence even when renting it out for CGT exemption for up to six years  however you can only do this on one house at a time. So house number two would be CGT liable while you are treating old house as main dwelling CGT exemption.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm

Exception to what I typed above
There is also a situation where if you are not renting out the two houses you can have both houses as main residence for up to 6 months
See
moving house section in link below
http://www.ato.gov.au/individuals/content.asp?doc=/content/36888.htm

If you phone the
ATO
on 132861
you will be find them to be very helpful on any inquiry or clarification on what was typed above that you may have.

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December 15, 2010 - 5:06 am

mucyx2007 wrote:

I am at ACT
New House 670k, Mortgage 535k
Old House market value, 500k, mortgage 230k ( was 90k, but had takend money out for the deopsit of the new one) Had been lived for almost 6 years

Friend suggested to rent the old one since can't get it sale due to current market, treated as rental property, would there be any CGT on that? 

Only from the point in time that you started renting it out till you sell it. So gain achieved in rented time would be subject to capital gains tax.

When you borrowed the 230k the bank would have valued the property at 500k. Keep in  your tax records this valuation report and then anything above this is capital gain when you sell later on.

You can also proportion the capital gain based on time as ppor / total time owned times final capital gain achieved from original purchase price will be exempt. gain that is after this exempt amount is subtracted off is taxed .

 

mucyx2007 wrote:

Also suggestions from an accountant that rent the old one privately, but named the new one on the rental agreement to claim stamp duty and more tax deduction on interest etc, would this take me into any trouble if ATO find out?

Remember that you sign your tax return declaration that every thing stated is true and correct. So you will be the one explaining to a tax officer why you are defrauding the ATO not your accountant.

You cannot claim stamp duty as a cost against a rental property that is private use (you can borrow the funds needed if the house is for investment purpose)?

You cannot claim a loan that is for the purpose of private use being your main dwelling as your rental investment purpose.

mucyx2007 wrote:

I basically don't want any trouble but attracted by the benefit of the doge way, just how much would I save if I listen to the accountant?

http://www.ato.gov.au/individuals/content.asp?doc=/content/82390.htm

mucyx2007 wrote:

If not too much, I will get it rented the normal through agent…

This quote below is directly from

http://www.ato.gov.au/individuals/content.asp?doc=/content/00131327.htm

Interest

People sometimes use their loan facility for both investing and private purposes – for example, to purchase or renovate a rental property and to buy a motor boat.

The interest expense on the private portion of the loan (the motor boat) is not deductible.

A common mistake is to claim a deduction for interest on the private portion of the loan.

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December 12, 2010 - 11:29 pm

My sister in law was walking on her outside deck when the timber snapped and her leg went through the deck trapping her.
Luckly she has friends who drop in regularly and investigated why she did not answer the door and found her round the back in the deck.

What about on the block when the ceiling collapsed on the wife. !

Uncle knackers has a video on you tube about locating electric wiring before cutting plaster off walls !

http://www.dailymotion.com/video/xdmsqt_uncle-knackers-shows-how-to-renovat_school

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December 12, 2010 - 11:15 pm

Terry has a good point about setting up an LOC or using any equity gain.

What you need to think about is tactics.
Are you a buy and hold investor for a longer term time period.

You could split the loan up which goes something like below
30% of loan fixed for one year at whatever interest rate.
30% of loan fixed for two years at whatever interest rate.
30 % of loan fixed for three years at whatever interest rate.
10% of loan variable at whatever interest rate.
this is an averaging of the interest rate while giving you flexibility to decide in a years time when the fixed rate on 30% finishes on if you want to fix the 1st portion for three years or go variable on 40% instead..

Servicing the loans is the factor that may stop you buying another property in the future.

You also need to take of your home owner thinking hat off and put on your landlord investment loan hat.
Remember that the rent and tax deduction refund help to pay the investment loan.

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December 9, 2010 - 12:21 pm

What  you need to search on is the term trust surcharge
As you have not mentioned what state you have the land in you should start at the relevant state revenue office for your state.

Also there seems to be a need to inform the SRO of your trust holding the land
In Victoria

0.375 % is charged from $25,000 to 3 million on top of the normal land tax rate scales.
In Victoria see link
http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-3A87315B22BC23FFCA2575A100441F59-A6FAB6BE64979127CA2575A100441FA4-2B349BF98DE9FF4BCA25768E00831147-6F409978B796F7B7CA2575D60023D584
http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-3A87315B22BC23FFCA2575A100441F59-A6FAB6BE64979127CA2575A100441FA4-2B349BF98DE9FF4BCA25768E00831147-24F090DCAEB985D7CA25768E008359B2
in victoria
<$250,000 is no land tax but the .375 % is charged on top of zero.
So 75,000 is taxable at .375% which I think work be worked out as $75,000 * .375/100 = $281.25
http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-34FAD0EFBAFF8BE0CA2575A100442101-C580F3A333F4AD44CA2575D10080AD1C?open

