Forum Replies Created
Well done Larsont on your first IP.
I’m a little confused though, how can you sell the front house if the subdivision isn’t finalised? Your estimate of 4-5 months for a subdivision is perhaps a little tight. Maybe it would be best to rent the front house as is, with a quick tidy, and use the income to pay the loan while you process the subdivision and development. I think you’ll be surprised just how long each step will take, and 12 months will just zoom by.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Devo,
Here’s the tax office download that may help you further.
http://www.ato.gov.au/content/downloads/NAT1729-06.pdfAmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
The following is an extract of our “Record Keeping” document off our website:
We suggest you keep the following records for each investment property:
• Permanent File
• Annual Financial year file
Need more help? Go to our Frequently asked questions
Permanent File
We recommend a Lever Arch file separated into the following sections:Legal – Copy Contract, Settlement Statement, property searches etc
Finance – Mortgage and other financial documents
Feasibility Study – Research data including photographs and advertising material.
Capital Gains – Records of any capital improvements made.
Rental – Contract for appointment of Property Manager, copy Lease, Condition Report and Bond details
Sundry – Any other relevant detailsAnnual Financial Year File
To prepare your tax return, your Accountant will require extensive information. You can collate this yourself, or alternatively, take advantage of our $imple, free downloadable Excel spreadsheet to assist you step-by-step.
We recommend you keep all the documents that your accountant will need in a manilla folder, split into the following sections:Front Cover – Owners, property, dates.
Inside front cover – Date first rented, number of weeks rented and available.
Gross Rent – Agents statements with a Summary stapled to the front.
Bank – Monthly bank statements.
Loan – Monthly loan statements with a Summary stapled to the front.
Diary notes – Details of stationery, telephone calls, faxes and postage
Motor Vehicle – Number of km travelled to inspect and manage the property (maximum of 5000 km)
Other – If you sell the property, include all relevant documentation, including legal documents.
Expenses – Summarise all expenses for the financial year in a Spreadsheet in date order.
Hand the completed documents to your Accountant to finalise your tax return
TopFrequently asked Questions
Q: Do I need a separate bank account?
A: Yes, you will require a separate bank account for property investment purposes. Take care not to mix your personal expenditure with that relating to your property investments, as this can cause many problems and may ultimately affect the amount you are able to claim for your property investments.Q: Where do I keep my receipts?
A: If you have one or two properties then a “zip lock†bag for receipts may be adequate. However if you have undertaken a renovation or have multiple properties then a filing cabinet or an expanding pocket file may be required. Those with large property portfolios may also need specialist accounting software to manage their affairs – see your AccountantQ: What expenses can I claim?
A: Including, but not limited to:Advertising
Body Corporate fees
Cleaning
Council Rates
Gardening
Insurance
Interest
Land tax
Legal fees relating to tenants
Pest Control
Property Management fees
Motor vehicle per km
Repairs and maintenance
Stationery, phone and postage
Travel and accommodation
Decline in value (Your Accountant will calculate this)You can also download a free Excel spreadsheet to help keep track of receipts, expenses & loans.
http://www.propertydivas.com.au/3TaxMang/TaxMan.aspxAmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Yes Richard is based in Brissy but as Krautcan said with email/phone/fax this shouldn’t be an issue.
http://www.propertydivas.com.au/7ProfServ/Professionals.aspx?cmaid=3b9d5965-4e9a-4d69-9254-a9dde01786e5&cmstat=ProfallAlternatively Alex & Cameron Perry (forum members) also have an office in Sydney, here’s how to contact them:
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
I’m seeing a lovely sea of concrete/paving with a lovely tree for all the birds in the middle of it.Cheers,
Marc.How could you & I suppose you could always paint it green!! Perhaps you’ve been in LA too long.
How about using our lovely Australian native plants to create a low maintenance garden which looks lovely, attract birds & takes very little water…..and no smelly manure!
