Hi
I have had a request for a private ruling in with the ATO for several months. Finally yesterday I received a thick envelope with the ruling. Excitement!
Although there are many technical details, the bottom line is that for OUR wrap company we are allowed to register and claim back 75% of the GST on JUST the GST paid to mortgage brokers. This is because they feel that the only GST cost we have that is directly connected with making a financial supply is the securing of a mortgage. (The normal claim for a “financial supply” is just 75% of the GST, not all of it)
All our other expenses on which we pay GST – legal expenses on purchase and sale, office costs, vehicle running expenses, account keeping, cleaning, inspections, advertising, etc are deemed to be in pursuit of the capital gain or buy/sell profit, and therefore not creditable acquisitions.
Well, it’s better than nothing, which is what we would have got if we had NOT asked. And the wider wrapping community can benefit… if you think the return is worth the effort of putting in GST returns. It would only be so if you do a LOT of deals, I imagine, and your mortgage broking costs were high. We tend to pay around $140 per deal in GST to a mortgage broker, so we can claim 75% of that, or about $105. As our business plan calls for us to buy one house per week, this is for us a worthwhile thing.
BTW just to let you know, we are a little behind on our business plan since the Nov 2002 Sydney seminar, but not much.
The ruling will be public knowledge when the ATO put it on their website… we have 28 days to request a review before they do this, so I imagine it will appear somewhen early in March.
One more vote for the legitimacy of wraps… as if we needed it!
Regards to all.
Lance
.
Fair Go Homes
http://fairgohomes.com.auRapt with Wrapping!
(07) 5465 4999
[email protected]Thanks Lance,
Clearly with such an aggressive business plan it was a viable propostion.
Good to see that someone had the desire to ask.
Michael [
]So Lance how is the business plan going this year. Very ambitious but I am sure you can do it. Made me look twice at what I want to do and think I may be underachieving.
EnjoyEnjoy
AD [:0)]“Don’t dwell on reality; it will only keep you from greatness.”
-Rev. Randall R. McBride, Jr.Edited by – [email protected] on 07/02/2003 1:38:29 PM
lANCE….GOOD ON YOU, CONGRATS
I’d be interested to know how you are getting finance for 52 houses per year…or even 20 !!!
I’m off to see my personal banker next Monday (we have a St George portfolio loan).we have three houses (2 buy/hold and 1 PPOR) and I’m sure the personal banker is going to be thrilled!!!! when i tell her I want to start some serious wrapping.
Maybe I should bypass St george and go to a broker…
any advice for Monday???? also, any himts for getting my interest rate lowered….Portfolio is high at 6.7%. My friend with a Westpac executive loan pays only 5.9. I reckon that I’ll need a lowish interest rate to wrap successfully.
Hi
The key to buying many investment houses is to have the right structure. I learned this last November at Steve & Dave’s seminar, and we have altered our structure to make this possible. (Thanks, Steve & Dave!)
Using the company strategy, and borrowing as a company guaranteed by a director, we provide the credit, and initially the deposits. When we run out of cash (soon!) we will use our investors to provide the deposit and closing costs. We pay the bank 6.01%, and the investor 10% with a 2nd mortgage. We charge our purchasers 9.01%.
We use a broker. They work on commission, and (generally speaking) are much more aggressive to find you the right loan than a banker on a salary.
Hope this helps
Lance
.
Fair Go Homes
http://fairgohomes.com.auRapt with Wrapping!
(07) 5465 4999
[email protected]quote:
We pay the bank 6.01%, and the investor 10% with a 2nd mortgage. We charge our purchasers 9.01%.Hi Lance,
I don’t follow what you mean by you pay the investor 10% with a second mortgage. Is this their return or is this a separate payment?
Cheers,
Matt.
]
The topic ‘Wraps and GST … Ruling at last!’ is closed to new replies.
