Forums / Property Investing / General Property / Which is best…equity or cash???

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  • Profile photo of SuperTedSuperTed
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    @superted
    Join Date: 2003
    Post Count: 205
    Originally posted by sizzling_duck:

    Quote:
    The real answer in this thread is that yourself and Russh, I believe classify the $35,000 in cash leftover from selling the land is worth more than the $50,000 in equity in the block as it has an associated liability.

    LoL ……….Never said that!

    And around we go ;-)

    Profile photo of probertprobert
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    @probert
    Join Date: 2004
    Post Count: 2

    I was always told ‘ants don’t pay rent’.
    Build or sell.

    Petros Umgaga
    Self Appointed Life President
    Banana and Mango Republic

    Profile photo of elveselves
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    @elves
    Join Date: 2003
    Post Count: 507

    Ok I agree with so much that has been said on all counts.

    Firstly, if the land was bought after 1985, yes CGT (or acquired)

    if the land has no loan or mortgage and it belongs to you, yes you have an asset, that asset is not income producing, and therfore has no tax benefits, but it may have CGT liabilities upon disposal. It is a liability in this sense, as it costs money from your pocket without giving you a return.

    HOWEVER, you obvioulsy have had some gain or growth (in order to owe CGT) So while it produces no income it has prduced it via growth. And is a hedge against inflation.

    My thoughts are: scenario 1: maybe get a loan on your own equity, or land component, build something on it and rent it out

    scenario 2: as abouve but sell, you often get more with a building on it ready to go, but you will apy more in CGT.

    scneario 3: sell it and pay the govt your hard eant growth money, and use the cash you have back to reinvest.

    personally, I dont like handing over CGT to the gov. i was also told never to sell. I did because my property was not subject to CGT and it had little hope of any real gain in the future, and I didnt want to hold it any longer.

    Only you can really decide what is the best deal for you according to your personal situation and according to your tax situation.

    elves

    ” a blind man may see what a sighted man may not”

    Profile photo of thefirstbrucethefirstbruce
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    @thefirstbruce
    Join Date: 2003
    Post Count: 133

    There’s an old saying”
    “equity is the most expensive form of capital”.

    Applying this here means Fish is better borrowing against the land and using debt to finance new ventures; rather then selling equity to finance new ventures.

    Nevertheless, all old sayings aren’t applicable all the time, esp after considering recent tax changes.

    Personally, I feel he should improve the land with a leaseable structure. Unless one increases yields, capital gains aren’t going to be that great over the next 2 years, esp in NSW. But this is my opinion.

    Bruce
    Mooloolaba, Qld

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