Forum Replies Created
I'm with the "paint it camp".
Also I think your quote of $8000 to replace it is a bit light on, while that may cover new roof sheeting how about the cost of removal? Asbestos is considered hazardess material and in most areas requires a licenced person to dissmantle, plus there's the dump fees. You can't just put asbestos in a skip, it needs a special bin lined with plastic and fees are usually assessed according to weight.
I think you'll be surprised just how fresh a coat of paint will make it look. Make sure the painter is experienced with painting asbestos roofs as the tiles can be brittle and easily snap, nasty stuff if you breathe it in!!
I think you'll find they aren't available as yet for investment properties. Here's a link to an article about the new Shared Equity from Richard Taylor:
http://www.propertydivas.com.au/7ProfServ/Professionals.aspx?cmaid=3b9d5965-4e9a-4d69-9254-a9dde01786e5&cmstat=ProfallSpeed is great but I'm also having trouble finding new posts and would prefer them listed according to category. It just makes it easier to find posts that I'm interested in responding to.
Having developed my own website I know how hard, and how much time it takes to get even the smallest feature to work smoothly so well done Steve and the gang.Hi Fann,
We’re with Elders insurance. During our last reno I contacted them to say the work would take about 12 – 14 weeks but that I would attend site most days. Although they also have a 60 day limit the underwriters gave us a special exemption. It probably helps that we also have several other properties insured through them and have never made a claim.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Trust me you’re not alone, but as long as you’re registered with a tax agent then don’t panic. As we usually have a tax bill I delay doing our tax for as long as I can.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
For an Accountant in Melbourne try contacting Nancy Keep at [email protected].
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Tim,
The current Division 43 Capital works claim is 2.5% over 40yrs.
Your deduction is calculated from the day the building is first used after completion of construction, and is based on the construction expenditure or structural improvement made.
It includes:
• All fees associated with the design, survey, engineering and council approval
• Any earthworks and retaining walls
• Cost of building construction
• Cost of fencingExcluded items are the land cost and costs for landscaping and clearing/demolishing of existing structures.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Suzieq,
My understanding is that you can only claim expenses at the point the property becomes available for rent. So if you haven’t taken ownership, you can’t claim it. Further the amount needs to be directly in relation to earning the income so I agree with your advice received to date that you can’t claim the travelling costs.
However I don’t agree with the ATO phone advice, as I see these costs as capital in nature and relating directly to this property, so I think they should form part of your cost base and taken into consideration when/if the property is ever sold.Certainly any travelling costs searching for property you couldn’t capitalise but I think you have a case as you’ve already signed a contract to purchase the house.
Can you get a trusted friend to do the pre-settlement inspection and organise the curtains? Perhaps if you could delay the trip for 6-12 months you may be able to claim it but I’d run it by your Accountant first.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Celeste you did make a reply post on the “other” forum!
Sorry to confuse you!AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Sibdividing is certainly a great way to unlock value in a property however you first need to check with Council to ensure this type of configeration is permitted. There’s usually a minimum side access required of approx 4m. Most Councils will also require that the full length of the driveway be concreted plus the existing driveway on the front property. Not to mention the fire hydrant you’ll probably need to install so the Fire Brigade can reach the back house in the event of a fire. New services for the water and sewer will need to be installed and that assumes that the existing pipes can cope with the additional demand. Subdividing can cost a lot more in time and money than anticipated so make sure you’re planned well in advance.
Cheers,
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
The SEQ regional plan (www.oum.qld.gov.au) identifies a new urban growth corridor for housing and industry. Ipswich is expected to grow from 140000 to 318000 people by 2026 so my pick is:
1. Ipswich
2. Ipswich
3. Ipswich
4 IpswichAmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
So Amanda do you believe that the interest paid on the 105% borrowed is tax deductible?The 5% covers all legals, stamp duties, inspections etc.
Thanks,
Simon Macks
Yes Simon, as I stated above my opinion is that all the interest on the borrowings, to the extent that it has been applied for the purpose of acquiring an income producing asset, would be deductible. What I mean here is you must use all the borrowed money to pay for costs in acquiring the property so any borrowed money used to payout existing credit card debts or a flash boat will need to be apportioned.
The total cost of the asset includes all those items that form part of the cost base such as the purchase price of property, Stamp Duty on transfer of the property, Legal fees and any capital improvements to property.
