Hi everyone,
This is our story….
When I was 25 my husband and I bought our PPOR in Westminster, Perth in 2000 for $71,000. We paid cash. It is an old house on a 850sqm triplex block. It is now worth $300,000. We are hoping to develop it in 2-3 years and build 3 villas. We are planning on holding 2 of them and selling one to pay for the development costs of the villas.
We bought our first IP in Westminster, Perth in 2001 for $135,000. We sold it for $330,000. We did not have to pay any capital gains tax as we have been working in Singapore for the last 9 years and have built up a capital loss that offsets the CG.
In 2002 we bought our second IP in Scarborough, Perth for $355,000. It is currently valued at $600,000. We have tenants in there paying $450 a week. We will be working overseas for a few more years so will continue to build up more Capital Loss to offset the Capital Gain when we sell this one.
In 2004 we bought another IP, but this time in Singapore. We bought it for $1.5million. We needed a deposit of 20% which we had- ($300,000 cash). We have a loan here of $1.2 mil but interest rates here are only 1% in the first year then it goes up to 2% in the second year then stays at around 2.5%. This property is now worth $1.6mill but it is still under construction – not ready until the end of 2006. It is predicted that when the development is complete it will go up even more – here’s hoping!!! [blink] We are not sure what to do when the time comes – either move in and enjoy the lifestyle (those of you who know Singapore – it is on the island of Sentosa on the canals) or rent it out – rent here is high –we could get about $8000-$10,000 a month for it.
Earlier this year we bought 2 hectares of land in Perth for $160,000. Paid $120,000 and took a loan out of $40,000. The land is now valued at $220,000. (There is a strong possibility to sub-divide into 2 blocks in the future)
We have also bought a block of land in The Village at Wellard but titles are not out till March 2006. We will hold this land for 2-3 years and hopefully come back and build on it and live there then who knows???? Not sure how to go about financing this one – but we have a few months to figure it out…..[blush2]
So to Sum up:
PERTH
Value $1,120,000 (not including the last purchase at wellard)
Loan $583,000 (paying interest only)
Rent $1800 a month
SINGAPORE
Value $1.6 million
Loan $1.2 million (Don’t have to start repayments till completion of the development – end of 2006)
When we bought our first PPOR in 2000 we did not use the FHOG so we will be using it when we get back to Perth to live.
We sort of “fell into†property investing but have been very lucky with our purchases. This forum is excellent and has motivated me to look into doing it full-time and learning more about investing. Thanks everyone!!!!
Any advice or any comments on our story – positive or negative would be appreciated.
Thanks, Mei[biggrin]
Hi Mei,
Sounds like you have some fabulous properties there – would love to see the one on the Singapore canals [blink]!
If you don’t mind me asking, how do you ‘build up capital losses’ while working overseas?
Regards, F.[cowboy2]Hmmm,
I was thinking the same thing.
As far as I know, as a non-resident for Australian taxation purposes, one can build up income losses through the ownership of negative cashflow assets when out of the country…and then “chew down” the losses when back in Oz earning a taxable income. No problem. But that’s on the income side of things.
In terms of cap. gains and cap. losses, I haven’t heard of that.
I was under the impression that income losses could be carried forward, but losses and gains needed to be accounted for in the fin. yr in which they were incurred ??
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Mei,
Well done for taking the plunge! Off the plan is not something I have been very interested. You have sure gone in at the deep end on this purchase but if the cap growth continues you should do okay out of it by the sounds.
Why not try something different as you have! Just one question. What is the local tax regime like in respect of cap gains. Have you structured it so you can keep you profits in Asia.
Has anyone bought anything in Malaysia???
I will be there next week and always like to sniff around.
Cheers
[email protected] – Experienced investors living in NZ who can find properties to meet your needs! Email us to receive details of upcoming deals.
Project management also available – finding solutions for problem properties! We can manage your renovation project for you.Hi Guys,
Thanks for your replies!
In regards to the losses – every year obviously our income from the rental property is less that the expenses – interest on loan etc etc…there are alot of things we can claim – when I fly back to Perth that can even be claimed!!! — resulting in a loss….Anyway every year that loss builds up and it can be used to offset any capital gain.
