This structuring of finance stuff is addictive! Thanks for the help.

I apologise for my ignorance but why wouldn't you just use the money straight from your offset account?

Thanks for your input guys. Will be keeping them!

Great point BigCubez. Our area is dominated by young families so I guess the robes will stay.

Thanks for the advice Nigel. As a newbie to property investment I am reluctant to increase my scope to beyond my local region. I feel that growing up in the Hunter Region gives me considerable advantage to an outsider looking to invest in the Region. Its almost like a sixth sense of knowing the desirable suburbs and areas poised for significant…[Read more]

Terryw wrote:
This is how I would do it.

List all the cash expenses in rows in excel
strata
rates
insurance
management
total

Then list all the non cash deductions
depreciation builing
depreciation fittings
loan costs (over 5 years).
total

Total costs = Cash costs + Non Cash costs

Income = rent

Taxable income of the property = Income less…[Read more]

Catalyst wrote:
Where do the $204 deductions come from?

You need to list all the outgoings for the house then add depreciation etc.  The rent you will be paying is not factored into it.
Just take that into account later. Not in your tax benefits.

You mentioned CGT and paying interest only as opposed to P&I. This has nothing to do with CGT. How…[Read more]

Hi Shahin,

No I would require a PM – ill add that in. I based the loan repayments on the loan (the interest component) itself. What am I missing? Insurance? This is the existing loan I have out on my PPOR.

I personally would look to set myself up with a PPOR first. This will provide some stability for you and your children and can always become an IP later on.

Sorry, table stuffed up.

Expenses (weekly)

Current

Proposed

Loan Interest (@5.5%)

$340

$340

Rates

$25

$25

Insurance

$15

$15

Rent

$0

$400

House maintenance

$76

$76

Total

$456

$856

Income (weekly)

Rent

0

$400

Total

0

$400

Tax…[Read more]

Thanks guys.

I see it as something that warrants further investigation so ill line up my accountant.

If I am to produce a spread sheet for cashflow, what are the key figures I need to include? Please identify if a figure is usually a rate (eg 2%) or a lump sum to help with my calculations.

Hi Shahin,

I dont have the program handy but it had many expenses covered. Actually, come to think of it, it included conveyance and stamp duty so I would actually be in a better off position than originally thought (as we have already bought the house).

FYI it is a house.

Would anyone go down this path? Freeing up $200 a week is tempting.

Hi Catalyst,

I used a cash flow calculator on my phone which takes into consideration tax credits.

I have no idea how hard it would be to get a tenant. The vacancy rate for my area is 1.3%.

Regarding capital growth, I understand living in it doesnt affect growth, but I would want to avoid CGT if we sold. If we changed out P&! loan to IO and the…[Read more]

Oh bugger. This is why I thought to get on here first before heading down to the bank. Will have to wait.

The NAB home equity calculator is very misleading. (http://www.nab.com.au/wps/wcm/connect/nab/nab/home/Personal_Finance/1/4/101/7/)

Thanks Jamie, Cubez and Shahin for your help.

Hi Jamie,

Property is worth $375,000 and $325,000 is outstanding.

Does this mean that I essentially have no useable equity? i.e. 80% of value is $300,000.

Hi Jamie,

Thanks for the welcome. I am with NAB.

Hi Shahin,

No you guys are the first port of call in this instance. Once my partner is 100% on board then we will take it to the lender. I will look into getting a valuation.

Cheers.

TheFinanceShop wrote:
Yes that is correct but you will not have any issues with either resale or renting it out due to the demographic in Hornsby and Kuring Gai (im from Gordon). The benefit of the Sepp is that you are following State Development Guidelines rather than the outdated and backward council DCP. 

Do you due diligence on both and see…[Read more]

Plus Stamp Duty? Are any of these expenses deductible?

The outstanding amount on the loan is $325,000. The house was purchased for $371,000.