West Pennant Hills (Sydney)

Originally posted by malik_nikunj:
Thanks for all the help guys,

one more question:
If i take out a personal loan to pay Stamp Duty then would that be tax deductible as well (i mean interest paid on it).

yes.

Originally posted by Brisbane 04:
If you purchase a property for $360000 and borrow

ummmmm Martin. Hate to be picky but Serf said $260k (or do you think that was a typo?)

I wouldn’t have a clue about Rocky prices to spot whether there was a typo by Serf or not although $260k and renting for $390 doesn’t sound right either.

Bird dog … an Americanism

The selling REA is no more than a bird dog for the seller – they just happen to be licensed to act as a sales agent. (In some places you also need to be registered to act as a bird dog – check with the appropriate authorities)

The REA gets paid a fee to sell the property. That commission (fee) is secured by written…[Read more]

Whether the HDT uses it for income generating purposes or not is (almost) irrelevant

That, I think, is the prime question here (and with the Div7a issue). How little income back to the unit holder (relative to the amount of CG going elsewhere discretionally) might make the ATO question …..

Irrelevant GP, forget all about the capital gains of…[Read more]

Hi Shelley,

Coast’s advice is good, and as Terry said, don’t forget to factor in the stamp duty on your loan contract.

Another minor charge could be the lender’s loan application fees which are usually non-refundable even if you don’t (need to) proceed with the loan ‘cos the simultaneous settlement you plan on did in fact happen.

And what about…[Read more]

Hi Mark

I’ve never heard of Intertax so I can’t report any good/bad news of them.

At 40% I’d probably have my fingers crossed for a failure ! <g>

Just remember that a guarantee is only as good as the mob giving it.

That being the case I’d want to see their financial statements for the past 3 years together with their tax returns (so that I…[Read more]

I didn’t feel you were “attacking” per se, although I could have sworn there was a podium watermark on your post!!!

Sorry, sometimes I appear to be on the soapbox but it’s just my chatty style of writing. It’s as though you were sitting across the table and my verbage is intended for professional clarity, not lecturing.

Besides I’m way too…[Read more]

Originally posted by GreatPig:

One thing I’d be interested in your view on, since you have a tax practice, is something Julia brought up on Somersoft.

Then perhaps we should ask Julia to respond? I’m not familiar with her writings and the circumstances behind her comments. However, with that said, let me take your questions as they now stand…[Read more]

Hey Jo, I’m not in attack mode …. ‘onest injun [biggrin] (Ferangii are gentle creatures now!!!)

I’ve worked in my own tax practice for almost as long as you have been investing. Not to mention the obligatory few years working in another practice before I cut loose and set sail on my own.

It’s been fun but doing and overseeing approx 600…[Read more]

Hi Nick,

The interest on all the loans you outlined would be tax deductible against the income generated by the property.

The taxman applies what he calls the ‘purpose test’. If the purpose of the borrowing is to generate taxable income then the interest associated with that borrowing IS tax deductible.

You’d need to be careful apportioning the…[Read more]

Originally posted by Monopoly:

All in all, ANY loss (property or shares) is best offset against your income.

Ahhhhh, but to achieve that you’d have to demonstrate that you are IN THE BUSINESS, and hence the ‘loss’ is a trading loss.

This can be a two-edged sword. Once you are (successfully)accepted as being in business, you can’t then argue…[Read more]

Hi Jo & GreatPig,

Jo, sorry to have confused you. As GreatPig correctly picked up my ball and ran with it … all I was saying is that ‘income tax rules’ as opposed to ‘CGT’ rules would apply in Gumshoe’s case.

Assuming there is a gain made, that gain will always be taxed unless it meets the (only) current EXEMPTION rule – that rule being the…[Read more]

Hi Adam,

What you propose is not ILLEGAL (as Terry said) however as CRJ correctly points out the interest you then pay is not deductible because you don’t meet the ‘purpose test’.

Selling the property to your Trust will trigger Stamp Duty but provided it was your PPOR then it will not trigger CGT.

The trust however would have as its Cost Base…[Read more]

Hi CRJ (& Gumshoe)

Thank you for the summary on the issue.

One issue that was not mentioned, and one that Gumshoe needs to be careful of, is that of the investor’s intent when the asset (in this case property) was purchased.

In Gumshoe’s case the stated intent is to settle on the land, build a dwelling and then sell it for gain.

This places it…[Read more]

Originally posted by Lucifer_au:
If you are buying +CF properties a trust. (15% discount on CGT, plus adds extra layer of protection from lawsuits)
If you are buying neg geared prop. a hybrid trust.(see above + can still offset tax losses to other personal income).

If you will be buying allot of CF+ or neg. geared properties use a corporate…[Read more]

Hi Julia,

I agree with your sentiments.

I’ve been a CPA long enuff to have experienced 2 or 3 attempts to merge the two bodies – each attempt being thwarted by the CA’s desire to protect the sanctity of their precious Royal Charter.

And yes, we are the larger of the two accounting bodies and that brings with it the advantages you…[Read more]

Hi Rick,

Thanks for the detailed account – very informative.

I wasn’t having a shot at you btw. I was simply trying to help Sansue evaluate what s/he would want as a return on their money if they were the silent investor instead of the active partner in the deal.

Based on your information such an investor would need in the vicinity of 19% per…[Read more]

I belong to a property investment ‘club’ which says that all SMSFs are not equal, and charges members $1750 to set one up that is supposed to be able to do everything. Do you think that’s ridiculously expensive, or is it within the ballpark?

Hi Cruiser,

Interestingly the most flexible funds ARE equal. You need to be very careful of being too…[Read more]

Originally posted by garrymartin18120590:
Derek
You seem to know a lot of accountants, and recommendation for the Newcastle area.
Thanks Garry

Garry, wouldn’t you like a tax deductible trip to Sydney every so often ?

Perhaps your new accountant can only see you on Friday afternoons [biggrin]

or perhaps first thing on a Monday morning that…[Read more]