Our accountant here is originally from Perth and he deals with all non-resident issues. He keeps reminding us that the Australian Expat is the “luckiest person on earth” :)and they key is to keep building up losses by more property acquisition over time as long as we continue to achieve increase in value in the properties.
So each year we accrue our tax losses which can be used to offset capital gain on any property when sold. The losses are offset in the order of sale of properties. Therefore we have to start building up the losses again to offset the CG from the sale of the next IP.
See ya, Mei
Hi don&liz,
Tax in respect of CG is minimal here but that’s because we are permanent residents. Not sure what it would be like for overseas investors.
And yes we will be keeping the profit here
Haven’t looked at properties in Malaysia. The property market here is just coming out of a slump so may be worth looking into. Don’t think it will go as high as the peak in 1997/98 but if it goes to even half of that we will all do well.
See ya, Mei
Originally posted by meilin08:When we bought our first PPOR in 2000 we did not use the FHOG so we will be using it when we get back to Perth to live.
Mei[biggrin]
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Dear MeiLin08,1. May I take this opportunity thank you for sharing with us your encouraging story. My congratulation to you and your husband on your successful property investing to date.
2.You may want to re-confirm with the Office of State Revenue regarding the FHOG.
3. My understanding is that you will no longer be eligible for it as you are presently holding other properties in WA. I stand to be corrected though.
4. May I ask who is your tax accountant and how do you find their services to date?
5. As for your Singapore investment, is there any particular reasons why your husband and you choose to invest in a S$1.5 million property instead?
6. Thank you.
regards,
Kenneth KOHOriginally posted by meilin08:We sort of “fell into†property investing but have been very lucky with our purchases.
Thanks, Mei[biggrin]
************************************************
Dear MeiLin08,1. Care to share with us how exactly do you go about doing your research and due diligence and how you and your husband go about deciding where and which property to invest, so as to be “so lucky with your purchases” to date?
2. Thank you.
regards,
Kenneth KOHDear Meilin08,
1.What are your investing goals?
2. What kind of work are you and your husband doing now? Are you now in Singapore?
3. I will love to meet up with both of you soonest before I fly out to Perth again this Wednesday on 7th Sep 2005. My Singapore mobile number is 90391898.
4. Thank you.
Cheers
Kenneth KOHHi Ken,
Check your Private messages!
Mei
In regards to the losses – every year obviously our income from the rental property is less that the expenses – interest on loan etc etc…there are alot of things we can claim – when I fly back to Perth that can even be claimed!!! — resulting in a loss….Anyway every year that loss builds up and it can be used to offset any capital gain.
(1)The losses you are accumulating are revenue losses, these can only be used to offset revenue gains. Only capital losses can be offset against capital gains. This applies to both residents and non residents.
(2)Be careful what percentage of the expenses you claim on your trips to Perth as the ATO are very hot on this issue.
Congratulations on your investments. Get back to your accountant re their tax advice.
ned kelly
Originally posted by nedkelly:In regards to the losses – every year obviously our income from the rental property is less that the expenses – interest on loan etc etc…there are alot of things we can claim – when I fly back to Perth that can even be claimed!!! — resulting in a loss….Anyway every year that loss builds up and it can be used to offset any capital gain.
(1)The losses you are accumulating are revenue losses, these can only be used to offset revenue gains. Only capital losses can be offset against capital gains. This applies to both residents and non residents.
Yes, that’s what I thought too – hence my original question. Given Mei’s statement:
We bought our first IP in Westminster, Perth in 2001 for $135,000. We sold it for $330,000. We did not have to pay any capital gains tax as we have been working in Singapore for the last 9 years and have built up a capital loss that offsets the CG.…I’d be wondering whether the ATO are not already owed a fairly large CGT cheque…
Mei, if you have screwed up by claiming non-existant capital losses, it may be worth your trouble getting in touch with the ATO to sort it out. That way they’ll be much more understanding than when/if they catch up with you.
Just a thought.
F.[cowboy2]I have done a bit more research on the topic.