So “Thinker” you may like to consider ringing the Accountant back to make sure you’re both talking about the same issue. As you can see from the posts here, it is quite a complex issue and easily confused. If you’re still not happy with your Accountants advice then perhaps consider speaking to a more senior Accountant or look elswhere.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
To clarify the Borrowing Costs issue:
Under Section 25-25 of the Income Tax Assessment Act you can deduct expenditure incurred for borrowing money, to the extent that the borrowed money is used for the purpose of producing assessable income.
What is classed as a Borrowing Cost?
Loan establishment fee
Mortgage registration fees
Title search fees
Mortgage brokers fee/commission
Stamp duty on the mortgage
Valuation fee charged by the lender
Lenders Mortgage Insurance (LMI)
Legal costs in relation to the mortgage
Underwriter’s fees
How do I claim Borrowing costs in my Income Tax Return?Your Accountant will calculate this for you. In most circumstances the total sum of all borrowing costs is spread over the period of the loan or 5 years, whichever is the shortest. So if you repay/refinance the loan within 5 years, then the remaining balance of the borrowing costs are claimed in that year. Borrowing costs not exceeding $100 are fully tax deductible in the year in which they are paid.
(Please visit our website to see an example.)Frequently asked questions
Q: What is LMI?A: Lenders mortgage insurance (LMI) is a one off payment charged by some financiers as a condition of loan approval. It protects the lender from loss in the event that the borrower defaults on the loan. LMI is therefore a borrowing cost and is not able to be claimed outright as a tax deduction under Sec 8-1 of the ITAA.
Q: Can I write-off the stamp duty on transferring the title on purchasing a rental property as borrowing costs?
A: NO! The costs associated with the transfer of title are “acquisition†costs that are payable regardless of whether or not money was borrowed to fund the purchase. Stamp duty on title transfer forms part of the cost base for Capital Gains Tax purposes.
Back to the original question.
I can’t direct you to any rulings however my opinion is that all the interest on the borrowings used to fund the IP would be deductible as they directly relate to purchasing an income producing asset.
As explained above the LMI is a borrowing cost but the stamp duty would form part of the cost base of the property.Hope this helps!
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
The most important thing is to verify their identity, employment and rental history. You can download a “Property Rental Application Form” off our website which may help, plus there’s also some other checklists that you may find useful.
http://www.propertydivas.com.au/Downloads/Property_rental_application_form.pdf
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Mashilu,
Looks like you’ll need to keep looking! If you consider subdividing a property again the following article off our website may be of help:
What is Subdividing?
Subdividing is when a piece of land is split into two or more pieces (ie separate lots). The process is controlled by the local Council. Planning codes and procedures vary significantly between Councils and also between States and Territories, as do the relevant fees and charges.Factors to examine when considering a Subdivision
• Local town planning regulationsLand zoning restrictions
Minimum size of lots
Access to water and sewerage services
Setback requirements
Minimum building envelopes
Parks and open space
Easements
Vehicle access including Council refuse collection
Storm water management
Increased noise from new development
Environmental and heritage issuesHidden Costs
A subdivision can take several months (and sometimes even years) to complete so you must factor in your holding costs such as:
• Interest
• Rates
• Land maintenance – (eg slashing and weed control)Many astute Developers make the purchase contract for the land subject to the acceptance of a Development application approval with Council. This is usually done with an option agreement (see your Solicitor for more information)
Dividing the Land
Before you rush out and build a new dividing fence in your backyard, you should first consult your local Council for specific guidelines and costings, as it is imperative that the property is divided correctly. Any errors at this stage will cause major problems further down the track.The Process
Most Councils require a Development/Planning Application to be lodged, together with details and drawings of your proposal. A Town Planner or Surveyor can assist you with this process, and they may also be able to give advice regarding conditions that the Council is likely to require.Before lodgement of the Application, you can ask the Council for a “Pre lodgement†meeting to discuss your subdivision and determine what issues will need to be addressed in the Application.
When the Council receives your application, they may require you to erect a notice board for public viewing. The purpose of the board is to alert the public of the proposal by providing details of the subdivision. The Council may also write to the owners of the residents of the neighbouring properties advising of your intentions. We suggest that you contact the Council to find out what procedures your local Council uses.
Additional information the Council may require
Water and Sewerage
• Are existing services available?
• Can the existing infrastructure cope with increased use or need upgrading?
• Is permission required from neighbours to access property?Storm Water
• How will storm water run off be managed?
• Is a drainage pit required?
• Are tanks required to regulate the flow of storm water?Noise
• Will existing main road traffic noise affect the subdivision?
