No stamp duty and first home owners grant. The market has slowed. Prospectively i can buy into the market increase my equity and make money from day one.Its tax free and removes wasted rent. Also i intend to buy something well under my borrowing power so i will still be able to invest.
Please feel free to say something!!!! As i completely intend to do this.
However i can only get this tax free once.
Would it be better to buy right up to the the 500k threshold and maximize my tax free or to be down around the 250k??? and increase my investing power.Can you clarify what you mean by “tax free”? Do you mean stamp duty free?
In relation to which way to go, it really doesn’t matter. It’s the deal itself you need to analyse. Whatever you buy, you’ll make more money (increase equity) if you buy below market. Also, you need to weigh in rental return.
Overall, you need to compare deal vs. deal regardless of whether you spend $250K or $499K. What are you looking to achieve? Cashflow? Capital growth? Have a think about your overall strategy and they find properties that deliver the result. The price is sort of irrelevant.
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.I think she means Capital Gains Tax Free when using it as her home.
Cheers,
Simon Macks
Residential and Commercial Finance Broker[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
wasted rent?
whats that?
If a property is owned, it has a rental return. Whether you rent it from yourself or to someone else, it is still an asset producing a return. That is unless you think you can live in a cardboard box.
It is a common misconception that ‘rent money is dead money’. Is an interest only loan dead money also?
http://www.posigear.8k.com
Positive Geared Share InvestingHi
It is very common for investors to rent. It becomes a lifestyle choice in the end.
I am currently renting and it seems every time this issue comes up more and more investors admit to living in rentala.
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The decision to rent or buy is a personal one.
Some people choose to rent because it gets them into an area they like, but cannot afford..renting is still cheaper on a day to day basis than buying the place, you also have the flexibility to move whenever you want, you may also rent as your job only has you in an area for a short-medium time frame.
Some people simply cant ‘save’ and get a good sized deposit together to buy..I always used to think of buying a house as “ForcedSavings” when things got tight.
Also Buying and selling costs are huge in realestate..I remember Jan somers saying she bought every time they moved and so ended up with a few IP’s over time (dont buy and sell..buy and buy).
Renting IMHO is better than buying “IF†you do something else (INVEST) with the money saved and you don’t mind moving, we buy our PPoR’s, but have still moved every 2 years for a few years now so I guess I’ll have to look at my own strategy..we look at the fact that rents increase but in most cases your loan will hopefully get less (even a IO Loan is still at yesterdays dollar value)
There are some rent vs buy calculators out there somewhere..
Crashy..can you expand on your comments, are you talking about renting through a Company or Trust?
What do you think?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorPerhaps i need to be more clearer on my issues I dont have a problem with renting, but as a potential first home buyer in TODAYS MARKET, It makes alot of sense to take advantage of the first home buyers grant with no stamp duty. And because i intend to live in it there is no capital gains tax to pay. So by taking the money I have now I can increase that figure over night by increasing my equity.(Correct me if im wrong) I intend to hold for 12 to 24 months. The result of this is.
1) I can still invest in other properties
2) My rent money is now going into my property not someone elses and it is tax free.
3) On sale of the house I can always go back to renting
4) Provided i have bought intelligently I can realize a tax free profit in 12 months
5) My girlfriend is a first home buyer too so potentially I could do it againPlease feel free to comment
Thanx for the input so far guys much appreciatedP.S Megan the reason i asked the 250k to 500k question was very simple. Because I plan to take advantage of the one off free stamp duty in my name obviously there is more stamp duty saved at 500k then at 250k. Your comments made a hell of a lot of sense!
Hi Nazzy,
Perhaps you may be more comfortable by first buying a ppor to take take advantage of the “tax free” situation, don’t over capitalise on it and think of it as another investment as we get a littel bit emotionaly envolved with places we want to live in.
Then as soon as you are in a position to invest, start Researching for something that matches your investment needs, but first you must know what you are wanting to acheive out of investing, to help you analyse what you need..
hope this helps..
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auNazzy, maybe the title of the post Buy vs Rent threw everyone, it seems you ‘want’ to buy but want to make certain you get the best *Bang* for your buck so to speak and if thats the case;
then it comes down to buying the best poperty, in the best area that will get you the “best” return in the time frame you’ve decided…?
Now all you have to do is find it and crunch those numbers, research yada yada..(sounds like fun.)
$250k or $500k..guess you’ll have to ascertain which property will give you the best return for your initial outlay…….
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorYes definitely i want best bang for my buck!
The reason i started this topic was to test it. I want people to comment on the idea and pull it apart based on there experience.
Funnily enough A year ago after reading Steves first book I swore i would never buy a house to live in as i believed i could save and build an investment property portfolio that would easily out perform in the long run.
Seems most replies have come from renters, and im one too, however todays market is a different ball game and instead of following the crowd im throwing out a different ideal. Theres an opportunity to make money here for all first home buyers. Up till now ive been saving and now its time to act!
So i have taken a look at todays market from my situation to try and plan my entry. The market is stagnating and is likely not to move forward for a while yet. So like everyone else i need to buy IP that is under market value that I can improve to acheive a profit, And while everyone else is doing it and being taxed, potentially I can do my first 2 tax free!!! No stamp duty no capital gains tax!!! And not pay much more then my rent!!!Again dont hold back hit me with everything you got!!!!
nazzy,
This is really only my 2cents worth. May only really be worth 1 cent, but here goes anyway.
You want to take advantage of the stamp duty and CGT concessions – understandably. The issue of whether to buy/rent has been covered quite well already, so I’ll leave that to you.
However, my feeling of the market today, is that there is better buying away from the 500k area. The reason being, around the 500k mark, there is a ceiling people are willing to pay, due to the FHOG/SD issues. Meaning, everyone wants to maximise the concessions they get and think, “I’m saving $X in stamp duty!” But that means that there is more demand in the sub $500k region. If you go above this, you will find less people are willing to spend, because every $1 increase in price will bring more stamp duty, etc. This means that you will have more bargaining power, and more likely to find a better deal.
To qualify my statements, this is only in the areas that I have researched in Sydney, and is highly unlikely to be applicable to all areas of Australia.
Regards,
Munjy
Hi ya, my girlfriend and I were in a similar situation. I own a few IPs but she is can get the FHOG in NSW. We were looking at maybe getting something together >$500K but yes, she loses $20K stamp duty exemption so on the w’end shes put an offer on a unit at low $4s which has been accepted. She intends to live at home (unit currently rented) and move into it next year to reno it a bit while I will continue to rent. We don’t live together which helps with her FHOG. Be careful with the spousal rules. Read the application form from the OSR website for more details. If I were you, I’d buy a good place as a PPOR. Obviously look at location, ability to add value, under market value..etc.. then sink as much equity into it as possible so that your rent roughly equals your mortgage if you can then you’re indifferent as to whether you rent or buy. Then set up a LOC and isolate that part for IPs so interest there is tax deductible. We sat with her mortgage broker uncle tonight and he ran through a westpac rocket repay product which I reckon is pretty good. One part P&I and the other I only with offset account. But munjy is right, in Syd the sub $500s market you’re competing with is FHO. Theres not many investors out there looking every Sat. I think the removal of the vendor tax has done the opposite – these guys are putting their properties on the market! Yields are still very ordinary in Syd. Then again if you think that this market is not going to go anywhere over the next 2-3 years, then you shouldn’t be in a hurry to get into this NSW market. But how long will the concessions last…. Good luck
Nice one asdf! u too Munjy!
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