The ATO position is revenue losses can be offset against capital gains, however capital losses cannot be offset against revenue gains.So Mei it sounds like your accountant is giving you good advice and I should sack mine!!!!.ned kelly
Hi Foundation and Ned,
If the ATO is owed a large CG cheque from us then they would be owed cheques from about 10,000 other people as our accountant has offices in Singapore, Dubai, London and all his clients are Aussie Expats who use losses to offset CGs.I don’t think he is wrong. This is what he specializes in.
Mei
Btw, Our accountant has had his office set up in Singapore for the last 11 years so if offsetting the loss against the gain was not right I’m sure the the ATO would have been onto them by now…
RE: the flights – you are right – we do not claim 100% – from memory it’s about 60-70%.
Mei
Ok then…
F.[cowboy2]Hi Mei,
Just goes to show that you get what you pay for and this especially applies to financial and legal advice. You have obviously paid for and received sound advice and will reap the rewards.
We should spend as much time selecting the professionals we use as the investments themselves.
Good Luck
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Renovations & Project Management***UPDATE***
Hi guys,
Haven’t been on the site for a while and thought I’d update what has been going on…..Not sure if anyone is really interested but here goes….
The titles for our block in Wellard have been delayed till June…. Will build on that as soon as titles come out and rent it out.
Also picked up a block in Capricorn Release 2…. titles out around Aug/Sept.
Looking into flipping the 2 hectare block and making a quick buck[biggrin]
And saving the best for last!!!!……………. Our property in Singapore has gone up to $2million….. Bought at $1.5 million about 14months ago!! It is still not ready yet – It won’t be ready till Sept this year.
See ya, Mei
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Hi everyone,
This is our story….
When I was 25 my husband and I bought our PPOR in Westminster, Perth in 2000 for $71,000. We paid cash. It is an old house on a 850sqm triplex block. It is now worth $300,000. We are hoping to develop it in 2-3 years and build 3 villas. We are planning on holding 2 of them and selling one to pay for the development costs of the villas.
We bought our first IP in Westminster, Perth in 2001 for $135,000. We sold it for $330,000. We did not have to pay any capital gains tax as we have been working in Singapore for the last 9 years and have built up a capital loss that offsets the CG.
In 2002 we bought our second IP in Scarborough, Perth for $355,000. It is currently valued at $600,000. We have tenants in there paying $450 a week. We will be working overseas for a few more years so will continue to build up more Capital Loss to offset the Capital Gain when we sell this one.
In 2004 we bought another IP, but this time in Singapore. We bought it for $1.5million. We needed a deposit of 20% which we had- ($300,000 cash). We have a loan here of $1.2 mil but interest rates here are only 1% in the first year then it goes up to 2% in the second year then stays at around 2.5%. This property is now worth $1.6mill but it is still under construction – not ready until the end of 2006. It is predicted that when the development is complete it will go up even more – here’s hoping!!! We are not sure what to do when the time comes – either move in and enjoy the lifestyle (those of you who know Singapore – it is on the island of Sentosa on the canals) or rent it out – rent here is high –we could get about $8000-$10,000 a month for it.
Earlier this year we bought 2 hectares of land in Perth for $160,000. Paid $120,000 and took a loan out of $40,000. The land is now valued at $220,000. (There is a strong possibility to sub-divide into 2 blocks in the future)
We have also bought a block of land in The Village at Wellard but titles are not out till March 2006. We will hold this land for 2-3 years and hopefully come back and build on it and live there then who knows???? Not sure how to go about financing this one – but we have a few months to figure it out…..
So to Sum up:
PERTH
Value $1,120,000 (not including the last purchase at wellard)
Loan $583,000 (paying interest only)
Rent $1800 a month
SINGAPORE
Value $1.6 million
Loan $1.2 million (Don’t have to start repayments till completion of the development – end of 2006)
When we bought our first PPOR in 2000 we did not use the FHOG so we will be using it when we get back to Perth to live.
We sort of “fell into†property investing but have been very lucky with our purchases. This forum is excellent and has motivated me to look into doing it full-time and learning more about investing. Thanks everyone!!!!
Any advice or any comments on our story – positive or negative would be appreciated.
Thanks, Mei
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