Forum Replies Created

Viewing 20 posts - 16,041 through 16,060 (of 16,308 total)
  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Psotive income means you will be making a profit and hence paying tax. You can reduce the tax you pay by other deductions such as travel expenses, study materials, maybe depreciation etc.

    Holding the property in a trust would also help!

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Lend it to me!

    No, seriously, you could use that money to buy a house for cash. It will have to be a good buy, under market value. Do some minor renos (mow the grass maybe?) and then approach a bank for finance. Tell them you have done the place up and it is now worth $20K more at least. You then may be able to get 100% finance and release your money again. You could then wrap it or keep it as a buy and hold.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    As far as I am aware there are no fixed rules with doing this. But at some stage, the ATO will deem you to be operating a business and you will have to pay tax, even if you are living in the houses. I have heard it suggested that even a couple per year could raise the suspicion of the ATO.

    You can make some really good money doing this tho!

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I just picked up the last copy at Dymocks, North Sydney. Looks good so far. It is a fairly big book at nearly 400 pages.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Alanek, Just out of interest, what are the transport costs like?

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I beleive it can be done, but haven’t done it myself.

    Advantages
    -Can claim expenses against other income, ie negative gear
    -Asset proection
    -can also furnish the property, and claim or depreciate almost everything you buy!!!

    Disadvantages
    -ATO is cracking down?? (I recall something from a few years ago, maybe a tax ruling, about this and unit trusts??)
    -You must pay market rent, so with increases the property will become positively geared eventually and the trust will then pay tax on the rent
    -You may want to sell down the track, and will have to pay CGT
    -There is no land tax exemption for trusts (in most states?)

    I wonder what some good accountants would say (like Dale GG). Chris Batten says in one of his books that he generally recommends the PPOR be purchased in individual names.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    And don’t forget to tell the valuer what you want it for. Don’t worry about paying another $300, it isn’t that much money when you consider the savings. It may even be worth getting 3 done and choosing the highest.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213


    I agree completely with JH.

    Don’t know about Dave’s proposal of buying in a trust. On average Aussies move every 5 years or so, so you are likely to decide to move out of your house at some stage in the future. I suppose you could just keep it and rent it out, buy a new one in the trust and re-rent that. But if you sold the CGT could be substantial. Imagine if your $400,000 property doubles to $800,000 in 5 years. Thats a $400,000 CG (or $200,000 after 50% discount) which could result in $100,000 extra tax.

    I wonder if you have to charge yourself rent if your home is onwed by a trust.

    Also if you keep renting it yourself, it will become positively geared – You must charge yourself market rent. So eventually your trust will be paying tax on your rent.

    Acountants such as Chris Batten recommend your home be purchased in your individual names not a trust. He actually recommends 99% ownership in the name of the person less likely to be sued.

    In fact, this would be a good new discussion topic. Buying Your PPOR through Trust.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Kate

    I would probably go for option 2. Buy a home, and use the equity.

    The PPOR is really the only tax free investment you can make, so it is definetly worth buying anohter. Als if you were to pay $15,000 pa rent, you would really need to earn $25,000 before tax.

    If you get a good high growth home to live in, even better.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    The interest can be claimed for anything purchased that is investment related.

    Legals
    Stamp duty
    mortgage stamp duty
    inspection flights/hotels (maybe?)
    repairs
    improvements
    gardening
    cleaning
    rates
    inspection reports
    strata levies
    buyers agent fees
    research
    etc

    Keep your cash to pay off your home loan and borrow the rest (if you can).

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Tas Investor

    Where is your property, Tasmania by any chance?

    If it was in Sydney (ie expensive) you could probably get it down to under 2%, but if in a cheaper country type area, the agents are not making much.

    Imagine if you were selling $35,000 properties in broken hill or $500,000 properties in Sydney. Imagine the diff in commissions. And it is probably easier to sell in Sydney.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    It depends.

    If you are just using the LOC for deposits on further IPs then it will work fine.

    However if you intend to use it as a day to day account when related to investing, then watch out. The ATO considers any deposit to be a repayment. This means when you withdraw the money again, the interest may not be taxable.

    Eg you purchase a $100,000 IP using your LOC. You deposit all your salary etc into this account and withdraw it out to live on. If you get $4000 salary put into your account, the balance goes down to $96,000. Now if you need $2000 for living expenses it will go back up to $98,000. The ATO will consider the balance for the investment to be $96,000 and the $2000 to be non investment related. Therefore you could only claim the interest on the $96,000 portion.

    If this kept going on for months, years, then you could end up with a $0 IP loan and a huge non deductible debt.

    A better way in this case would be to use a 100% offset account to keep them totally separate. Using the LOC for deposits and other IP stuff is OK, just pay the interest, don’t put all salary into that loan.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Paul

    Good point. I have all of the expenses paid by the tenants and so have (?) arranged for all rates notices, water rates etc go directly to them. I only get a copy if they don’t pay on time. I have a few water rates notices for these properties, but so far no rates notices. I just thought they were paying on time. But maybe not! The council is probably chasing the previous owners. If so, I will then have to pay at settlement and will pass onto the new owners.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi I think Dram is correct.

    In NSW you just state on the fron page of the contract where you want tenants in common (with % sahre) or joint tenants.

    Loans will have to be joint at the same bank. Both parties income and expenses etc will be taken into account

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes it is pretty amazing. I had 5 properties with this bank, and I had already gotten to know the names of most staff in their complaints section. various thngs going wrong, delayed sttlements because papers were sent to wrong state etc. The bank is already paying for my extra legal fees on my last 2 property sales.

    Now this is a strange situation because the 2 properties were bought months apart, and both have the same problem-names on title still is the previous owners.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    This is a difficult question that many people face.

    If you rent it out you will have to pay tax on all the rent, at the same time you will be paying interest on your new home whith after tax dollars.

    If you sell it would be CGT free. So maybe if you can get a good price, it would be better to sell, and use the money to pay off your new PPOR and the left over for more investments. (You could also get a LOC secured on your new home for even more ips)

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    BruceG

    Trusts may not protect you from the banks, but if you get sued as an individual it should protect the assets held in the trust.

    But the major reason is tax savings.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    NewToPI

    You could claim it as your PPOR, but the period is limited to 6 years. Since you moved into it again, the 6 years starts again. SO I think you probably could claim it as your PPOR. Check with your accountant.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Purchasing an Option on a property is very common with Developers. One of my clients had a developer purchase an option on her property. He then went am purchased options on all 10 houses in that block. Once he had options on them all, he then submitted plans, DA etc to council and got approval to build a huge block of units.

    The good things about options are they give you the right to back out. The purchaser has the obligation to sell you the property, but you have disctretion on whether you actually purchase.

    You can also sell your option to someone else. eg negotiate a good deal, sign up the seller on an option so that they cannot back out, and then find someone to sell the option to. It may even be possible to not pay stamp duty by doing this.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Perth Guy

    You could actually refinance to 90% of the value to withdraw a little bit extra equity.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 20 posts - 16,041 through 16,060 (of 16,308 total)