Forum Replies Created
Yes I would think it could be done via a loan type arrangement. I have heard someone (I cant remember his name) from Chan and Naylor talk about equity shifts as an asset protection strategy. They charge an arm and a leg so I am sure there is someone out there who could do it for a more reasonable fee.
What are you trying to achieve? Asset Protection?
Cheers,
LukeGenerally you will be able to sell each half of the duplex individually for more (combined) than if you sold them in one line. The reason is that if you sell them individually, you can market the duplexes to home buyers and investors, whereas if you sell them as a pair in the one line you are lmiiting your target market to just investors with enough money to buy two properties at once.
Perhaps in some cases you would be able to get more for selling them in one line e.g. if the site is a potential development site and you can market to developers who are willing to pay a premium for developable land, but generally speaking I think it would be best to sell them individually. Maybe talk to some local agents to get their opinions.
Cheers,
LukeHi Marty/Others,
In regards to working under an ABN though an agency, how does this effect borrowing ability? For example, I have been employed in engineering for 5 years under a salary arrangement, but am considering taking up a position where I am paid under an ABN through an agency. Would this impact my borrowing ability if I want to purchase another investment property in the next 12 months? Do the banks consider this arrangement as being the same as being employed under a salary?
And taking it a step further, would banks still be willing to lend me money if the arrangement was me working for a relatively large company, employed through an agency and paid through a Pty Ltd structure?
The reason I am asking this is that it might appear that I am self employed and I am thinking the banks might want say 2 years of tax returns for the company structure (or personal ABN tax returns), when in reality it is exactly the same as a salaried position but the method of payment is different. Whether or not banks would lend to me is iomportnat as I dont want to change how I am paid if it means I can't borrow money anymore!!
Cheers,
LukeThe implications for depreciation are exactly the same as if the property was owned outside of a SMSF- it reduces the taxable income.
Cheers,
LukeHi Zehra- 6.59% is quite a high interest rate to be paying.
I would think that you should be able to refinance to another bank and pay 5.7% – 5.9% on a variable rate (depending on your loan amount). There are good brokers on this forum that can help you- try Richard Taylor or Jamie M.
Cheers,
LukeHi David- it looks like you are pretty heavily geared and with little in the way of savings, and at 90-95% LVR there is little room for setting up a line of credit.
I would start saving more money so you have a buffer in case interest rates rise or you have any other unexpected expenses. A income tax variation would help with that.
And due to this I would hold off on spending money on development plans until you have some more cash stashed away, as I don't see any point in getting the ball rolling if you don't have any intention in developing the properties any time soon.
Cheers,
LukeYes, it is all politics. I am not convinced that the government was actually trying to implement change. I think they were mostly concerned with trying to look like they were looking after the average battler and going after the big greedy banks. And the reason for doing this was so they can win votes.
Michael- I dont think you can win on this 'battle' with the banks. If banks can't charge break fees (or exit fees if you want to call it that- lets not debate semantics) then they would not be able to offer fixed interest rates. Otherwise, everytime the variable rate drops below the fixed rate, everyone would just break their fixed rate contract and go back to variable.
It is very clear (in my opinion) that when you sign up for a fixed rate mortgage you will pay break fees if you refinance out of the loan before the contract term is up. I have a friend who signed up to an 8% fixed rate loan in about 2007 just before variable rates went down to about 5%. He was kicking himself but that is how it goes- you win some you lose some and he understood that he just happened to lose this time.
I cant see the issue here.
Cheers,
LukeI thionk the Perth market is one of the best in the country, along with Sydney. The population growth in Perth is the highest out of any capital city, and with lots of mining activity there is quite a bit of money floating around.
However Perth does not have the geographical supply problems that Sydney does so I think that while the inner areas of Perth will do well, the outer areas may not do as well in the medium term. There is supply of new suburbs being developed in close proximity to transport and within a 30 minute or so drive to the city. I think these suburbs will weigh down the appreciation of older established suburbs that are nearby and other outlying suburbs.
Cheers,
LukeHi Amit- Correct me if I am wrong but you are looking for a scheme where you can make large amounts of money without using any of your own money and without any experience?
If you have some equity in your home then you can use this to obtain a line of credit to use for investing. You could start by doing a small subdivision project or small development and by educating yourself, using good consultants and perhaps having someone who has done these projects before to help you out you can minimise the risk.
Sounds like you pay it. It is not the tenants fault that there was a water leak as it was due to general wear and tear on the property.
