[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 6:53 am

thanks Birdy. I think you are on the money.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 6:40 am

thanks Dram. I’ve fixed that post to Tenants in Common Thanks for the advice peoples

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 4:11 am

OK had that cupa tea and cream bun and chocolate swiss roll, and am gathering my thoughts about the second point of lowering your tax bracket threshold.

Say I am close to the lower tax bracket limit after claiming my IP loss. Say after IP effects my new taxable income is 50,500 which puts my in the 42c tax bracket for tax re-calculation.

I have used 2002 – 2003 tax rates here.

i.e. $50,001 – $60,000
$11,380 plus 42c for each $1 over $50,000

thus my tax is $11,380 + ( $499 * .42 ) = $11,589

No say I spent $600 on painting the property or general wear and tare repairs of one sort or another, prior to tax time. This would mean my taxable income would be less $600 being $51500 – $600 = $49900 Thus now I have fallen into the lower tax bracket calculation of ;

$20,001 – $50,000
$2,380 plus 30c for each $1 over $20,000

thus my tax is $2380 + ( 29900*.30 ) = $11,350

Thus $12009 – $11350 = $239 difference in tax paid. I admit this is not much of a saving.! But in effect the tax saving has partly paid for the repainting or general repairs of $600. Also this $239 represents a $4.50 per week cash saving, by structuring the IP and costs with the tax system.

Hmm starting to look like no benefit at all actually when you consider that the expense of $600 would be deductible at the higher bracket also.

Oh well it was worth the mental exercise for me.

Anyway this is what I was getting at.

I have corrected the figures. I think

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 3:32 am

I got this from the ATO today 2002 – 2003 rates

0 – $6,000

Nil

$6,001 – $20,000
17c for each $1 over $6,000

$20,001 – $50,000
$2,380 plus 30c for each $1 over $20,000

$50,001 – $60,000
$11,380 plus 42c for each $1 over $50,000

Over $60,000
$15,580 plus 47c for each $1 over $60,000

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 3:25 am

Thanks Stu and others.

Getting back to the main item $68K gross income with IP. So the 8K is taxed at 47c thus when you claim deductions they are ofsett at that higher rate. That’s what I meant in my query. I admit it aint much i.e 8000*.05 difference in the tax rates from 47c to 42c but its $400 or $7.69 per week in extra refund.

I’m a little confused about the other aspect

Is rent pluss gross salary total gross income ? Assuming net income from the property after all property deductions is negative. But my Gross income has risen due to rent effects. This is what I’m getting at. Thus I understand my taxable income is higher, but when I claim my property deductions against that I’m getting the bennefit of the higher gross income the then claim back. ie.

Looking at is from another angle, I guess if I did not have an IP but just earned 68K then I would be paying tax in the higher bracket, as I would not have IP deductions or cash losses.

I’m too tired I think I need some sleep. Been averaging 5 hours lately.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 2:11 am

Thanks Terry and RSTARR

My bank says loan servicing is not the problem. I’m on 59K salary

So I can only borrow $80K ? or that’s my equity ? and I can borrow 4 times $80K = $320K

OK So if I plug in more optimistic figures I get this.

Value 750K owe 550K Thus 750K *.80 = 600K

600K – 550K leaves LVR at 50K so 90% loan would be 400K ? that I could borrow ?

cheers

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 31, 2003 - 1:57 am

Hmm, now I think I’m talking gross income not net income. I understand the rent is added to my gross income to get total gross income. My property has no net income as it is cash negative.

The total combined gross income, I understand could push you into a higher tax bracket, giving you a better tax break when you claim your property deductions such as cash losses and depreciation.

Also if you get your gearing structured properly, you could find the optimal tax bracket you may want to be in. i.e. you may find that buy spending $500 you push yourself into a lower tax bracket that may overall provide more cost effective.

This is the aspect that I wanted to confirm.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 30, 2003 - 4:49 pm

re; book title “‘From Life Sentence to Lifestyle'”

I can sort of understand the publishers view here. Compared to the ” 0 to 130 properties in 3.5 years ” , the first title seems a little ambiguous at a glance. The second title, although a little cumbersome in expression, seems to more evidently convey the subject matter in the main heading, which I suspect they thought is the most eye capturing.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 27, 2003 - 3:44 pm

Given that mainstream media is arguably owned by the rich and poweful, does this translate that it is the rich and powerful that are influencing the property market prices for their own gain ? or are they merely trying to create attention to their own stories about property to sell more.

If not, then of what interest does the media have in talking up or down the market ? other than selling news papers, magazines or TV news items etc… ?

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 27, 2003 - 3:36 pm

Peter you have $75K equity. I expect that would easily allow you to borrow that. It also depends on your income though. Just see your bank lending manager and if they say no, go somewhere else until you get yes.

cheers,
007

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 26, 2003 - 3:00 pm

Chris, personally speaking from a position of ignorance to some degree, I think you are well on the way. I don’t think these wealth creation seminars are essential. Stay on this forum to learn about WRAPS and other investment strategies. When you read about somthing of interest, you can then research it further. Check out the other forum rooms and Resources, articles etc… There are a few good links to sites that specialise in certain areas, such as wealth creation, accounting, trusts, conveyencying, just about everything.

Anyway that will be my approach for now at least, for better or worse.

good luck.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 26, 2003 - 12:57 pm

vluu28 I would be getting legal advice and a copy of your contract !

