Forum Replies Created
Hello vyaw2003
It all depends on your lease which, as hookstart mentioned, is much more complicated than a residentual lease and takes into account things that residential landlords only dream about. It should be prepared by your solicior.
It also depends on what sort of commercial property it is as to what is "usual" in the lease.
Generally on a 5x5x5 lease it will say a CPI increase every year and "fair market rental" at the end of each lease period.
I assume you understand that a 5x5x5 lease means a 5 year lease with an option to renew for a further 5 years, twice. Their option, not yours.The funny thing about commercial property is that at the end of the lease period "fair market rental" may be considerably lower than what you were just getting for the property if there has been a large economic down turn in the mean time.
The good thing about commercial property is that usually the tenant pays all outgoings including land tax (single holding value), insurance, rates and water. My lease requires my tenant to paint the whole place whenever I ask.
However, since a good, long term commercial tenant is a joy for ever, you would be silly to ask when it was not necessary.
The price of a commercial property is dependent on the income of that property. For example I think the current return for a wharehouse with office is somewhere around 7 % yield. In excellent areas it could be less. It's a different yield for shops and offices. This of cause means that prices of commercial properties fluctuate with the condition of the economy.You might get some useful information on the following sites
http://www.propertyupdate.com.au/articles/49/1/Residential-Or-Commercial—Which-is-right-for-you%3F
There is also a book called "How investing in commercial property really works" by Martin Roth and Chris Lang which is worth a read.
Hope this helps
ElkaHello Jeff
Looking at your example is it then correct to say that there is no advantage to supplying a depreciation schedule showing the written down vaue of both P&E and capital works with the contract of sale? Or have I totally missed it?
Thanks
ElkaHello pasandbec
I'm not a MB but pretty sure that the bank will not allow you to use the cash in the offset account as security for a loan.
You would have to put some or all the money into your PPOR loan itself, then borrow whatever you need (using a split loan to keep the deductible interest for the IP seperate) and then take out a mortgage for the rest secured against the new IP.
For example to buy an IP for $100.000 you could borrow $25,000 against your PPOR to cover 20% deposit and buying costs and $80,000 as a mortgage against the new IP.
Have you sat down and worked out if this is the best way to go. I mean to sell an IP in Canberra which is, as you posted somewhere, a good CF+ property ?. I don't know anything about the Canberra market but would imagine that house prices are still appreciating??
I realise that you are trying to reduce your un tax deductible debt as well as reduce your mortgage repayments for the time you are not working but, with the selling costs, CGT, buying costs plus the fact that a CF+ in a good location is now very hard to find will you be ahead?
If you were willing to post the details maybe some of the great number crunchers on the forum would be willing to help.
Just a thought.Cheers
ElkaHello pasandbec
The following is taken from the ANZ site and explains what equity is
Equity is the difference between what your home is worth and how much you owe on it.
For example, if your home is worth $300,000 and you owe $100,000, you have $200,000 in equity. And over time, as you reduce the amount you owe on your home or the value of your home grows, your equity increases.
It’s that simple.
So cash in an offset account is not equity. It may however help you grow your equity quicker by reducing your interest repayments.
People are interested in their equity because it's now possible to take out loans against this equity. Having money in an offset account is better. You already have the money.
Is there a specific reason for the question?
Cheers
ElkaHello shivsehgal
As you have income in Australia from your investment portfolio you will need to put in a tax return each year. All expenses, including interest and depreciation, are simply deducted the same way as they are now from the income.
Depending on how long you are going for you may want to declare yourself a non resident. The tax rate for non residents is higher as you start paying 29% from the first dollar (see ATO site). However I believe you can accumulate your loses and I thought I read somewhere that you can use them against any CG for CGT purposes if you sell. Anyhow you should be able to use the loses to offset any income once you start earning again in Australia.I believe Singapore has very low tax rates.
You may want to speak to a good accountant who is versed in this area.
Also do a search of this site for Singapore as I remember some threads on this topic last year.
Hope this helps
ElkaHello Nick
I don't understand why your mother is paying 11.4%. Surely she has enough equity in her house to simply renegotiate a normal residential/investment loan which would then be very roughly around 7.5% . She could also make it interest only for a number of years. This would mean that she would have to put in about half of what she now has to contribute towards the house.
Seeing as it was her home and because she lives overseas at the moment she will not have another PPOR in Australia, she can rent out the property for up to 6 years without attracting CGT if she sells. A nice bonus if it's in an area that's likely to grow over the next few years.
If she is planning to come back one day then she will still have her home and not need to buy back into the market at whatever price it will then be.
Check this with your accountant but I believe that your mother can accumulate the loses and simply use them to offset any gains she makes one day in the future.
Hope this helps
ElkaP.S. Using wee man as your user name is also not helping your reputation.
(Just teasing you)Hello spudsta
Just to make sure we are on the same page (pun intended) here is a link to the site karlm63 told you about
scroll down and there is a box marked property reports on the right side of the screen. There you will find various reports. One for free and some which you will need to pay for.
Hope this helps
ElkaThank you all for your good suggestions.
Regards
ElkaHello mnedbrock
Sorry can't help you with your questions but thought you might do better if you moved this post out of the frolic section and into the accounting and legal section.
Cheers
Elka