• If so, how will this be reduced? (Fences and/or earthworks)Soil Conditions
• Do the soil conditions (eg.sand, clay) impact on road and footpath design?Other issues
Footpath
Lighting
SignageIssues for the Developer to consider
For the Developer there are also other issues to consider such as:“Wasted†land due to unusual configurations
Steep slopes
Flood-prone land
Other planning overlays (ie restrictions)
Other factors that may reduce the number of lots and so profitability.Approval of the Development Application
The approval process for your Application may take several months depending on the complexity and size of the subdivision.You will then be issued with a conditional approval covering topics such as:
Developer to supply a plan of survey and mark land with survey pegs
Road reserve
Easements over stormwater, water and sewage mains
Requirement that storm water pipes be designed to cope with a “1 in 100 year†event.
Dust control
Hours of permitted work (usually Mon – Sat 6:30am to 6:30pm)
Headwork contributions to be paid by Developer
Open space (parks)
Social infrastructure
Road infrastructure
Water infrastructure
Sewerage infrastructure
Street scape contribution
Disposal of cleared vegetation
Entry walls or features
Connection fees to live sewer mains
Road (width, pavement depth, footpaths, kerb and channel, ramp profiles)
Street lighting
Fire Extinguisher (Battle axe blocks)
Underground electricity and phone
Erosion and silt management
Maintenance period of roads
Retaining walls
Fire ant inspections
Portable long service leave for Building and Construction Industry
If you are not satisfied with the Council’s decision, you may apply for a review.Operational Works
Before work can begin, you will need to engage the services of a Civil Engineer to design and draw the sewer, water, road, footpaths and any other Council requirements.This is a separate application usually referred to as “Operational Works†and attracts additional fees and charges.
Final Stage
All civil work will require Council and Engineering certification. When the subdivision has been completed to the satisfaction of the Council, you can then apply to register each separate title deed.Conclusion
Land subdivision is a $mart way to fast track profits into your investment portfolio. However, as with all investment decisions, thorough research is necessary in order to balance the level of risk associated and ensure that the process runs as smoothly and quickly as possible, and that the best, most profitable outcome is achieved.Happy house hunting,
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Bennn,
Welcome to the PI forum! I’m a little confused by your question but I’ll do my best to answer it.
All rent that you receive must be declared as part of your taxable income but you can offset any expenses you have paid such as rates, insurance etc. and the interest only part of any loan repayments. The tax office don’t look at which property is mortgaged as security with the bank rather what the borrowed funds were used for.
What often happens is that people live in their PPOR (home) for many years and pay the mortage off. Then they decide to build their dream home, only problem is they have no cash, so they decide to rent out this PPOR and borrow to build the dream home. In this case because the funds will be used to build the dream home, which is personal, all interest would NOT be tax deductible. It doesn’t matter what property you use as security but where the funds are used. And yes the rent less expenses on the old house will need to be disclosed as taxable income.
I hope this example explains what you’re asking.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Ezn,
Well it certainly sounds like your biting off quite a lot. Here’s an extract of an article about subdividing of our website that may help.
What is Subdividing?
Subdividing is when a piece of land is split into two or more pieces (ie separate lots). The process is controlled by the local Council. Planning codes and procedures vary significantly between Councils and also between States and Territories, as do the relevant fees and charges.Factors to examine when considering a Subdivision
• Local town planning regulationsLand zoning restrictions
Minimum size of lots
Access to water and sewerage services
Setback requirements
Minimum building envelopes
Parks and open space
Easements
Vehicle access including Council refuse collection
Storm water management
Increased noise from new development
Environmental and heritage issuesHidden Costs
A subdivision can take several months (and sometimes even years) to complete so you must factor in your holding costs such as:
• Interest
• Rates
• Land maintenance – (eg slashing and weed control)Many astute Developers make the purchase contract for the land subject to the acceptance of a Development application approval with Council. This is usually done with an option agreement (see your Solicitor for more information)
Dividing the Land
Before you rush out and build a new dividing fence in your backyard, you should first consult your local Council for specific guidelines and costings, as it is imperative that the property is divided correctly. Any errors at this stage will cause major problems further down the track.The Process
Most Councils require a Development/Planning Application to be lodged, together with details and drawings of your proposal. A Town Planner or Surveyor can assist you with this process, and they may also be able to give advice regarding conditions that the Council is likely to require.Before lodgement of the Application, you can ask the Council for a “Pre lodgement†meeting to discuss your subdivision and determine what issues will need to be addressed in the Application.
When the Council receives your application, they may require you to erect a notice board for public viewing. The purpose of the board is to alert the public of the proposal by providing details of the subdivision. The Council may also write to the owners of the residents of the neighbouring properties advising of your intentions. We suggest that you contact the Council to find out what procedures your local Council uses.
