Forum Replies Created
Hi there,
I have one more question that I forgot to mention.
What if I move out of P1 in FY09-10, rent it out, then withdraw the equity in P1 to pay down P2 in FY10-11. Will that fail the purpose test again?
cheers
Hi duckster,
I have a similar question. My situation is:
– Have a PPR (let's call it P1) almost paid off
– Have a IP (let's call it P2), negative geared beforeI moved into my P2 from P1 in the end of last year, so now P2 becomes my PPR. I haven't done the FY09-10 tax return yet, so this has not been triggered in my tax return with ATO.
P1 has been rented out privatly, I manage it myself since I moved out. I wish to withdraw some some equity out of P1 in the future, maybe to buy a P3 or maybe lend/gift the money to my family member.
My questions is, if I withdraw the equity in P1 and gift it to my family member, does ATO have any rules about it? After I withdraw the equity, P1 will be neutral geared, will that attract audit from ATO? Will I need to document it somehow to show them where my equity goes to?
And anything else I should watch out that I shouldn't do?
Thanks a lot for your help!
thanks for the advices!
I just got 2 tradies came to our house for a quote, they will get back to me this week, will also check out some show rooms in the coming weekend to get a feel about the prices.
I've already got a clear picture in mind how i want the finished bathroom to look like, i'll find out about the material cost this weekend.
will upload some before and after photos later.
Thanks again!u can transfer profit from another trust to offset the loss, so effectively u don't pay tax on the profit from the other trust.
if you don't have another trust that making profit, then loss will be locked in this trust with no benefit.u may want to consider the asset protection that the trust provide too. also, u may want to set up a proper JV agreement with the other couple to avoid any legal complication.
also note that the properties in the trust have no exemption of land tax. and make sure you do tax return for the trust every FY too.
Generally this kind of properties are charged higher management fee, one of the university accommodation we looked into charge 12% management fee. Normally when they try to sell it to you, they quote the gross rental which is before taking out the commission.
Also, as everyone has mentioned, banks don't like them. especially with studio or uni accommodation where the unit internal area is as small as 20-40sqm. I seriously doubt any bank would lend at all. most of the investors have to pay 100% of the price.So if you do the calculation assuming no lending, then take away the 12% management fee, that is the true cashflow u look at. then you'll understand why Dwolfe is saying be very careful.
Thanks Terry, also you mentioned that it is not always possible to transfer the profit between trust, why is it?
If i have trust no.1 that's holding a negative geared property, effectively making a loss and trust no.2 buying, renovate and selling for profit, can I make trust no.1 beneficiary of trust no.2 then distribute the profit to trust no.1 to offset the loss?If the two trust have the same company trustee, will that be possible?
thanks a lot!
I've used some buyer's agent before, they only sent us a couple of deals throughout the year. We end up buying one property from them. but I just think the speed they provide deals is not fast enough for me. so I end up doing my own research.
I would say set a financial target first to decide the price range you are looking at, then add other criterias such as transport, schools, shopping, yield etc to filter the suburbs.
it is quite overwhelming to start with. But if you can only afford a mortgage of 500k, why waste energy in the suburbs where everything is over 1 mil? once set up the price range target, the picture will be a lot more clear.
hope it helpsHi Terry,
Can an overseas resident be beneficiary of a discritionary trust in Australia? Obviously they have to pay tax in their home country, but will they be required to pay tax in Australia?
cheers.
viv
We inspected roughly 100 for the first IP, it was hardwork, 3 months of non stop inspecting every saturday from 10 to 3 with lots of sandwiches lunch in the car or on the go. But it paid off, we got a great bargain that gave us positive cashflow from day one and nearly 100k capital gain within 2 years.
the second one we took a different approach, as we are looking for long term capital gain + good rental yield with no additional renovation work, I did lots of due diligence on paper, purchased the residex report growth report, filtered the 50 suburbs down to 2 suburbs based on our criterias, then drove to the area to verify the due diligence on paper, then we bought in the third weekend of inspection, didn't inspect 100 properties this time, as timing is critical in this purchase and we were not after an absolute bargain this time.
from my experience, it really depends on the area you are targeting at. One thing I suggest is being focused, taget at one or two suburbs only. The last thing you wanna do it run around every saturday to different suburbs every week. I have done that, really time consuming and tiring but even if I inspect 500 properties, it won't help to develop solid knowledge in any suburbs.
HI all, the report is in soft copy pdf format, it is encripted so that u will need password to open up the report.
it includes overall NSW market trend analysis and a hotspot map, basically a NSW map color coded according to growth rate. then it has couple of paragraphs summarizing what they believe drive the market in the past 12 months or so. The main part of the report is the suburbs prediction, ranked by the highest future growth suburbs to the lower one. for each suburb, they provide past growth, future growth(1 year, 5 years and 8 years), current median price, current median yield.
In this report you receive 50 top growing suburbs for units and another 50 top growing suburbs for houses. The title top 100 is a bit misleading, as I thought i would get top 100 suburbs for houses and another 100 for units, which is not the case.
The report I got was published in February. I've also purchased "Top Budget Growth' report, which features the top growth suburbs in NSW which has median price lower than 400k.
Please PM me if you are interested to know more. cheers.
The unit actually looks pretty solid and decent condition from outside.
