What should we do?
What claims can be made?
Who do we need to speak to for professional help?
Currently we have a single mortgage of $700,000 for two houses of which one has been vacant for 6 months and the other is our PPR. The value of both houses has dropped since we received the loan. The PPR is valued at a rough guess $450,000 and we paid $480,000 last July. The empty property is on the market at $450,000 but not selling as nothing is selling over $400,000 in the town. We are unable to rent the vacant property as the sewer needs to be connected which we will need to borrow another $30,000.00 to do this.
We have no idea what to do.!!!!!
The vacant property is producing no income and we still have to pay utilities, insurances, mortgages and so on.
The mortgage is currently interest only as we can not cover principal and interest.
Can we make any claims on the vacant property?
Any help would be greatly appreciated.
Can we make any claims on the vacant property?
No.. because it doesn't produce any incomeAgain… issue of X-collaterilised both propeties is interesting to solve the problem
As long as you are intending to rent this property, I am of the understanding that you can claim deductions. if I were you, I would source the finance to get the plumbing done, then rent it…you got yourself into a real pickle….good luck….
Thanks for the replys
Handy do you mean that as soon as we advertise it for rent we should be able to claim to connect to the main sewer??
With having only a single mortgage how do we work out what percentage of interest is claimable is we rent the vacant property??
Is this even possible??
Hi, you sound really stressed. Can you sell PPOR instead? $30000 drop is not dire but not being able to make repayments is.
You might take a pasting on the price though. You might want to consider selling on a leaseback i.e. you rent back the house and pay the investor enough to make it worthwhile for them.
I did that last year and used my repayment as the starting point to figure out how to present the investment. Sold on the 1st open.
I pay $350 p.w. but the rent [market rate] is $285-290.
I got a quick sale, the proceeds of which saved me a lot of money & unnecessary stress. I'm repaying the same amount only I don't pay to the bank, I pay my landlord. He's not having any capital gain at the moment & the house will be hard to sell but he's getting steady cashflow from me and will do so for 5 years.
Good luck,
KYHi Fordy – they say a problem shared is a problem halved? or something like that.
I'm no expert but another option maybe a rent to buy on the 2nd property – you would get repayments back to cover your interest and a little extra. The deposit that the buyers use could connect the sewerage. Is there a certificate of occupancy on this property?
Best of luckWe really dont want to sell the ppr as its where we intend to stay for at least 10 years or more.
The vacant property is 700klms away from us know so thats why its harder to decide what to do there.. We lived in the vacant property for 5 years but the septic has packed it in and needs replacement, and because we recently added the en-suite the building permit stated we must connect to mains sewer. If we did put the sewer on and rented it would earn us about 400-450 per week but how do we maintain it from so far away? The house is 100 years old so maintainence is an issue.
I can see the point of the rent to buy option but don't think we are in that state yet. The interest only mortgage still has another 16 months to run before it reverts back to P & I.
Why is it going to cost $30K to get hooked up to the sewer?
Is the new sewer in a difficult location? Does it not pass by your property?
Does council expect you to extend the sewer up to your property ie be the first to connect to it, then everyone else in the street has access to it? If this is the case push council to pay for the extension of the service and advise council that you will refuse to allow any one else to connect to 'your' sewer (ie install the minimum size pipework which will only take your premises).
Does that cost include decomissioning the existing service?
Can the old septic be used for greywater for the garden? (rather than removing it after decommisioning).
How much will it cost to install an alternative eg envirocycle (will council accept this or has the block been subdivided below the threshold for septic)?
Will being on sewer add to the sale or leasing value of the property?As for maintenance & property management – let a local PM do the management and arrange the necessary maintenance.
(Sorry for all of the questions but it will help to find a workable solution ie getting the property leased and some money back into your pocket).
Hmmm interesting dilemma.
Here is my non accountant, non lawyer view of this (Danger!, Danger!, Danger!).
The house you bought (or constructed) was for investment purposes (rental income). Hence you should be able to deduct the mortgage payments off your income tax. Get a loan (personal/family/anything really) to get it connected asap. Hopefully with the ability to deduct rent and the sewer pipe in place you can restart on new footing.
How much can u deduct? Well the mortgage on the investment property. The bank can tell you this (just tell them you are selling the investment property and you need a payout figure for that security), if they still refuse to tell you just use the amount you bought it for (speak to accountant). The ATO is mainly concerned with how the income is earned not your loan structures (Please Note – I am NOT an accountant!). Here is the form name from the ATO site, so you can deduct interest payments from your current paycheck – PAYG income tax withholding variation (ITWV) application.
If you are looking down the tunnel – I would do it regardless of the tax situation. Because given enough time, you should be okay.
The nearest sewer connection is 57 meters away and the council will not pay one cent to bring it into our street. They do insist on connecting it up to their existing connection and then let me pay them for the privilidge. I asked them if I have any comeback if anyone else in the street then connects but they said no.
The 30,000 is a rough costing so far it could be more or less depending if they hit rock on the way. It didnt include decommisioning the old septic either.
The council want the old tank decommisioned completely.
The council did however just recently approve the block next door to get a bio septic but the cost is roughly the same and then the block couldnt be subdivided.
If we had to keep the property we would try to subdivide again although this will also be costly without a guarantee of success. Have previously been knocked back as the owners of the land behind us have an approved subdivision plan that somehow includes our land and we have to conform to that plan to get permission to subdivide.Have been told that the market is very down and even spending the money to add the sewer won't add anything to a possible sale cost.
Is a pump out service an option?
Thanks for the info Tas,
Pump out of the tanks is not an option as the first tank has sunk into the ground a bit so the system won't work.
The wife has just thought of a great idea…
The property is on an acre and has a very large shed at the rear plus a 5 car carport and a lockable two room building that has three phase power. She suggested we rent out the land and sheds, this area has its own shower and toilet that has a working septic so a business could use it easily..
If we had to keep the property and did that then it would generate an income and down the track we could connect the sewer. Would this then become a claimable deduction?Sewer connection is a capital cost, hence it is only able to be depreciated.
If you (or the neighbour behind) have paid S94 contributions for the provision of services for subdivision, I'd be hammering council to provide those services to the site. It is council's stipulation that you connect to the sewer however, you can argue that until council has provided such to a point infront of the property you are not obliged to connect to it.
Pardon me if I sound 'blonde' but how could your neighbour have submitted a subdivision application including your land unless you have signed his application? If the council has approved this subdivision without you submitting (either jointly or separately) a da for the subdivision, then they may have been negligent in approving the subdivision. Has this neighbour paid their council contributions for the subdivision?
The people who own the land behind us are a club who own a large parcel of land and nobody we know signed to any agreements for the subdivision. Its been approved by WAPC which we couldn't believe as some of the land wasn't theirs. It was submitted a few years before we brought the land but I can't see them developing the land now as there would be no buyers for the new estate. They do have plans for sewer connection behind us but we could be waiting forever for it to occur.
30k for deep sewarge??? I paid for my mums' 2 tears ago and it only cost 4k. that included 45m of line laid, septic decomisioned. Her house is about 50 yrs old. Where is your IP
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