NSW info
http://www.cleardocs.com/clearlaw/trusts/unit-trusts-land-tax.html
http://www.osr.nsw.gov.au/lib/doc/factsheets/ofs_lt02_curr.pdf
http://www.osr.nsw.gov.au/lib/doc/factsheets/ofs_lt09.pdf

Adelaide
http://www.revenuesa.sa.gov.au/taxes/ltaxlandheldontrust.html

brisbane
http://www.osr.qld.gov.au/legislation-rulings/public-rulings/land-tax/lta009-1.shtml

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 9, 2010 - 11:47 am

Does your land lords insurance cover a non fixed lease week by week situation

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 9, 2010 - 3:51 am

you could offset capital gain against other capital loss or previous financial year carried forward capital losses

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 7, 2010 - 11:34 am

Have cheap ones that hire a hubby comes in once a year to replace batteries.

In Victoria you would ask consumer affairs on how to apply to get this taken off the bond.

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 7, 2010 - 12:19 am

Look at what a line of credit can do. Do a search on this forum on LOC or line of credit for numerous postings on the subject and then go and ask your lender if they have such a facility and what costs are involved..

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December 7, 2010 - 12:17 am

A lot of investors state that improvement factor is the motive.
Also the gearing is higher in property than say borrowing against shares for the next deposit.
Say you buy shares in the stock market can you improve the value of the shares through a renovation or a sub divide ?
What I hope to achieve in the long term is financial independence.

However having the PM ring me with a leaking shower I am beginning to wonder if it is worth doing.

Also there are two types of property investing.
Passive . Buy and Hold – long term profit.
                   Negative cash flow or Positive cash flow
Active –    Buy – improve – sell – short term profit.

Also having previously experienced rapid 4 year growth in a property it becomes addictive and gets into your blood.
I am thinking even though my wage is not enough to buy property at the moment on how I can invest in property without much wage income.

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 7, 2010 - 12:05 am

Have you got enough deposit and can you cover stamp duty as this will affect your financial decision.

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 7, 2010 - 12:03 am

If you have the planning permits approved you could sell the subdivided lots to a developer.

If you want to JV you need to network with people. People do not do Joint ventures usually from advertisements they want to know the person they are teaming with. Unfortunately you have not provided information on the State and suburb so I can't advise you on possible networking places in Victoria and Perth at the Active Property network http://www.activepropertynetwork.com.au/. However this type of networking takes time to do.

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December 6, 2010 - 11:16 am

http://www.ato.gov.au/individuals/content.asp?doc=/content/00131327.htm
from ato
Initial repairs to rectify damage, defects or deterioration that existed at the time of purchasing a property are capital expenditure

This means if you repair an item that was in a poor state when you purchased the property to beyond the state it was purchased at it is considered an improvement.

This would also cover missing blinds at purchase of property being replaced.

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December 6, 2010 - 10:59 am

No

Not with residential investment property in Australia.

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December 5, 2010 - 1:48 pm

Investigate with your bank on having an offset account linked to the PPOR loan?
You can reduce the interest on the PPOR and when you need a deposit for IP2  you can take it out of the offset account.
You can link it to IP1 but then you reduce the interest costs but this causes less tax reduction if negative gearing.

You can take the offset balance savings money and use it for the next deposit on ip2 .

[ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674]

December 5, 2010 - 1:30 pm

Look at paying weekly if you are not doing this.
Get an full offset account attached to the loan and get your salary put into the account.
do a search on the term offset in search function of forum for more info on how this can reduce the term of your loan.
As you get pay increases or over time payments put this into loan repayments..

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December 3, 2010 - 1:35 am

Where you will have a problem is with LVR normally a borrower can get a higher loan to value ratio but in your case you will have no choice but to go to either private finance or non bank lenders.

This will require you to have a lower LVR which means more savings are needed for the deposit.

http://www.e-mortgages.com.au/bad-credit/default.aspx

The links below are not a recommendation but examples of this type of lending
http://www.badcreditfinance.com.au/
http://www.mortgage.webseo.com.au/articles/mortgage_loan_bankruptcy.php
http://www.ownyourhome.com.au/Resources/post/Bankruptcy-Housing-Loans.aspx
http://www.nationalmortgage.com.au/images/pdf/WINNER.pdf
http://www.phoenixmortgages.com.au/
http://www.loansaver.com.au/
http://www.fundsnational.com.au/

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December 3, 2010 - 1:10 am

There is a shortage of builders thanks to a lack of training of apprentices and the closing of Technical schools which helps with the shortage.