Forum Replies Created
CGT is a complex code, but I’ll share the bit I know (limited todate!!)… Capital gains tax is linked with income tax, so I don’t think there is a figure that somebody can give you that will be accurate unless you show all your earnings in that financial year. The capital gains will be treated as income on top of your other income and will therefore put you in a different tax bracket.
For example…If you earn $32,000 a year in a job and make a capital gain of $20,000 this would put you in the $52,000/year income bracket – moved you from the 31% bracket to the 43% bracket. Therefore you would be taxed about $8,400 on the $20,000 capital gain (don’t quote me on this one).
That’s a basic idea but not accurate!!
Chris (:
You normally have to pay a spotters fee for such info – a better question would be, “How do I find suitable properties?”
Rodster,
You are certainly in the right direction – many bankers etc. don’t know too much about trusts etc. Some do though.
Just yesterday a TerryW posted this website on this board, “chrisbatten.com.au” I have had quick read of it and all your questions will be answered there (hopefully)! The advice on this site seems exceptional. If you can contact Deacons lawyers they are also exceptional for advice on structures and assett protection.
Do you self a favour and spend a few hundred on good advice regarding this – sounds like you’ve already spend a $1000 or so registering a company and trust etc.
Chris (:
Kay Henry
Yep! I think if you aim for a win-win situation in all negotiations then you will get a good name and accoding to the same book, a good name is better than silver and gold (:
Chris
Yes, on a residential property you only pay 50% of the gain in CGT after owning it for 12 mnths. On commercial property you only pay 25% of the Capital gain in CGT after 12 mnths.
AIUI (as I understand it)
Chris
Doesn’t Soloman say, ‘the buyer says its too much, then walks away and boasts of the low price he got it for’
Chris (:
Just found this one out – maybe its common knowleged, but it might help somebody (:
According to a tax expert!!! (who just got back to me) you only pay 25% CGT on commercial property that you’ve had for over 12 mths (50% if under 12 mths). No roll over is possible!! Residental is different, as you would know.
Disclaimer…as with all free advice… you’d better check!!
Chris (:
No, this advice will be free – so maybe dangerous (: Lets see what he comes up with??
But my Account just informed me (for free!) that in Australia you can’t roll over CGT on investment property – you can if you are running a business from it though. In business (my major background) you can roll over CGT to purchase more equipment etc.
The other guys are much more correct than me!!
Chris
As far as I understand it, the 11 second rule is only a rough guide to sort potential good deals from bad deals. It does not mean it is a good deal, but warrants further research, which you are doing.
You need to make the final decision based on all the info available and your goals, not just the 11 second rule – it’s only a filter to help lessen your load from researching every property on the market.
regards CHRIS
Basic rule of thumb – as I’ve been told!!
One loan against one property. The banks will always want more.
Chris
You can always check this out for your self at; ABS – 2001 Census of Population and Housing ABS Census free data.
this link is found on this website – follow ‘Web Links’ on the left side of this screen and scroll down and look for the ABS link (:
CORRECTION!
No, Steve does not mention that CGT is transferable but mentions to be aware of tax deferral regarding claimed depreciation included in CGT at time of sale etc. p.141 – 142. and general warnings about CGT in retirement. Sorry for mixing the two together.
Free advice is dangerous!!
I’ve just chatted to my tax adviser and he said such a question is not an easy one and he will get back to me with specifics – I will gladly pass the info on later today (:
Chris
[email protected]I dought that very much, as a loan and offset are linked – supers cannot have loans, so I would take it that they cannot be linked to a loan?
Check with a banker (difficult to get the same answer every time you call!!)
CGT will never disappear! It is simply defered until a later date. I’ve heard this being done quite effectively, but Steve mentions the consequence of this in his book that once you hit retirement and start selling off – you have huge capital gains tax to pay the tax man at a stage in life that you may not of calculated for or can afford. CGT is only ever defered! In a trust structure it can be defered for generations!! But it will catch up (:
Chris
One book I’ve read covers this topic – ‘Anyone Can be a Millionaire’ by Sean O’Reilly. He is an Aussie as well!!
He says that purchasing property via a super fund is not a good idea, as you need 100% cash for purchase, a super fund can not take out a loan.
The example is given that with $200,000 you can buy several properties worth $200,000 each (use the cash as a deposit and getting various loans for each property) Over time they all (hopefully)increas in value, giving you much more worth at the end of the day (retirement) than just one $200,000 house owned by the super fund. Have a read (:
Chris
Thanks, bill, for your reply. I’m in the research mode of property investment and have found a few positively geared commercial properties starting from the $155,000.
I have other souces of income, but was just bouncing around this idea of using my equity to help. I actually have $57,000 equity, but based on the 80% loan rate etc. I can get a line of credit (at home loan rates) of $22,000 to $24,000 secured against my house. I’m considering using this as a deposit for a loan secured against an investment property not my house – which I’ve been told is possible. From my calculations an 80% loan against a property would give me a starting price of $110,000 (20% of 110,000 is 22,000). With other sources of income etc. I can raise my purchasing ability.
Can anybody see any flaws in this logic?
You should always check such things with an accountant … but here’s my two bits worth (:
All operating expenses are tax deductable on any business adventure – investment property is a business adventure. To have a truely positively geared property you can not (my opinion) off set rental income against a job or other income you have; it must, by it self, produce more money than it consumes. That is the meaning of positive gearing.
You can make a negative geared property look like a profit when off-set against wages etc. This is very common, but is contray to the financial freedom message of positive gearing. Hope that helps (:
Chris
I’v come accross various ‘mortgagee in possession’ houses over time; they were very cheap and would of been a good buy, but I wasn’t in a position to purchase at the time. Various realestates have them on their books from time to time. I think If you are constantly looking they will come up now and again. Can’t say I’ve seen any lately though!
Chris
Jules,
I’m a newcomer to this property investment stuff and am seriously researching all angles before jumping out. I rang a few real estates about positivele geared properties and they basically laughed at me and said none exist!
I had an RDO from work and searched hard on the internet and found three positively geared properties in one part of QLD! I have received the accounts on one of these properties and am seriously looking at it (looking at rental agreements, outgoings etc).
Go to Yahoo and type in ‘realestate’ and see what search engines appear – you can narrow your search to price and location very easily in a matter of seconds. The only positively geared properties though, were commercial properties – I’ve only looked for one day!! Have a go (:
Chris