In addition to what others have suggested, two things I would do:
1. Repaint the outside wall with a more humble color, The bright red is a bit too scary for most people
2. Minor plumbing to make the kitchen tab coming out of the bench instead of the wall.Hi there, i've purchased 2 residex report couple of months ago. one is Top Budget Growth in Sydney, another one is Top 100 suburbs in Sydney.
We've purchased one house in Sydney last month based on the residex report and more due diligence we did.I think it is really helpful in terms of narrow down your due diligence research area. There are hundreds of suburbs in Sydney and to decide which area to target at can be very time consuming. I found my target suburbs within 1 day with the report in hand.
Their report is based on past numbers, and they apply statistics to predict the future, which is very scientific approach. It is useful but you still need to do your own due diligence on top of the report to maximize your return.
They provide both units and houses prediction. I only need the houses part, so am thinking of sharing the report with someone to split the cost. Please feel free to contact me if you r interested.
rental yield is dependent on lots of factors, suburbs, location in the suburbs, condition of the property etc.
generally units has higher yield than houses, but in outer suburbs there's no units, only houses, so there's no comparison.why does it bother you it is a house or unit? in the end u want something that makes money for you.
Hi Jess,
Thanks a lot for the thorough feedback. I also have a question about the financial feasibility software.
How does it look like? And how do you use it? Is it just like a excel spreadsheet that helps you to work out the holding cost, renovation cost (with predetermined renovation cost of each component such as bathtub or toilet or wall in it), and selling cost to show you the end profit?
How does it help you decide the end selling value? or do you need to work it out yourself manually?
Does it also have a project management type component that helps you estimate how long the reno is gonna take and the milestones?And for the suburb due diligence, is that all manual data collection combined with RP data?
Thanks a lot and looking forward to your reply!
Vivian
Hi cut the chase,
they actually don't ask if there is more than 1 lease, the sales representative just want to get the premium so they don't bother asking details like this.
I actually asked explicitly if they insure it, then they answered no. I believe the risk is that if you buy an insurance without telling them it is more than 1 lease in place, you will have trouble when declare something in the future.
did you try the broker? how did that go?
viv
hello,
declaring the rent is completely up to you.
if you don't declare it, you just keep the cash rent to help the mortgage repayment and you still get 50% off CGT when you sell the house.
if you declare it, you can declare part of your mortgage interest now, but when you sell the house you will lose the 50% off CGT on the part you declared, because that part is investment.
so it really depends on what you want to do in the longer term.about the inconvenience of sharing with others, everyone has different living standard. my personal experience is if you find good tenants, it's actually really nice because you become friends with each other. Actually one of my housemates lived with me for 4 years and she even moved together with me and we remain close friends now.
it all comes down to what you value more: comfortable lifestyle or financial goal. one thing you need to consider is if you want lifestyle now, it will slow down the speed you reach financial goal. if you can reach your financial goal faster then you can have comfortable lifestyle faster too.
good luck.
Hi Matt,
All of Steve and Cherie's deals are in the high end market, and their renovation style is to bring a house from bottom of market to the top of the market to maximize their margin. However, I don't think everyone can afford to play in that price range to start with. At least for the first deal, I wouldn't go out and buy a 800k house and try to reno it, too risky for me.
I haven't done their course, but I guess there are three reasons why they choose to do expensive structural reno rather than rebuild:
1, council approval process is a lot longer for new building, hence holding cost is significant especially when u r holding a 1mil house. vs most of the renovation don't need council approval at all.
2, some house may have heritage listing, so knock down is impossible.
3, some terrace style house got common wall with neighbors, so again knock down is impossible.Just my guess, could anyone who's done their workshop comment on it?
cheers
I've been to their meetings. totally waste of my time.
the presenter just keep repeating the advantages of negative gearing. she said she was really happy with her 8 heavily negative geared properties, instead of paying 40% tax, she is only paying 9% tax and can live off from withdrawing equity from existing properties. when we asked what happens if the market goes down, she replied, in long term the market keep going up.
they only promotes negative gear, long term buy and hold, didn't mention anything about other strategies and had no idea about asset protection.
and the people attending the meeting seems know very very little about properties too, some of them don't even know what negative gear is……..
I won't go back to their meeting again, that's just my experience.
Hi Tinkara,
Actually I am curious to know why she doesn't wanna share more info too!
To me, I believe their workshop must be good, but don't think it is the one and only one workshop out there to make a renovation successful. besides some of the materials they cover, such as asset protection, subdivision and strata title, I've already learnt. What i am interested in is just the dual diligence template and financial feasibility analysis.
just a thought that's not relevable to the topic:
5k per person, say 100 students per workshop, so each 2 day workshop = 500k.
Question: how long does it take for a renovation project to generate this much profit? and how much work + capital must be involved in it for this profit?
conclusion: real estate workshop is a lot more profitable than the actual real estate deals.The problem is that in the seminars, it is intellectual property that get taught. The price is whatever people are happy to pay for. It's hard to justify.
Agree with JacM,
I don't think the simple ROI calculation is valid for super. Firstly, It is something I can not touch for 30 years, even though it has a value today, the real return is only realised when i withdraw it, and it won't be in today's dollar. Secondly, if you withdraw early, the fees and charges are so heavy that you automatically lose half of the book value immediately. thirdly, you still have to pay tax when you start withdrawing from super, so the 'saved tax' is only deferred, not eliminated, so the saved tax should not be part of the calculation.
anyway, what i notice is that my super's annual growth is not even enough to cover the annual management fees charged.
