Hi Lizzie,By purchasing your PPOR and living in it for the first couple of years before renting it out, provides you the opportunity to take advantage of the 6 year main residence CGT exemption. I have written an article on this topic which you may find useful.  It contains a simple numerical example to help you understand this very i…[Read more]

Terryw is correct.  The interest repayments on the "mixed" LOC will have to be portioned based on the existing % between private and investment portions of your LOC principal.Read Tax Office's TR200/2 – paragraph 20 explains how to calculate the deductible investment portion of interest expense.  But you will find it is a very messy pro…[Read more]

Hi Gyn,I posted a reponse in a similar thread this morning:You also have to be careful how much you claim as a tax deduction on the "first" property you purchases (the one that will become your IP).   You gotta be careful that your current loan balance on that IP is not "infected" by redraws for private usage.  E.g redrawing from that home loa…[Read more]

Its crazy times at the moment……banks all over the world going bankrupt/bailed out by Gov't, sharemarkets crashing, central banks slashing interest rates…..its probably a good thing in the long run to get excess debt unwound and asset values to deflateif we're not at the bottom of the sharemarket, we sure are much closer to the bottom than i…[Read more]

Kev2008,Yes you can do that as long as you have enough equity or cash to satisfy your Lender(s) LVR and have sufficient rent income + salary to service these 2 loans.You also have to be careful how much you claim as a tax deduction on the "first" property you purchases (the one that will become your IP).   You gotta be careful that your current lo…[Read more]

If you've got excess cashflow and have an offset account (linked to your home or investment loan)……park it in the offset account.It will guarantee you around 8% AFTER tax return on investment which equates to around 11% before tax (if marginal tax rate is 30%) and 14.5% before tax return on investment (if your marginal tax rate is 45%).  It…[Read more]

Besides the high strata fees associated with Sydney CBD apartments, is the posibility of having MANY uni students as residing in your apartment.  Sydney CBD is a favourite location for Uni students due to its proximity to everything.I'd hate to stereo-type uni students but alot of real estate agents I have spoken to, admit that some investment…[Read more]

Hi Kwarrior,I'm personally not a big fan of "off the Plan" purchases as I like to see and touch the final product before putting my hard-earned dollars in such a large investment.When I inspect properties I like to see to quality of the finished product, how my particular unit compares to the rest of the complex (and how it is comparitively…[Read more]

TracyD,Underestimating your expenses in the Variation form is a wise thing to do because if you get caught with a tax liability when lodging your tax return, the ATO may disallow you from varying your PAYG tax in future years (this rule is in place to prevent taxpayers from rorting the system by obtaining the benefit of higher cashflow during th…[Read more]

PropertySeeker,In the accounting circles, its commonly called the Section 221D form.Its basically a form to instruct your employer to take out less tax each month in anticipation of a tax refund (due to negative gearing).  Instead of getting a big refund after lodging your tax return, you may get 1/12th of your refund every month instead (via…[Read more]

Tess,Totally agree with Richard on his comments above:Bankwest have a track record of providing very slow service and causing delayed settlements (causing heaps of stress for FH buyers who are purchasing property for the first time).  This goes to show that borrowers should not think that the loan product  with lowest rate is actually best for you…[Read more]

tess85 wrote:
Meeting a potential mortgage broker today (guy from Mortgage choice). Do you think it is worth asking for a 30% or 50% rebate on commission? My husband & I have well-paying jobs, and though this is our first property and we are young, we expect to buy a couple of IPs before we are 30.

Tess,  I'd be interested in how that Mortgage…[Read more]

Hi Stuart Wemyss,I totally agree with your comment……….. "I would just say that you shouldn't act on tax or financial advice from a mortgage broker unless they hold an Australian Financial Services License or are a Registered Tax Agent".Only registered tax agents/accountants should provide tax advice. So if a borrower needs and wants tax a…[Read more]

D,I'm all for regulation that aims to achieve more disclosure for consumers.  Consumers benefit from understanding who gets paid what and from whom.  We can all understand the motives behind every player in the process better if all commissions and profit sharing are disclosed.  All mortgage brokers have an inherent "potential" for conflict of i…[Read more]

ABC-09 is correct.Break cost refinance fees are considered a borrowing costs which can be claimed as a tax dedution over a 60 month period (5 yrs).The other thing you have to watch out for is whether "all" of the refinanced funds is used for investment purposes or not.  If you are extracting equity out of the IP and drawing down extra funding for…[Read more]

Hi Tess,A good mortgage broker should be able to offer the same product (in terms of rates, fees, features ect) as all the 5 lenders you are about to meet.  So you would save yourself a lot of time by engaging a knowledgeable broker that can not only offer you the same product as the lender's loan Officers/Managers but be able to highlight the…[Read more]

I agree with rudo1ph, while some price estimates seem to be reasonable, other estimates appear to be way off the mark by hundreds of thousands of dollars.  Not sure whether to take the residex estimates seriously or not.In any case, the google map feature is really handy for home-buyers.

Hi Chis,The Tax Legislation looks at the "purpose" of the loan taken out.  Because you will be drawing out a loan for the purpose of purchasing your "home" (and not to purchase/renovate an investment property), the interest on this loan wil not be tax deductible.Your rent will be considered income and you will be positively gearing while the int…[Read more]

Hi Justin,You mentioned you have a home loan.  If your home loan has an offset account linked to it, i would advise to put the whole lot into that offset account (as opposed to putting it into a term deposit). The tax benefits are two-fold:1.  The interest income you earn (or save from paying on the linked home loan) is equal to the home loan ra…[Read more]

Hi TD,I agree with mpertile.  The bond money you received should be refunded back to the tenant or used to pay for damages.  Its not income that needs to be included in your tax return.RegardsKevin