I really feel sorry for you and not the company, who appear to me, to take advantage of the deficiencies of trusting human nature.

I went to one of their seminars that was supposed to be free and it was by the look of it. However before they began they requested everyone sign a non disclosure agreement within the space of about 3 minutes. Just trying to understand the legal language was a challenge in itself. It was a real pressure situation in which every other poor sole signed the contract and I bet not one of them understand the full implications of the legal language.

Suffice to say, I had reservations as I did not understand the implications of this agreement and thus did not sign and thus was not able to be present at the into seminar. And it smelt like a dirty low life rat !

Funny as I was leaving the room, I heard the presenter say quite rudely, there is one of the 95% of the population who won’t own an investment property. This remark which I overheard combined with the uncertain wording of this non disclosure agreement, was enough to make it clear in my mind that this group was less than honorable, and in my mind a damn con job !

Jeez I’m glad I did not sign that thing ! I feel for those that did, i.e every other poor sucker in the room. About 10 of them.

This group has it down pat. They get em in the room put the contract on the desk, prepare to begin the seminar within 3 minutes and you can’t stay unless you sign. They start the seminar before they collect all the contracts so that people get captured by he opening lines and thus then feel the need to sign for fear they will miss out on this secret stuff, they pretend they have exclusive knowledge of, that will somehow give you the edge over others.

They even had the hide to phone me up and ask me why I left. I explained why and then they tried to offer me a free personal consultation. I declined.

I guess the lesson is;

1) never sign anything you don’t understand unless you are signing something that your own solicitor has tried to explain and approved for signing in representation of your best interest. I say this because the reality is that we do sign many things that we don’t fully understand. But when it involves the potential transfer of money, always be extra careful.

2) Stay clear of any group that tries to put you on a guilt trip or make you feel inadequate in any way. These are the low down tactics they use to make you feel you need their help to survive.

3) really you dont need them, anyone can do it on their own by reading and researching and asking questions on online forums and via property investment information web sites etc… ask widely from many sources, speaking to independant accountants and conveyencors etc… Allow your self 3 to 6 months to educate yourself about property investment, before acting.

By the way, at the end of all this, I did my own research on the net, and now own 2 investment properties ( so go shove it up that property group ) , both tenanted and in total costing me less than $80 per week after tax effects. I bought in high capital growth areas where if the market hold true to estimates I can expect good CG of around 10% for a few years. At present my $500K of properties, is capitalising over $1000 per week in growth. I’m happy.

I say forget these silly blood sucking scoundrel low life groups all together. Do it on your own. You can do it !

That said there a a few groups that dont behave in this way and if you research about them carfeully and get wide and varied opinion, you may find one that suits your needs. But as I said, you can do it without them !

Go to it ! Have faith in yourself. Give credence to your gut feeling. Get balanced views about your pending property decision and go kick some property group ass ! Suck their blood for knowledge and then use it for your own gain ! not theirs.

And never, never, never sign a damn thing with them !

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 25, 2003 - 4:02 pm

VH2000 ” value > $500K own $425K ” how can this be nagative cash flow ? it appears you own most of it.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 25, 2003 - 3:54 pm

Terry wow learn something every day. So what about if you move back in for a year, then rent it out again for 5 years then sell ? Would you have to pay CG then, as you moved back in and it became you PPOR again for a period before you rented it out again.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 24, 2003 - 2:53 pm

cool thanks peoples.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 23, 2003 - 4:03 pm

failing this, you can always join a property club.

cheers

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 23, 2003 - 4:23 am

yes I accepted the second offer of $235 from the tenant and did not insist on $240. This assured me of a near instant tenant as soon as I settled on my new IP. Piece of mind, time saved and the ability to move on and re-focus on the next challenge is worth $10 a week o me at least.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 21, 2003 - 3:32 pm

ToeEdge no, just a would be patient of one. hehe []

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 21, 2003 - 3:14 pm

Yes I tend to agree its horses for courses. I have two new properties worth near $500,000 in high growth areas. i.e. 10% pa so I’m getting $50,000 growth pre CG tax on them per year for now at least. They are both negative geared and after tax will cost me about $120 per week to hold the two of them. thats $6240 per year holding cost for $50,000 pre tax growth. Even after CG tax effects I’m ahead by about $18,000 on 1 years growth. ( excluding inflation effects ) with inflation at 4% im ahead about $15,000 net gain. So the numbers speak for themselves.

The other reason I buy brand new is because I buy interstate properties and I dont want the hassle of managing repairs from a distance. Its easier for me to buy brand new and just get an independant property valuation. New generally property has less maintenance issues.

OK so if I can no longer fund negative cashflow properties, I just buy a positive one when I absolutely have to.

[hwd007Member@hwd007Join Date: 2002Post Count: 247]

July 21, 2003 - 2:58 pm

Bob, I suggest you now build and hold and repat this, until you pay near zero tax dollars if you can afford to i.e. if you have a partner to fund you, then build and sell then build and hold again.

Use the capital gain from your last sale and increased equity from your last hold, to fund your next deposit for build and hold, then build and sell. Then repeat the loop.

While you at it build me a nice little 3 bedder with ensuite and 20m balcony plus courtyard. Actually I prefer a duplex. Find me a nice block please 5 min walk from beach will do.

Thanks
Dave