Forum Replies Created
Hi Wayne,
Child support is calculated using your yearly taxable income. So if the property is positively geared you will pay more, if it’s negatively geared you will pay less.
Hi Mandy,
My partner and I were looking at the Chinchilla area about 14 months ago, and to be honest we assessed that we had already missed the boat on that area (would be even more so now). Prices had already risen sharply and there were a lot of housing developments going up.
The problem is that the demand for property has been strong due to the construction phase of many projects (Kogan power station, LNG pipline, CSG exploration). However very soon all of these projects will be in the operational phase, and some already are. And unlike coal mining, LNG and CSG operations require a much smaller operational workforce. So basically when the construction workforce leave town, there will be a lot of vacant properties that will be competing with each other for tenants, which should see prices drop.
It's always important to do your research, and not just take the advice of the spruikers.
Terry has pretty much answered it for you. With no other PPOR each time you moved out and had it tenanted there would be a 6 year CGT exemption. When you moved back in within 6 years it would reset this time. As each time you moved back in well inside 6 years of absence then you wont have any problems being CGT exempt up to the time you moved into your new PPOR.
Jemima,
You seem to have a pretty good understanding there. When you move into Property 3 just be sure to have a valuation done on both it and property 1. Apart from that I don't know much about LOC so can't help with that sorry.
I hate it even more when you search for a house and units show up.
Seeing as no one has replied yet I thought I would try my best too respond. Although hopefully someone who knows more than I can answer you better.
Option 1: I think if they are classified as a boarder (paying their share of costs i.e. water, electricity, food) as opposed to a tenant (paying market rent) then CGT doesn't apply. (I may be corrected on this)
Option 2: Hopefully someone else can help with this one sorry. Although how do you prove intent of living in it?
Option 3: You will have to live in the property first for the 6 year CGT free period to apply. Although I don't believe there is a minimum time that you have to have it as your PPOR.
I wonder what the difference in cost between this and conventional methods would be.
If you're looking at 80% LVR's then you wont have to worry about LMI
Agree with Andrew, set your end goal and then plan on the best way of achieving it. You mention you want to generate large amounts of passive income, identify exactly how much you want to make per year. What asset base and ROI do you require to achieve this? (eg. asset value of $1.5m with a net return of 7% will generate $105K/year) Also setting timeframes of when you want to achieve certain goals is important. Come up with your short, medium and long term goals.
To be fair though, I don't think auctions have ever been popular for buyers in Qld.
10 years? That's a long development. So interest on a construction loan is deductible during construction if the intention is the rent the property? I was unaware of that. That's good to know
minds-eye wrote:I was thinking that I would rent the property out initially in order to claim approximately $5k worth of deductions during the construction phase.I'm not sure what 5K deductions your trying to claim during construction. It is my understanding that if the property in not available for rent, then you can't claim deductions.
With the CGT, if you have it as your PPOR initially, then move out with no other PPOR, then it can remain CGT free for a further 6 years. If you rent it out first, then move in, the CGT will be apportioned between time of ownership and the amount of time it was your PPOR.
Unsure of other states, but in Queensland, yes off the plan purchase will have stamp duty payable on the full contract price. However House and Land packages will have stamp duty payable on the land price only.
Isiah Thomas wrote:I was thinking when the fixed interest rate finished we would put the 120k into the offset account with the intention to pay the debt off. I have also read some advice that if you pay off your investment property and keep the loan open that when you want to buy your PPOR we can take the money from the offset account and put it on our own home so that most of our debt is back on our IP and is tax deductable, is this possible?Hi Isiah,
When you put money into your offset account you are not actually paying off the debt. The total debt still remains but you are offsetting the interest that you are paying. So if you were to put the 120K into your offset account, you would still have the loan debt of 254K but would only be paying interest on 134K (254K – 120K = 134K). I think this would be the better option, I would rather pay less interest, than pay more interest just to keep it negatively geared (being negatively geared means you are losing money).
And yes you are correct. If you then want to buy a PPOR, you can then take the 120K from your offset account and use it as a deposit for your PPOR. This will then reduce the loan amount you require for your PPOR (which is not tax deductible), and increase the interest payable on your investment property (which is tax deductible). Hope this helps.
Regards,
Cubez
Hi Jamie,
Thanks for the great article. It was definitely helpful for our situation, and I'm sure will be helpful for many others also.
Regards,
Cubez
10K? I would be looking into why this property is so cheap. You mention it CAN be rented out for $600 per month. Does this mean it currently doesn't have tenants? It's very possible it is located in a slum, making it near impossible to rent out.
If you have a PPOR mortgage or any other personal debt, you would want to have an interest only loan on your investment property so that you can pay down your non tax deductible debt first. Jamie M has written an article on the subject that you might want to read. I spent weeks trying to explain to my girlfriend why an IO loan would be better, only to have her stare at me with a blank look on her face. I emailed her Jamie's article and now she fully understands why you would want to set it up this way.
Haha, view things from a different perspective.
Hahaha
Yes it will be deductible. However once you use it to pay down your PPOR loan, accessing the whole $30K will depend on the LVR on your PPOR.
