Forum Replies Created
I would go for central mandurah… it still looks cheap compared to the new surrounding suburbs. the extra dwellings that are forecast to be built around them will make them even more scarce over the long term. buy something with rezoning potential and you may get a pleasant bonus.
http://www.megainvestments.com.auJohn Carroll
“I would also include an expiry date for the offer if submitting it on the contract.”
I hear this often but it really isn’t necessary. You can quite legally (in WA) verbally withdraw any written offer up until the point that acceptance has been communicated to you. The only benefit I can see is that the Seller may get a psychological kick up the backside when they see it written down.
http://www.megainvestments.com.auJohn Carroll
a fax would be acceptable. it is correct that if it is not on paper it is not an offer.
http://www.megainvestments.com.auJohn Carroll
and for a completely opposing opinion
https://www.propertyinvesting.com/forum/topic/17913.html
http://www.megainvestments.com.auJohn Carroll
there is an important concept being missed here – return on capital. it’s like saying the same about cash deposited at the bank… it will be worth the same in 10 years but it hasn’t gone down in real value as you have had the return on capital to account for. There are a heap of other factors to consider of course – risk, gearing, tax etc
http://www.megainvestments.com.auJohn Carroll
Of course if the asset returns 5.3% in rent during that period, the asset has neither appreciated nor depreciated in that time. so growth of only 1% on a median priced home at say $280,000 is real growth of $2,800 in that case.
http://www.megainvestments.com.auJohn Carroll
oh here we are:
not quite a shift of the whole operation, but the nickel division is still good!
http://www.megainvestments.com.auJohn Carroll
hey dmichie we have our disagreements at times but I must say good on you for your export efforts. I have ambitions to export one day and effectively give back to this great country. I just disagree that thumping the property industry is the way to achieve higher exports.
http://www.megainvestments.com.auJohn Carroll
“But it’s hard to see much of an improvement in net exports – and thus a return to faster growth – until (for whatever reason, domestic or external) the dollar falls and makes us more competitive.”
Oh dear – another subscriber to the old theory that if you can’t produce goods that people want, just deflate the price until someone will eventually buy the rubbish on price alone.
http://www.megainvestments.com.auJohn Carroll
9-5 grind? lucky her! most agents are more the 6 to 11, 7 days a week grind.
http://www.megainvestments.com.auJohn Carroll
I don’t see this paradigm shift…. the ratio of ownership to renting i.e. about 50% of the cost has been static for decades. The arguments have been debated long and hard and in summary it has come down to (a) emotion, and (b) depends what the future holds for capital growth, which no one can be certain about. At the end of the day, if you can deal with rent inspections and being shuffled from home to home, it is possible that renting is financially a better option if you are diligent and can invest in other properties of equal value
http://www.megainvestments.com.auJohn Carroll
you must be joking F – even you must accept that the huge subsidisation of property by the taxation system is contributing to lower rents
http://www.megainvestments.com.auJohn Carroll
Dmichie we have reached concensus before on how to fix this – taxation reform. but it aint gonna happen.so as I said before, you may very well get your weak dollar and I hope you benefit from it.
as for the pile of debt – don’t worry about. we are all big boys and girls and can look after ourselves.
http://www.megainvestments.com.auJohn Carroll
Originally posted by foundation:Nope, they were looking at it, but it’s right off the burner now!
Link Here
God do we ever live in the lucky country!? Here we are with a government who hand out more in tax deductions on investment properties every year than they take in tax on rental income!
Amazing.
This is the best. What a great idea!Cheers, F.[cowboy2]
only because they collect even more back in capital gains and a myriad of other taxes. Even the government believes negative gearing is a wealth creation stratgey!
http://www.megainvestments.com.auJohn Carroll
Originally posted by dmichie:but I do like the taxable aspects of investing, and would probably still chuck the bucks into IP’s instead of a ppor.It almost makes you think there’s something wrong with a tax system that encourages property investment but not home ownership.