Additional information the Council may require
Water and Sewerage
• Are existing services available?
• Can the existing infrastructure cope with increased use or need upgrading?
• Is permission required from neighbours to access property?Storm Water
• How will storm water run off be managed?
• Is a drainage pit required?
• Are tanks required to regulate the flow of storm water?Noise
• Will existing main road traffic noise affect the subdivision?
• If so, how will this be reduced? (Fences and/or earthworks)Soil Conditions
• Do the soil conditions (eg.sand, clay) impact on road and footpath design?Other issues
Footpath
Lighting
SignageIssues for the Developer to consider
For the Developer there are also other issues to consider such as:“Wasted†land due to unusual configurations
Steep slopes
Flood-prone land
Other planning overlays (ie restrictions)
Other factors that may reduce the number of lots and so profitability.Approval of the Development Application
The approval process for your Application may take several months depending on the complexity and size of the subdivision.You will then be issued with a conditional approval covering topics such as:
Developer to supply a plan of survey and mark land with survey pegs
Road reserve
Easements over stormwater, water and sewage mains
Requirement that storm water pipes be designed to cope with a “1 in 100 year†event.
Dust control
Hours of permitted work (usually Mon – Sat 6:30am to 6:30pm)
Headwork contributions to be paid by Developer
Open space (parks)
Social infrastructure
Road infrastructure
Water infrastructure
Sewerage infrastructure
Street scape contribution
Disposal of cleared vegetation
Entry walls or features
Connection fees to live sewer mains
Road (width, pavement depth, footpaths, kerb and channel, ramp profiles)
Street lighting
Fire Extinguisher (Battle axe blocks)
Underground electricity and phone
Erosion and silt management
Maintenance period of roads
Retaining walls
Fire ant inspections
Portable long service leave for Building and Construction Industry
If you are not satisfied with the Council’s decision, you may apply for a review.Operational Works
Before work can begin, you will need to engage the services of a Civil Engineer to design and draw the sewer, water, road, footpaths and any other Council requirements.This is a separate application usually referred to as “Operational Works†and attracts additional fees and charges.
Final Stage
All civil work will require Council and Engineering certification. When the subdivision has been completed to the satisfaction of the Council, you can then apply to register each separate title deed.Conclusion
Land subdivision is a $mart way to fast track profits into your investment portfolio. However, as with all investment decisions, thorough research is necessary in order to balance the level of risk associated and ensure that the process runs as smoothly and quickly as possible, and that the best, most profitable outcome is achieved.AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Chetnik,
Here’s an extract of an article off our website about Self Managed Super Funds:
A self managed superannuation fund (SMSF) is a superannuation fund that you operate and run by yourself.
Managing an SMSF is strictly regulated by the tax office to ensure it complies with the Superannuation Industry (Supervision) Act 1993 (SIS). An SMSF performs the same role as other funds by investing contributions for the sole benefit of members upon retirement.
Usually consisting of 1-4 members, an SMSF is also required to have trustees that are also fund members. A SMSF is required to keep separate records, lodge a tax return and have the financial accounts audited by an approved auditor.Rules on running a SMSF
An SMSF must follow an investment strategy through compliance filters:Cannot borrow funds and cannot lend to members or relatives
Cannot invest in an asset that is subject to a security and cannot operate a business
Investments must be at arm’s length
The investment must be carried out for the sole purpose of providing for the members’ retirement benefit
Investments purchased from a related party (“in-house assets”) must not exceed 5% of total fund assets.Advantages of an SMSF are that you control investment decisions and diversity, and a 15% flat tax rate applies. Where assets are held for over 12 months, a 331/3 CGT discount applies. Also, members’ life insurance premiums are tax deductible and there is a tax exemption status in pension mode. The main disadvantages are that the SMSF must comply with the SIS Act, and so maintaining the SMSF can be time consuming.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Michelle,
Try contacting Nancy Keep [email protected]
She’s an Accountant in Melbourne who also has several of her own investment properties. Not sure though if she has any experience in NZ but certainly worth dropping her an email. (Ps. Tell her I referred you)AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Yes a trip to the Accountant is a great idea but firstly you may need a plan so you get the best possible advice:
Step 1 Set your personal and financial goals
Step 2 Prepare a budget and savings plan
Step 3 Have an investment strategy
Step 4 Build your team including visit the Accountant
Step 5 Research
Step 6 Feasibility study
Step 7 Negotiate the deal and repeat!AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
