All Topics / Help Needed! / Turning PPOR to IP..negative or positive geared?

Viewing 5 posts - 21 through 25 (of 25 total)
  • Profile photo of hornbillhornbill
    Member
    @hornbill
    Join Date: 2011
    Post Count: 23
    xdrew wrote:
    hornbill,

    There are lots of parts to say about your current invest.

    First .. you do realise you have 6 years to be away from your PPOR and still claim it as a PPOR and receive all the capital gains from that? At the end of that 6 years you can either return to the property or sell it. Thats gotta be worth a cracker to you .. you can have someone paying half your PPOR bill for you and you reduce your exposure to the debt by half or more ! FULL CGT exemption .. but no depreciation allowances or interest deductions. Sucks on one account  .. but profit on the other.

    Transferring between person to company .. or family member to family member is not a great way to save on tax unless you started with that as the main reason for the deal. Unless you are dealing with larger folios or multiple properties .. bundling into separate names attracts transfer duties and is an expensive way to solve an issue that should have been straightened out in the first place. In other words .. if you are going to run a large company structure or a small one to minimise on tax .. start that way from the outset. Re-arranging assets once title has been exchanged can be a ludicrously expensive procudure to minimise any tax you receive. And on that .. there is always the chance the tax department will change the rules on you. Think trusts .. as they used to be.

    Presented with a deal where you have a bad egg (because you are dealing with building defects and legal issues) to take to the market, you'll reduce your chance of effecting the best sale price. Wait until all builders defects and warranty issues are off the table to assure potential purchasers of a solid deal. I make money purchasing bad eggs, and waiting for that .. so I know what I'm on about. The difference between a bad egg and a solid deal can be up to 20% of final sale price .. so its worth that security.

    By the way .. you can still run better deals in the current market. Mashing together a couple of properties and splitting a block into strata title .. i revalued it and borrowed against a couple of the properties without need to sell. Gearing with OPM on the rest of the deal .. i am getting 22.7% Gross on the deal .. coupling to 18.3% net after expenses. Its all about gearing and how you work the deals .. NOT how the deal exists on the market.

    As far as working in overseas or interstate markets .. it requires you to be on top of the legal requirements .. obligations and permissions 100% of the time. Read a couple of posts in the overseas section to recognise what sort of requirements you need to be fully aware of the dangers posed by investing overseas. Become your area expert .. or .. roll the dice.

    xdrew,

    I don’t quite get you on the 6 years, PPOR, CG exemption bit. If I rent elsewhere for say 5 years, then decide to sell my apartment (which I rented out for all that time), I get CG exemption? Wouldn’t my PPOR be my new rented property, and not my apartment? How do I then declare any loss/profit of my leased apartment to ATO?

    On the title change, I ran some rough numbers with my tax accountant and she said it may not be worth the hassle to change the title or even get the depreciation schedule done…we’ll see once I get all numbers on the table.

    The property is actually solid, good location, close to uni and major shopping and easy access to CBD. The bad eggs bit are mainly in the common areas which we are addressing now.

    Once resolved, it would be a good property to keep for long term rental. Of course I will always look at overseas option. I’m actually finalising 1 overseas property purchase at the moment (in Malaysia), mainly for long term retirement purpose, to lock-in current market price, and more importantly stay close to family than making big bucks out of it.

    My brother-in-law bought his property by the same developer 2 years ago in next door development and price has gone up by a whopping 30%. Sounds like Australia property market 30 years ago when price doubles every 7 – 10 years, before it pauses for income to catch-up and supply/demand to rebalance itself. It’s emerging market from my personal opinion. As I said, main purpose is to secure a property for my retirement and to stay closer to families in the future, than anything else. That, to me is priceless…

    Also to split my eggs (risk) into different baskets. I am a Malaysian citizen, but even then it took me several years to observe and research this market, getting some advice from friends and families before I took the plunge.

    I fully agree, oversea investment can be tricky sometimes. I’ve got a family now, with single income household and other commitments, I have to be very critical of my risk/reward analysis and ensure I also have my worse case scenarios adequately covered.

    Btw, if you’re interested to see what I bought (http://www.cascadia.com.my/the-product-bamboo.php). I paid approx $215K (AUD) for it (today’s exchange rate). I’m taking local mortgage there @ 4.15% interest rate (variable loan). Let me know what you think. The most likely place I will live in the future – when my wife and I grow old, and the kids are free to roam the world by themselves..:-)

    Now you understand why I can’t buy a 2nd AU property (especially not in the near future) due to my current commitments…

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

    John

    Do you realise you can change names on title in VIC (between spouses) without stamp duty? (maybe just $50 nominal).

    For CGT absence from main residence see s118-145 ITAA 1997. You can be absent for up to 6 years as still claim it as your main residence.

    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 xdrewxdrew
    Participant
    @xdrew
    Join Date: 2010
    Post Count: 479

    http://www.ato.gov.au/individuals/content.aspx?doc=/content/36887.htm

    From the ATOs mouth .. the relevant passage and how it works out.

    6 years .. you can claim as main residence .. as long as its your ONLY residence.

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

    Or look directly at the law
    http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html

    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 hornbillhornbill
    Member
    @hornbill
    Join Date: 2011
    Post Count: 23

    Thanks guys. I will take that into consideration and speak to my tax accountant further about it.

Viewing 5 posts - 21 through 25 (of 25 total)

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