Cheers,
LukeHe has recently done interviews for the past 2 iclub packs, but dont think he is doing any tours or anything again as yet. I think he spoke at the Mega (sales pitch) Conference so maybe someone who went to that would know more.
Cheers,
LukeThere is also lots of things to look into with the wide range of sales. g. Dlwich Hill in Sydney has a wide range of sale prices, but the expensive units are art deco units and the cheaper properties are in 1980's brick apartment buildings. No matter how well you renovate a property in this market, you will not be able to sell a unit in a 1980's brick building for as much as one in a art deco building. My opinion- you reallt need to do your due diligence and know the market like the back of your hand.
Cheers,
LukeSorry I should have said break fee not exit fee when I was talking about the fixed rates.
Break Fee is to break a fixed rate contract that you had with a bank. Because you are breaking a legal contract, you need to pay the break fee that you agreed to when you signed up.
Cheers,
LukeAgree with Richard- the banks will make their money one way or another so I dont see how abolishing exit fees will reduce the costs for the consumer. The banks will either charge higher interest rates or just charge up front application fees. I couldnt see anything wrong with the deferred loan establishment fee as it was pretty clear what it was and what it was for, and they told you right at the start how much it would be- it was hardly hidden in fine print.
Unfortunately the banks need to charge exit fees for fixed rates, or else everyone would just fix rates when fixed rates are lower than standard variable rates and then refinance when the variable rates fall. You cant have it both (or all) ways!!
Cheers,
LukeI have no knowledge on the area but would be surprised if a small regional town with a population of less than 5000 had capital gains this large in the past year. Has a new mine opened in the area or some other major industry? Or were the statsitics based on a very small sample of sales and skewed by unusually high sales?
Would be interesting to see what the stats show over the next 2-3 years.
You could always ring local real estate agents to hear their thoughts as they deal with proeprty sales all the time so would have a finger on the pulse. They would be able to tell you if the market is moving up or whether the stats are an anomoly.
Cheers,
LukeHi Eric-it is whose names are on the title that gets the tax treatment and rental income from properties. So if you and your wife each own a 50% share in the properties and the loan is in 100% your name, the rental income and tax deductions get split 50/50 between you and your wife.
You may be able to transfer the ownership of the properties with stamp duty exemption into 100% your name depending on what state you are in, but CGT would need to be paid. And you should also consider the ong term consequences of this i.e. when it comes time to sell, the capital gain would be distributed according to ownership so if you own 100% of the property, you would pay tax on 100% of the capital gain so a short term benefit like getting some extra government assitance might turn into a long term tax problem for you.
I dont know what the rules are for family assistance but surely your income and your wifes income would be added together? It doesnt make sense that someone would be able to get family assistance from the government because they are not employed irrespective of how much their spouse earns. This would mean that someone would be able to claim government assitance even though their husband might earn $1m + per year!!!! I wouldnt think that this loophole exists.
Cheers,
LukeHi Marie- it depends on a lot of things. Standard of finishes, one story vs two story, where the property is being build (i.e. inner city vs outer suburbs of a capital city vs small regional centre), etc all have a big impact.
Cheers,
LukeBetter asset protection in trusts and also a better tax structure.
If you held in your own name and you sold, all of the capital gains would be declared on your tax return and you would pay tax based on your marginal rate. But if you held in a discretionary trust you could distribute some to yourself, some to your wife, some to your parents, some to your adult children etc to gain the best tax outcome.
Cost to set up a trust varies but it is in the order of $1500 for an off the shelf trust (but can be more depending on what you want) and about $1000 per year in extra accountants fees to administer the trust and do the tax returns for the trustee and trust.
Cheers,
Lukescha9799 wrote:Put under trust is a safe way to go as far as asset protection goes.
just check up your land tax threshold, if you buy under your and your partners name, the land tax will be treated as differently as you hold under trust.
eg if the threshold is 200,000 then under your and your partner ( as family) you can have 200,000 + 200,000 = 400,000 limited before you reach to the threshold.
but if you buy under trust, then you only will have 200,000check with your accountant
No need to waste your accountants time- just check the Queensland osr web site.
E.g. For a property with a land value of $500k you will pay $500 in land tax if held in your own name (assuming you have already used up the threshhold on another property). If held in a trust you will pay $4000. So you will pay $3500 extra in land tax by holding in a trust, however a trust will offer far greater asset protection and be much more tax effective so you will probably end up on top by holding in a trust.
Also consider that each trust has a $350k land tax free threshold so if a property has a land value of less than $350k then you will be better off holding in a trust from a land tax perspective.
Cheers,
Luke
