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  • MsTrump started the topic 7.25% interest rates? in the forum Finance 4 years ago


    With current interest rates hovering around the 3.5-4.5% mark, what would the finance experts here say is the likelihood of rates increasing to their “normal”/average 7.25-7.50%? Considering most lenders assess serviceability on this basis?

    Or are the days of such high interest rates now well and truly behind us, bearing in mind we’ve had a…[Read more]

  • MsTrump replied to the topic Developer help in the forum Value Adding 4 years, 6 months ago

    So where’s the developer’s benefit in all this? Aside from a block or two as a “Thanks for everything”? They would’ve paid for all the sub-division costs, which would’ve been significant, considering the land size.

    Servicing would be an issue for me. The alternative would be to just go small – remove house, sub-divide, sell, albeit for a smaller…[Read more]

  • So I have a distant family member who was sitting on a massive block of land a few years ago. Didn’t have the money to develop or sub-divide, so somehow found a developer/cash cow who was willing to help out with all the ins and outs. Not sure how that worked exactly, but said developer probably kept a lot or two for himself “for free”. Distant…[Read more]

  • I wouldn’t worry too much. If you’ve shown commitment to repaying it (not just putting it in the “I don’t care about it” pile), lenders will consider you with a good explanation as to why it occurred in the first place. Showing you’ve paid it off, saved in the meantime, no other defaults for the last 3 years, stability in employment and residence,…[Read more]

  • Thanks, Terryw.

    I’m looking for any information that would tell me how I could minimise land tax with my next purchase (i.e. how to structure the ownership of the next IP, and the next one, and so forth), what the future tax effects would be (e.g. how a property owned under a Trust would be different to that owned by an individual – future CGT,…[Read more]

  • Any further information I could potentially obtain from somewhere (or someone)? Seems there’s an abundance of it online, which can be a bit hard to narrow down and actually find what I’m specifically looking for.

  • Would need more info on the company/trust scenarios. From what I’ve read it can be a complicated structure and limits lending ability.

    I have an IP in a different state, but keen to keep it local, as I know the market better. I’m in SA.

  • Hi All,

    I’m in the market for my next IP purchase, but in doing so, I’ll be putting myself in the next land tax bracket. I know it’s a reality and a cruel fact of life, but I can’t quite accept what this will do to my bottom line. It’ll make the purchase almost meaningless (I’m sure the Government will be happy, though) and make any positive cash…[Read more]

  • Thanks, Terryw.

    What are the benefits? And how would I go about setting it up?

  • Hi,

    While I’m enthusiastically searching for the answers, I would appreciate some valuable input in the meantime:

    I have four properties to my name and am looking at adding more to the portfolio. At what stage do I start looking at trusts vs buying in my name? My main concern is the generated profit in, say, 10 years, or rather the tax that will…[Read more]

  • never too late, that's certainly an alternative we could consider, but the lack of people renting out the second property during that first year means 100% of the loan expenses will have to be covered by us during that period. Otherwise if there are renters inside, at least we'll only cover some portion of the loan, not everything. At the end of…[Read more]

  • Seriously – who actually wants to pay tax or maximise it? It's very demotivating. It's easy money for those who receive it.I'll follow your lead and advice and hopefully progress. Everyone has been helpful in this forum, so thank you!

  • Terryw, I can assure you businesses can afford to pay tax a lot more than what I can, and with their financial resources, they can probably afford better tax lawyers and accountants than what I can. Presuming their company structures, trust set-ups, and what not… they probably don't pay as much as what they theoretically should, anyway.My…[Read more]

  • Thanks to all who have responded so far. Greatly appreciated, and will mention those things to my accountant when I see him again. The aim IS to sell both properties (eventually), but how would I be able to convince the tax department this was for revenue-raising and not capital gains purposes? More questions to consider, I suppose.Problem with…[Read more]

  • Richard, so even though I have a regular income from my job, can I not be classified as a developer, as in this instance development will clearly be happening? Obviously this will be for the purpose of completely eliminating the CGT liability. I plan on doing this more than once or twice, and don't wish to be hit with a CGT bill at the end of each…[Read more]

  • Yes, he did suggest that – he spoke of increasing the cost base to minimise CGT, but my main frustration comes from the fact that any CGT is payable on the second property at all, even though we'll live in it after the first one is sold (it'll become a PPOR). Even renting out the property for a day will one day make it liable for CGT, which I…[Read more]

  • @ Kiwi Property Guy – thank you! You've certainly shed some light on what I may end up doing in the future, and your suggestions had seriously crossed my mind – buy +CF first, and as that portfolio builds up, start concentrating more on areas with greater capital growth potential. That's not to say, though, that +CF IP's in "worse off" areas…[Read more]

  • Average units were costing around $150K-$200K or so only 5-6 years ago, just before the boom ended. Now, even during tough times, the same units go for $80-$100K more. While property prices haven't been increasing at the same rates as several years ago, they have stayed the same for a while. I'd like to think that that's the worst case scenario,…[Read more]

  • Richard, I'm not sure which loans you're talking about, but every time I put a lump sum (when I can afford it) into my loan, I make my lender recalculate both repayments and interest (at no cost to me), which definitely reduces as a result of the lump sum. It's helping me out this way, and reduces my minimum repayments. I can then, on top of them,…[Read more]

  • So what you're saying is that if I wish to purchase an IP for $300K, at 80% lend I'll get $240K from the bank. The other $60K I can use from the current built up equity I have, by means of a second loan/line of credit, which will be used to fund the starting stage of it all. And in reality, the other $240K will be secured against the new IP. On…[Read more]

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