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Problem 1: How do I know which of the 1000s of Financial Planners in this city will be any good?Look for someone that has experience in property and is also a financail planner such as Richard Taylor, known on this forum as “Qlds007”
As for “Problem 2 & 3” a lot of your concerns come down to needing a solid plan.
There is no Get-Rich-Pill you can take, but you will need a strong desire to succeed. To be successful in property you really do need a good system in place, so my advice would be to follow our 7 step process.
Step 1 Set your financial goals
Step 2 Prepare a budget
Step 3 Set an investment strategy
Step 4 Build your team
Step 5 Start researching
Step 6 Prepare a Feasibility study
Step 7 Negotiate the deal and repeat!As children we’re often raised to fear failure and as a result we never try anything new. You are going to make mistakes it’s inevitable. Take the opportunity to learn from them.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Thank you to Tom from Ipswich for submitting his story “Sharon – We’ve just purchased our first IP”
Keep them coming…..
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Here’s a link to a document that explains the concept further:
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Marc,
Just curious is your Accountant in Aus or LA?
Having worked in the tax accounting world for some 15 years (and I don’t miss it for a moment!) I know how much pressure staff are under to meet the lodgement deadlines. We would always try to aim for a 10 – 12 week turnaround for our small business clients.
The tax office require the higher payers on level 4, 5 & 6 to be lodged usually before Xmas so Accountants are under pressure to meet these targets. The lower levels 3, 2 ,1 and refunds aren’t due in until April/May.I would certainly speak with your Accountant of your concerns but perhaps ask when they would prefer you to submit your work, as 5 months is really not acceptable in my view.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Wayne,
From the reseach we conducted there was no report that the smoke alarms needed to be checked annually by someone qualified. Certainly a hard wired smoke alarm must be installed by a licenced electrician. Some States did however mention Smoke alarms being replaced before expiration of the service life.
You can test if the smoke alarm is working be depressing the button on the outside or follow the manufacturers directions. To check the battery backup for hard wired units you’ll need to turn off the power first.For clarification of the law in your State or Territory, contact your local Fire Authority, local/state Council or relevant landlord/tenant bureau/information centre.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Ana,
Well we haven’t built it yet but we’ve ordered a kit home from Harkaway Homes. They specialise in Classic Victorian & Early Federation Reproductions. We flew to Sydney and inspected the display homes and they are lovely with every detail down to the roof pitch.
http://www.harkawayhomes.com.au/index1.htm
You can also get a glossy magazine from the Newsagent for around $10 that has details of most kit homes.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Roger,
Well if there was a way to guarantee 100% success we’d all be pretty happy, but lets face it trying to pick the next “boom” area is not that easy.
First you need to understand at what stage the property cycle is at. By the time a “boom†hits the media, its often too late, the smart property investors have already scooped up most of the bargains. Beware that interest rates alone don’t explain trends in the property market.
So many factors impact a property market its hard to give you a precise formulae however the following factors should be watched closely to give you a better chance of buying in the right place at the right time:
•Established area where a Developer is coming in and buying property.
•Re-development plans for a neglected district that will revitalise the retail district. (Urban Renewal Task Force OR Suburban Centre Improvement Projects)
•Population & Migration growth- more people there’s a greater demand for houses to live. (www.abs.gov.au)
•Major employers or industry moving to an area (i.e. Resources boom in WA). Jobs attract people.
•Infrastructure – Improvements to infrastructure, such as new/upgrading roads and railway lines can change the value of a suburb. This is usually associated with an initial boost when constructions commences and then again on completion.
•Social Changes – Lower birth rate and the ageing baby boomers retiring for a “sea changeâ€Watch out for the ripple effect when a suburb has experienced a very strong surge often the neighbouring suburb will become undervalued in comparison.
Sometimes you can predict the future by observing history. Pinpoint a recent boom area, study its characteristics and then search for areas with similar qualities that haven’t boomed yet.