As John Garnaut put it today:
Most economists agree that the current account deficit has been inflated by the housing bubble, which, in turn, has been partly fuelled by taxes and other policies that divert investment away from productive enterprises and into real estate.http://www.smh.com.au/news/National/The-ball-is-in-Costellos-court/2005/05/31/1117305622815.html
But don’t worry, be happy, lets all be positive, there’s absolutely nothing to worry about [biggrin]
you should be happy dmichie – if the CAD blows out you will get your much anticipated destruction of the AUD. then painful recession, chuck in one or two labor govts before people realise it was a mistake, wait for the next lifeline (a food crisis somewhere to boost farmers incomes, or an accute shortage of uranium or something) that we can blow on new technology consumer goods and the cycle can start again.
http://www.megainvestments.com.auJohn Carroll
“Check out south of Perth for example. In Mandurah I can rent a huge place next to the ocean fro $300/week but to buy it I’d be forking out up to twice that. That can’t be sustained for long. people will stop buying and rent and price will move together again.”
as far back as I can remember the cost of renting has been about half that of repayments and yt I don’t see herds racing to become renters? why? PPOR CGT exemption is the biggest factor. one of the last bastions of making a tax free dollar.
http://www.megainvestments.com.auJohn Carroll
F – can you check that link please?
tipped to end? must have blinked and missed it. Once again they have interchanged Sydney and the entirety of Australia as one market.
http://www.megainvestments.com.auJohn Carroll
yes you will have to pay it back. Just to comment on a few points of Truth 2:
Truth #2: The dangers of depreciation
Buying a property based on depreciation benefits is dangerous and deceptive.
A little emotive….
Depreciation is an accounting term used to describe the wear and tear of an asset that occurs over time. In practical terms, depreciation on a property refers to the carpet wearing down, the walls becoming chipped or stained and the furniture dating.
In most new properties you are allowed to claim a tax deduction for the depreciation of the fixtures and fittings and in certain circumstances you may also claim a building write-off of either 2.5 per cent or 4 per cent of the property (not land) value too.
Slick marketing companies sell the notion of the taxman paying off your property using depreciation and building write-off deductions, but this sales pitch is quite deceptive because you don’t avoid paying tax with depreciation, you just defer it.
but cashflow is what CF+ investing is all about, so I am not sure why you wouldn’t consider the taxman helping to fund your cashflow to be an excellent benefit. And there is the possibility that you will never sell and thus never pay it. You may even demolish the whole building at some point, write off the remaining balance and selling a vacant block of land.
Commonsense suggests that depreciating an appreciating asset like property will give you a tax deduction today, but you’ll have to repay it in the form of capital gains tax at a later date when you sell.
CF+ investing suggests that cap growth is just a possibility that may never happen and hence you should chase cashflow. so if the cap growth never occurs, you will never have a liability (other than the claimned depreciation which is the same regardless of the cash flow of the property). personally I would claim depreciation even on CF+ property
‘Bracket-creep’ issues can catch out many taxpayers too. If you earn $50,000 when you buy the property you will only be able to claim a deduction for depreciation at 43.5 cents in the dollar, but if your income rises to $60,000 when you sell then you’ll need to repay the depreciation at 48.5 cents in the dollar.
ye sbut you are talking about a future dollar not a present dollar. besides which, tax brackets do get adjusted as we have seen recently.
If you don’t ever plan to sell the property then at a minimum you should recognise that your depreciation tax deduction represents the wear and tear on your asset that will need to be eventually refurbished in order to continue attracting quality tenants.
applies to any property. if the item is replaced you simply start claiming again.
Finally, beware any financial model that allows for depreciation benefits but does not include a maintenance budget. You cannot have depreciation without an expectation of repair costs – even new properties still need tap washers replaced.
once again, applies to any property.
Whether you claim a deduction for depreciation is up to you at the end of the day. For the same reason that I would recommend people take a weekly variation in their weekly tax deductions I would also recommend claiming the depreciation. Cliche one: cashflow is king…. regardless of CF- or CF+, cashflow reduces the burdon. Cliche two: a bird in the hand is worth two in the bush
http://www.megainvestments.com.auJohn Carroll
sorry Redwing I don’t really know. Our homes are at the median level and wouldn’t even cost $180k to build! It wouldn’t surprise me if at the top end of the market they were doing that, but to owner build presents it’s own problems. Firstly you don’t have a fixed price building contract, so you will need the $500k or so in cash as I couldn’t find a lender to advance funds without it. And as you don’t have a fixed price contract you are personally exposed to the ever increasing cost increases which could add up to more than 20% by the time you have spent a couple of years building the mansion. Secondly you can’t sell the property for x years as an owner builder.
Having said that, I am looking at using a cost plus contract on my next PPOR as I am happy to take a bit of a punt and the guy I have in mind is the most fastidious builder I ave ever met (and has a brain!)
http://www.megainvestments.com.auJohn Carroll
