Forum Replies Created
No you are right. You can't buy with the SMSF because you will be living in it – causes issues with the sole purpose test. Can you restructure your Sydney house eg if jointly owned buy your wife's share. This won't change your total debt, but will make more interest tax deductible. It will also have CGT implications if you are currently wnating to keep your Sydney residence as your PPOR
You can only claim if the property was to available for rent by you
There should be an exemption from stamp duty under the Family Law Act as it is part of a settlement. Talk to your solicitor and get the document drawn up
Would the $270K have been on the basis of 80% LVR? ie they would have lent $270 on a property bought for $350 ie no LMI required
Drycleaners that have adapted have offered extra services eg repairs, ironing, or sold other items eg gifts, luggage. If your parents in law are going to do this then they need to work out how a new business will succeed.
Not many people get much drycleaning done particularly in retirement/seaside areas where informality is the rule.
Your parents in law bank is doing them a favour by knocking back the loan.
I have gone in the past 30 years from getting a suit drycleaned once a week to getting something drycleaned once a year.
The first step would be that they should be asking you about your plans etc so they are advising you on an holistic basis.
The second is they should be proactive in advising you re use of offset accounts etc etc
Have a look through it first, then ask for any explanation you need.
This article has some of the things to look for:
On Gatherum Goss and associates website there's an article by Steve Navra "Rental Reality" http://www.gatherumgoss.com/Navra.pdf
I haven't analysed any areas using Rental reality but it coud be a useful tool to consider.
Personally on my resi properties I've bought in areas I considered to be attractive because of access to services etc, but in areas the locals did not like because of their perceptions of the area which reflected the areas a few years earlier and not as they are when I bought.
I think you need to factor in risk as well ie what percentage you need to receive above the risk free rate of return. In the US treasury bonds are traditionally regarded as risk-free. At the moment in Australia, term deposits because of the gov't guarantee might be a reasonable approximation to a risk free investment.
Simplistically, not taking into account tax and deptreciation issues
So if you invest in a term deposit at the moment a 25K term deposit would get around 4.5% per annum say
So if you're buying for $300K and put down $60K, then a $60K TD will give you 4.5%, $2700
compared to 5% gross yield $15,000 less $240K at 5% = $12000, say $5500 for rates, insurance, agents, repairs – loss of $2500
So you will need Capital Growth of $5200 just to be even with the term deposit.Now if interest rates go up your costs wil go up. The Reserve Bank etc say we're at the bottom of the cycle, so if we say average interest rate will be 7%, you're actually losing $7300 cash and need $2700 as well to get where you would hvae been with the term deposit.
So you need capital growth of 3% roughly on the property just to stay square with a term deposit.
But with a TD your money is available, it might take 9 months to sell an IP, so you need to fcator in to your pricing illiquidity risk, interest rate risk, legislation risk eg vendor duty, market risk. Maybe other risks.
Having said that, I acknowledge that many people who kept money in term deposits have not found that to be as good as other investments.
In addition you can do things with property to increase your return and therefore improve its capital growth.
Yes, you are right – under an instalment contract you have an equitable interest in the property with a right to possession which you can protect by way of a caveat subject to the rights of any prior interests registered in the Land Titles office such as the first mortgagee.
If you are not already doing so you should be talking with a solicitor not associated with the Vendor so you can make an informed decision whether to proceed or not.
An easement for sewerage is normally 2-3 m so that if there is a problem people can get in and fix it. It's in your interest too that they can have reasonable access so that if there is a problem it can be fixed easily. For practical purposes your Council wouldn't let you build on top of it normally. they only have access for the purpose of the sewer not for having picnics or using it as a path
In NSW there is a standard easement unless the parties change it:
http://www.austlii.edu.au/au/legis/nsw/consol_act/ca1919141/sch8.html
Part 4 – Easement to drain sewage
Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, from time to time and at all times by means of pipes to drain sewage and other waste material and fluid in any quantities across and through the land herein indicated as the servient tenement, together with the right to use, for the purposes of the easement, any line of pipes already laid within the servient tenement for the purpose of draining sewage or any pipe or pipes in replacement or in substitution therefor and where no such line of pipes exists, to lay, place and maintain a line of pipes of sufficient internal diameter beneath or upon the surface of the servient tenement, and together with the right for the grantee and every person authorised by the grantee, with any tools, implements, or machinery, necessary for the purpose, to enter upon the servient tenement and to remain there for any reasonable time for the purpose of laying, inspecting, cleansing, repairing, maintaining, or renewing such pipe line or any part thereof and for any of the aforesaid purposes to open the soil of the servient tenement to such extent as may be necessary provided that the grantee and the persons authorised by the grantee will take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and will restore that surface as nearly as practicable to its original condition.
Yes $5.00 a week in additional licensing costs is going to make it easy to justify charging an extra 2% (say $6.00 per week) per property.
On the other hand having a good managing agent is worth a few dollars a week.
For PPOR only applies to spouses
Farming properties there are some additional concessionsYour relative would need to pay half the mortgage (presumably because she owns half) to the bank plus half of the market rent to you. The fact that she is paying a debt she owes does not make it income in your hands.
If you're not getting fair market rent from your relative and the property is not on the market for rent you have no tax deductions.
Did you factor in the cash you came up with for the purchase and any refurbishment and the interest you could have earned on that.
having said that you have done well to be on the positive side of the ledger.
Their web page says they are a mortgage broker and now they're finding property for you? Follow Richard's advice. Learn a bit more before you sign up to someone. Look at the article on page 34 of August's Australian Property Investor magazine.
Even although the apartment is rented on a monthly basis, depending on the state your asset is in you may need to give longer notice eg 60 days in NSW
Your parents should consider whether these gifts will affect their current or future entitlement to Centrelink benefits.
Don't set up a company unless you are running as a business as there is no CGT relief for companies. Possibly corporate trustee of a trust.
a director of a comopany will normally have to give personal guarantees for borrowings
