Forum Replies Created
There is no law in any Australian State or Territory, as far as I am aware, that requires anyone to pay a minimum amount for a deposit.
The deposit is simply a contractual detail agreed upon by the buyer and the seller. You can offer a $1 deposit, and if the seller accepts your offer, that’s what you have to pay! Of course, you still need to pay the rest of the purchase price at settlement.
Caitlyn, as the seller, you’re entitled to reject an offer if you think the deposit is too small. It’s the same principle as increasing the purchase price – simply cross it off and write in the deposit you want, then get the amendment initialled.
Cheers
Elysium-MDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
Hey kiwi,
Welcome to the forum!
Talking about life-changing books, have you read Robert Kiyosaki’s books? They’re the second-most important set of life-changing books for me (behind the Bible). They completely turned my understanding of finances upside down, but for the better!
I know that there are people who bag Kiyosaki’s books, just like there are people who bag Steve’s book. Check it out for some financial wisdom.
In fact, the Bible itself has some really good advice on finances. Check out Proverbs 11:25.
Cheers,
Elysium-MDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
Hi Digger,
Sounds like the “refinancing” principle, where you can use the money the trust pays you for the units to go and buy a PPOR or holiday home (or just spend it all on a holiday!), and the interest on the loan is tax-deductible, because the trust borrowed the money to redeem its units.
The property is not located in WA is it? Because if it is, this strategy won’t work. The trust will cop full stamp duty (at the property conveyance rate!) on the market value of the units being bought back, which in most cases will negate the income tax benefits, or even put you in a worse position.
Getting an ATO ruling is a great idea. The trouble with doing tricky things with trusts is that it usually raises a red flag with the ATO. This significantly increases your risk of being investigated or even audited. A binding private ruling will help make things kosher.
Cheers
Elysium-MDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
I like “Unlock the Secrets to Your Money Personality and Change Your Life” by Greg Smith.
He’s also got a website: http://www.moneycafe.com.au
As for keeping track of things, I use Microsoft Money. It’s affordable and easy to use (although it’s a bit quirky at times).
Cheers
Elysium-MLooks like they’re in the market to buy another house.
Which means they’re going to have to borrow money from the bank.
When you (or your solicitor) send them a letter demanding interest and damages, politely point out to them that if they don’t pay up by the deadline, you will be forced to sue them, and if you were forced to sue them, this may adversely affect their credit rating, because the lawsuit will be on the public record.
This might encourage them to cooperate and honour their contractual obligations (whether to settle on the house or cough up the interest and damages).
Cheers
Elysium-MHey kay henry and rugby (and even bear, if you’re feeling discouraged and need a glass of vino),
I’ve discovered an even better deal so you don’t have to go to the cellardoor to pay $5 for all you can drink.
Send me a private message, plus a $1 fee (to weed out the tyre kickers), and I’ll tell you. [:p]
But seriously (actually, I’m not) – just pop down to your local Vintage Cellars. They usually have a few bottles for quaffing down in the tasting corner. Not necessarily premium plonk, but it’s still decent stuff. Besides, you don’t have to drive all the way into the countryside to the cellardoor, then realise that you’re way over the limit and need to take an $80 taxi ride home!!
Cheers
Elysium-MHmmm – I must confess I haven’t looked at those areas.
As for beachfront and regrets, here’s a story about one that didn’t get away: my life insurance agent told me how he bought his house in Ocean Reef, literally metres from the beachfront, years ago for a couple hundred grand. Back then, it was woop-woop. Some houses in the neighbourhood are now going for a million bucks!
Cheers
Elysium-MHmmm – I must confess I haven’t looked at those areas.
You need to set up a proper self-managed super fund.
For that, you need a lawyer to prepare all the documents (trust deed, trustee’s minutes, application for membership, notices to the member and employer, investment strategy, etc).
You also need an accountant to apply to the ATO for the necessary things (election to be regulated as an SMSF by ATO, ABN, TFN, etc).
The trustee can either be a single corporate trustee, or individuals (at least 2). There are specific rules that need to be followed. Go to the ATO website – I think there are some guidelines there.
And make sure you understand all your obligations regarding the use of the super money. Breaking the rules WILL land you in a lot of strife. for example, see my earlier post regarding mortgaging super assets. That is an absolute no-no! There are also strict rules about fund members selling their assets to the super fund.
The ATO has already said that it is focusing on investigating compliance by SMSF trustees. An example of the strife you could land in are fines, and also getting your super principal (not just the income!) taxed at 48.5%!!