For research data and report’s :
http://www.propertydivas.com.au/5Tools/DivaLinks.aspxAmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Yes it is a great prize and we received our first entry today!!
Yes we can certainly post the winning entry here and Steve will make the final judging decision.
If you’re not good at writing a story, that’s fine too, as the best “before” and “after” photo’s are also eligible to win.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Without any set goals or clear investment strategy it will be difficult for you to move forward. Once you have set, clear-cut goals, they become embedded in your sub-conscience and you will automatically be guided towards your goals through your future thoughts and actions.
Decisions followed up by action to get to your goals can result in great personal happiness, wealth and achievements. Be committed and passionate, but keep an open mind and embrace change as your life continues.
Here’s a link to our “Big Picture Goal Setter” to get you started:http://www.propertydivas.com.au/Downloads/big_picture_goal_setter.pdf
I think you need to sit down and work out what you want to achieve first, because as Richard has stated, this will impact on what tax structure you use.
Best wishes,
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Yep totally agree, capital improvement but you may be able to claim it under Division 43 (ie. 2.5%).
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
We have an article on our website about tax structures but I really don’t think you should be making such a significant decision without seeking professional advice from an Accountant.
It really depends on what assets you hold, family & personal situation etc. A few hundred dollars spent now may save you thousands down the track. Anyway this will get you started:http://www.propertydivas.com.au/3TaxMang/TaxStruct.aspxAmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi cruzinbud,
We started the subdivision we are currently working on in Oct 2004 so its been a long haul. You can read a bit more in our monthly newsletter :
http://www.propertydivas.com.au/5Tools/NewsStand.aspxEach stage takes time. Sound reports, Engineer reports to test if the current sewer/water lines could cope with the extra usage, surveyors doing plans on land contour, designing the road, and the list continues…… Just waiting and chasing up for quotes from Civil Contractors took 5 months and then we needed to wait for our turn for work to commence, then it rained…….The latest delay was during final inspection last Friday the Engineer, Plumber, Contractors & us all turned up to the scheduled meeting, but Council were a no show, so its back in the cue we go. Very frustrating, but we don’t want to make too much fuss or they may not give final approval!!! As the land is vacant we receive no income, so my advice would be to seek a house on a large block, rent it out, and chop off some land, so you don’t have the constant cash drain.
Re Ipswich Road. There was talk last week about upgrading the Ipswich Hwy but its all gone quiet but something needs to be decided soon, either upgrade or a new bypass. They have announced this week that the preferred new transport corrider linking Ipswich via Springfield will now go through Yamanto and not Fliners View as origanally suggested.
Cheers,
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
CGT is calculated from the date of the contract of sale, regardless of settlement, so as long as this is after 1 July, 2007 then it will fall into the 2008 tax year. In fact register with a tax agent before 31/10/2008 and you probably won’t need to lodge and pay your tax bill until April/May 2009.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Gina,
As LA Aussie and LW mention you should pay your local Council a visit as they will usually pull up the property details onscreen, and they can instantly confirm any restictions such as flooding, undermining, sewer/water mains etc. For a small fee they may even give you a printout to take home.
Often the Council won’t allow the block to be deveoped or subdivided if its under a 1 in 100 level.AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Hi Karl & Rita,
We live in the Ipswich area and have done a couple of subdivisions. Probably the biggest cost with subdividing is time. Here’s an extract of a document off our website that will get you started:
<b>What is Subdividing?</b>
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 issues<b>Hidden Costs</b>
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)
Top<b>Dividing the Land</b>
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.<b>The Process</b>
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?
Top
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.<b>Approval of the Development Application (DA)</b>
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.<b>Operational Works</b>
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.
<b>Final Stage</b>
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.<b>Conclusion</b>
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.As you can see from the above there are a lot of issues to be considered so I can’t give you a $$$ estimate as it depends on what’s involved. If you need a referral for a Civil Contractor and Engineer then drop me a PM.
Best wishes,
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
