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you'd sort of imagine that getting the electricity connected in your name might be the most convincing of those eh… i mean electoral rolls, drivers licences, mail redirected all sound like a waste of time if your planning to only reside there a short time, but who lives in a house without getting the power connected… :o)
Do the profits have to be distributed every year?
its not like they could accumulate for 3 years and then if you were expecting a year when u might have a much reduced income (take a year off etc) choose to distribute profits in that year???
or does it have to be distributed every year or automatically taxed at that 46% rate?
Mark
Hmm, this is probably something i need to look at more… a couple of things, how much does it cost to set up such trust? and can you transfer a house you are about to buy into a trust later or will that incurs fees and stamp duty etc, etc???
I just want to clarify as the couple of places i have read up on this, even on the ATO site to me wasn't quite clear. If you move in for 6 months and then move out for 6 years is that the only period that you can use the 6 year rule? Or could u move in for 6 months, rent out for 6 years, move in for 6 months and then rent out again for another 6 years and so effectively collect 12 years of rental, live in it for 1 year and claim CGT exemption for it all when u sold it???
Thats what that para 2 of the above seems to state Dan…
Hmm wouldn't u know, the Keystart criteria have just changed and made it harder… oh well, s**t happens…
I'm often reading these days about how electricity bills in all the states seem to be being hiked 60-70% and if the ETS legislation becomes law that will probably only go up, so how much is electricity going to cost in the future??? I know a lot of people are screaming about how they are going to struggle to pay their electricity bills as it is???
I am thinking of getting another car soon and maybe converting to gas, but no, an electric car isn't on my shopping list yet…
Hmmm, i was told i would need a deposit of $25,000 or so on a $300k property and so that was going to take me a longgggg time to build that up with renting and all so had gotten a bit discouraged…
But i live in Perth and found a house and land packager that uses Keystart (http://www.keystart.com.au/key/about-keystart.htm which is a Western Australian Government Program to assist people into houses) and they only require a 4% deposit of which only 2% has to be via a savings record, the rest can appear out of nowhere and don't have to be a first home buyer either… They give you some fee assistance and i might be able to package some of the fees into the loan… Anyway i should be able to do something hopefully with a deposit less than $15,000….
Now keystart seems to only be available for WA residents who will live in the propety bought (not sure how inventive you can be about this as an investor) but anyway just letting you know that not everything will require a 5% deposit plus all the rest in these tougher lending times as i had been turned away a couple of times and told to come back when i had more money… Not sure if Queensland has anything similar to allow you to get in quicker???
Mark
I imagine it would also depend on your income and so your applicable marginal tax rate… I don't know exactly the tax scales off by heart but they are easy enough for you to look up on the ATO website, but if you are in a 30 cents in the dollar marginal tax bracket then if you earn 5% of $30000 = $1500 – 30% tax = $1050… Obviously if you are in a higher marginal tax bracket of say around 40 cents in the dollar = $900 after tax that you would make from it… that's just for the basic interest for the total amount of the year, not sure if it was interest credited each quarter and so compounded a bit etc… no expert on these high interest accounts…. but it adds up to, on the 40% tax bracket (return of $900), an effective interest rate of 3%….
i imagine on the loan you should be saving the equivalent of 6% each year on each dollar that you are not paying the interest on tax free… and over the life of the loan i would have to think that would add up to more than the effective 3% high interest savings account…
but others might be able to give you a more definitive answer…
So does that mean the guy (mortgage innovator) in Perth who is good only writes loans for the CBA, while the advice on the post is to try to setup your portfolio with at least a range of lenders?
I am starting at the very beginning just buying my first place shortly hopefully, and once i have some equity will be looking for my next place, but sounds like its best to get started on the right track in the first place, so while this CBA lender may be one option, again does anyone know any other good alternative brokers in Perth?
Hmmm, ok i saw this house and land package place and going down to have a look at a block at Bertram and the package i can get in for about $320,000 on a 340 sqm block… have to decide whether i want a 3 or 4 bed place… anyone have any thoughts on best configurations for maximising value??? and only needing a $12000 deposit and so will owe little ore than $300k by the time i take out the loan….
suburb is a little further away down the freeway south than had ideally been planning for…. but guess i got to get in the market sometime…. will go have a look at it today and think about it over the weeked….
Jenny, I can't find that WAIP page on facebook, can you provide a link to it?
And spewing i missed that last perth meeting with the lady who does the renovations!!! Definitely would like to attend the next meeting…
Mark
Yes well I would love a $500k place, but on my own its just not feasible at the moment…. I think I am going to have to do it a bit like in the old days where your first house wasn't the one you were going to die in, but after building up up your finances more you move on to the next better house and so on… or in this case the first one i build/buy might be lived in for a bit then rented out and my next property become my PPOR rather than trying to get my dream home first up…
I know in places like Gosnells and maybe Southern River (not the dream suburbs i know) i might be able to build for around the $330-340k mark… but it will be a small block no doubt approx 340 sqm… the alternative is i can go and buy an existing place in places like Maddington or Huntingdale for around the $300-320k mark (3bed/1bath which isn't ideal i know) but could be on a block like 700-800 sqm potentially in Maddington etc… Certainly bigger than these 300sqm blocks with the fence within touching distance of most windows. But I don't think these places will be rezoned any time soon to allow you to split up the big blocks, it would just be in case you wanted to extend later or eventually knock the old place down and build something… But then these days i am tending towards something like a 500sqm block being a decent size without a big lot of yard to maintain…. but i did see on a number of these selling houses shows on foxtel recently about how you can take a tired old place and with a relatively small budget repaint it it, just do the fronts of the kitchen cupboards and resurface benches etc and make them quickly look a lot better… i know on these shows though that all these workmen seem to magically appear so they may only be talking materials when they quote a figure of $6-8000 for a quick renovation…
But yes, i know a built home will come nice and brand spanking new and doesn't have the risks of of buying an older established one or the upkeep on lots of old stuff and is probably rentable at a better rate… and i could probably reduce the costs by opting to do my own painting and landscaping etc… But living with my friend for a year or so if i bought an established property i could have a tenant in there straight away (or reasonably soon hopefully) paying the rent and my supplementing it for the full time which would get more money paid off the loan…. although the idea of maybe taking out the interest only loan and putting my $2000 a month savings straight into a second house is an idea??? that's why i wanted to pop my options out there and see what people thought… i like the ideas others have…..
and damn that ATO and their long memories… that's beauty of having a tenant come and share the place rather than formalise a rental arrangement on a whole house… although the contribution someone would make to sharing your house will be a lot less than renting a whole house obviously… anyway, wanted to get started before the boom really takes off again on getting my first place in the market, and then see what else i can do after that…