Cheers
Elysium-MHi guys,
Thanks for all your advice.
I wasn’t really looking to work out what my legal rights are (pretty easy to do that).
I was more interested in practical solutions, which avoid things getting out of control and keeps the tenant happy.
Apparently, the tenant’s pay comes in a couple of days after the rent is due, and he said that he tried to set up a direct debit arrangement with his bank, but somehow it didn’t go through. So there is a reason. The win-win solution, I think, is to allow him to pay his rent within 1 day after payday, even though it’s strictly not what the lease requires.
And yes, I’ve got landlord’s insurance. Better check to policy to make sure that this “win-win” solution doesn’t leave me exposed!
What do you guys think about this? Am I being too lenient? I’m thinking that he’s only just moved to a new town, and I should give him a break at the beginning. He’s got a good job and could have the potential to be a good long term tenant.
Cheers
Elysium-MHey dev,
While I totally respect Steve’s views on +ve cashflow investing, I firmly believe that any portfolio should have a mix of +ve cf and what I call “rare earth” (which is almost invariably -ve cf) properties, if you can afford to maintain the payments on the latter.
Which should you get first? Hard to say, unfortunately. I’ve already got some “inland” property, but am still saving up to buy some beachfront real estate.
I think the benefit of getting a few +ve cf properties first is that you’ve then got the extra cashflow to make your life easier when you buy that massively negatively geared beachfronter.
The other thing, though, is that rare earth may go up in price faster than others. So the longer you wait, the more you have to pay.
Hate to pass the buck, but I think you’re going to have to make the decision yourself, based on the pros and cons and whether you’re comfortable, in your own circumstances, with the risks and cons for the particular choice that you make.
As an alternative, you might want to look at riverfront, as opposed to beachfront, properties.
By the way, those prices you’ve quoted sound scandalously cheap, even for inland stuff, if you’re talking about houses. Are you sure they’re decent suburbs?
Cheers
Elysium-MHey Terry, that idea of yours sounds quite clever! I guess it’ll be a case of you renting the property to the trustee of the trust for say $50 per week, and the trustee sub-leasing the property to a tenant for $120 per week, which means that the extra $70 will be trust income, giving you the flexibility to distribute it in a tax-effective manner.
Cheers
MelvinLook on the bright side – at least the capital gain will only be taxed at the company rate of 30%.
If you’re in the top marginal rate of 48.5%, even if you had the benefit of the 12 month CGT concession, your concessional tax rate on the capital gain will be approximately 24% Which is only a difference of 6%.
Besides, if you’re going to have a CGT bill, it means you’re actually making money!
I hate to tell you this, but I don’t think that there is an easy way (maybe no way at all!) to get the property transferred out of the company without copping both CGT and stamp duty.
If you want to hire a professional to help you with this, don’t waste your time with a “GP”-type. You’ll need to track down a top tax accountant or lawyer, the type whose client list reads like BRW’s top CEOs, and be prepared to pay at least a few grand for the possibility (NOT certainty) of finding a solution. I’m just being realistic, not pessimistic.
Besides, even if you manage to transfer the property “painlessly”, you’re going to need to hold it for another 12 months before you’re eligible for the concessional CGT rate. Does that work for your selling timetable?
Cheers
Elysium-MHey Hamster,
$250k for both houses? Is that semi-detached or 2 standalone houses? Anyway, it seems like quite a bit.
Is it a turnkey price, or do you have to spend extra for fixtures and fittings? For example, carpets, painting, window treatments, appliances etc. And what about site preparation and utilities connections?
If it’s turnkey, then maybe it’s not so bad, but if you’ve got to pay more for the “extras”, then you might want to get a few more quotes to make sure it’s a fair price!
Cheers
Elysium-MAbsolutely, Melbear!
I’d to think that you can learn a new thing everyday!
Cheers
Elysium-MOnya richo! Everyone looks happy. Looks like a great wedding.
Here’s to a long and happy marriage, with lots of kids and even more +ve cashflow houses!
Cheers
Elysium-MGoes to show how little I know!
Cheers
Elysium-MThanks kay henry. Of course, you know that my comment was made tongue in cheek, right? [
]Still waiting for my private message for a bit of illumination.
Cheers
Elysium-Mhehehehe![
]Hey what’s good for sensible hobbits has got to be good for humans, as long as the roofs are not too low! [
]What’s the Hellfire Club all about? Sounds sinister. Or risque?
Cheers
Elysium-M
]
]
