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Hi Rob, there was an excellent discussion on the use of options at:
https://www.propertyinvesting.com/forum/topic/12042.html
getting council approval is like the old length of a piece of string – could be 6 weeks, could be a few decades, it all depends on what you are trying to get through.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
That all makes sense JWT, except for one important thing: the value of the land is irrelevant… the margin scheme is only concerned with what you paid for the land (unless you bought the land before 1 July 2000). Here is the extract from the ATO website:
What is the margin scheme?
The margin scheme is an alternative method of calculating the GST you pay when real property is sold by a registered business. It allows the seller to choose to pay GST equal to one eleventh of the margin for the sale of real property, rather than one eleventh of the total selling price.
Methods of calculating
For real property purchased on or after 1 July 2000, the margin is the difference between the selling price and the price paid to buy the property (consideration method).
For real property purchased before 1 July 2000, the margin is calculated using one of two methods:
the difference between the selling price and the price paid to buy the real property (consideration method), or
the difference between the selling price and a valuation of the property at the relevant valuation date, usually 1 July 2000 (valuation method).
Methods of valuing real property bought before 1 July 2000There are five valuation methods available. The method you use will depend on whether the premises was completed or partly completed on 1 July 2000. For more information on what is a completed or partly completed premises and the different valuation methods refer to GST ruling GSTR2000/21 by visiting http://www.ato.gov.au:
No valuation is required for real property purchased after 1 July 2000 as the margin is calculated as the difference between the selling price and the purchase price.
Who does it affect?
Sellers
If your business sold real property and chose the margin scheme, the GST you pay is one eleventh of the margin rather than one eleventh of the total selling price
PurchasersIf your business purchases real property under the margin scheme you will not be able to claim a GST credit
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
interesting read and I fully agree… a nice steady market does allow people the opportunity to get in there and create real value instead of having capital gains distorting (or even worse, eroding) everything. This is the ‘prefect’ market!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
has anyone else not received their newsletter or is it just me? I am wondering if this may be why there aren’t many posts.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
“and you get some very nice tax benefits”
this might be a case of the grass being greener…. the main difference is that because you are trading stock you no longer qualify for capital gains tax concessions – it is all income. Definitely see an accountant because trading purely within a company may be a bit restrictive.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
“But who in their right mind would use a financial planner”
the very term is misleading isn’t it? most people would assume planners would act in their best interests, not their own. this is impossible when their commissions come from the products they sell. It’s like buying a vaccuum cleaner and asking which one is best – the one that has the highest sales commission of course!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Freedom I think this is more of an accounting question re registration for GST purposes. have a read of http://www.ato.gov.au and see if you think you’ll hit the threshold for turnover. Either way you’ll need to declare it as income as well.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
some argue that most individuals do not have enough leverage to buy decent commercial properties and are hence better of buying units in a commercial property trust. If your only asset is one commercial property and it sits vacnat for 1 or 2 years it could send you under.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Hi Joe – with all these matters a good accountant familiar with property is invaluable to advise you. In this situation I would use a discretionary trust, which would allow me to channel income to the beneficiaries as desired.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
good on ya Chefman… fixing up a broken business and channelling profits into property is a very effective strategy to achieve passive income and retirement; although some may consider running a pub as a retirement dream!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I read an article from REBA which states that spotting is not illegal… it spelt out the differences between acting as an agent and spotting. Unless you lived in a highly CF+ area like Scotty B e.g. Karratha, I think you would struggle to spot deals and it would be atough way to make a $.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
When I was a school kid it was quite obvious that hydrogen power was the wonder fuel of the future. An oil shock will be dealt with by the market by forcing substitutions, so I agree that the increasing oil price is not necessarily a bad thing… somehting had to force the situation to change. Let’s just hope it doesn’t make less viable fossil fuel sources economically viable over hydrogen!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
“Its funny that I fortold this outcome many moons ago but people just laughed me off. Well get ready caus here it comes!
We are all made from Stars
Hehe, there were in fact a small group of us Sal. I remember well the satirical resposes to our posts.
Cheers”
…lets not start celebating the predictions just yet, it is yet to come true. And if you make enough negative predictions you are bound to get it right one day. Anyone that predicts the sky will fall down will eventually be proved right.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
this is interesting too:
“We have also been bullish on oil, even though we had expected the price of oil to pull back to a still high price of US$35 a barrel, and for that to be the new floor for the foreseeable future. Rather the price is still around US$50, with the fall yet to materialise. I believe it will, but the timing is difficult.
The risk in the year ahead is that the impact of the rising oil price will gradually seep through into various inflationary impacts, and this would be even further aggravated if the US dollar were to fall more significantly than it has already. Then, interest rates would rise even further to bring inflation under control. Should this scenario come to pass at a serious level –and I’d regard US$70 oil for an extended period as serious – then it would cause the next global recession. This is likely due in the later years of this decade or the very early next decade, whatever the cause.
In a possible US$70 oil madness, Woodside shares might hit $30, and BHP, $20. As interest rates were rising, our broader equity markets would fall, offering far higher dividend yields for counter cyclical investors such as IRIS subscribers. For 90% of recessions are brought on by high “
I predict that interest rates will remain unchanged, but could quite possibly rise. If not, a decline is likely.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I would argue the surging oil price is a natural brake on the economy, hence indicating lower interest rates are on the way in order to prop up the economy. With a floating exchange rate the trade imbalance can be funded by a devaluation of the $. Then you have to consider the impact of the falling share market – will this creeate another stampede for property? And how does our overheating economy fit into the deteriorating global situation? The skills shortage is sure to drive up inflation to which the RBA must respond, but if rates are falling in the rest of the world and we are hiking ours up, the appreciating currency will have farmers and miners screaming. The bond market isn’t indicating interest rates are on the rise. Too many variables – and no one economist seems able to accurately forecast this stuff, what does one do?? arghhhhh!!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
paying tax is a horrible reality, but it’s better than carrying forward losses!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
the trouble is the people achieving the DA’s often have little understanding of the expense and effort it takes to develop a site and want to take a slice of the developers profit up front. good luck to those that can get away with it, but it means a good proportion of sites advertised as ‘development sites’ are not economic to develop at those prices
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
ps – if you are liable to pay GST and you haven’t registered you will be committing an offence. make sure you understand the thresholds that require you to register
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
yes unfortunately developers don’t get a special exemption from GST and you can’t deduct it – it’s a tax just like income tax etc. If you apply the margin scheme you won’t pay GST on the amount that you paid for the land. The net result of this is that you basically pay 1/11th of your profit in GST. The other 10/11th’s is assessed as normal assessable income (be it in a compnay, trust whatever. note that developers cannot take advantage of the CGT 50% concession).
the ATO website provides fully worked examples.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
what we really need is a separate forum for NZ investing – the topics all seem to end up being posted under ‘general’.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
