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Bear in mind that local prejudices about a particular street or area often are out of date ie if a street had a bad local reputation 10 years ago, the locals possibly perceive that reputation to be current even though the problems might have been dealt with. It can be a good way to make money. I have an IP where a year before i bought I read a comment by an agent saying the particular street had improved and no longer deserved its reputation. I bought there, have a great ROI, average of 2 years per tenant. Even now 10 years later people say X street is the worst in Y town. My only regret i snot buying 2 more in X street in the next couple of years after my first purchase
If you are in Victoria there is no stamp duty on transfers between spouses. I think Terry is right. Unless your existing house will be a great investment you could be better off to sell and then purchase an IP using the equity in your new PPOR
Check Council and government charges. In NSW there are development levies. GST would probably be applicable. Chek if you can use the margin scheme.
Fencing would not be required legally unless it was a condition of council consent
If the new property is such good value or represents your lifestyle dreams then maybe you should sell your existing property. This should mean you could buy the land and then focus on building up savings so you can look at construction later on
Almost every country town experiences some flooding from time to time:
http://www.smh.com.au/articles/2004/01/25/1074965440345.html
www.alburycity.nsw.gov.au/…/CHAPTER_O_PLANNING_FOR_FLOOD_ AREAS1.pdf
http://www.heraldsun.com.au/news/breaking-news/hundreds-of-residents-evacuate-as-wagga-wagga-floods/story-e6frf7jx-1225965816227http://www.ses.nsw.gov.au/infopages/8805.html
If you want to invest in one of these towns buy in a an area which is not floodprone but be aware that if you have a 1 in 100 year rain event eg 100mm in an hour you have no guarantee that a town's drainage can cope with that.
I'm not sure of the issue raised with Taree and the highway. Taree was bypassed several years ago and with the upgrades to the Pacific Highway is an easy drive from Sydney. THat area may become more popular when Buladelah is bypassed.
Wagga and Tamworth both have good infrastucture. Wagga has a Uni, Tamworth's nearest is UNE at Armidale. Capital growth will depend on projected population, availability of land etc. All the Councils should have this kind of information.
Tamworth may get some spinoff from the coalmining happening around Gunnedah.
Look at values rather than percentages. I bought an IP some years ago – 17% discount on initial asking price. INitial asking price was still good value.
IP a few years later. I assessed the value at $X, passed in at auction. Later that year I purchased for about 2/3rds of $X. 7 years later property now worth between 2 and 3 times $X, grossing 1/3rd of my purchase price. Industrial property badly managed by Vendor.
PPOR listed at offers between $245-$265, offered $230. Purchased at $237 Sellers had found a hobby farm they loved where the vendor to them was willing to reduce his price.
Property listed $369, offered $305, purchased $320. Vendors selling to build a new house for retirement.
For an employer we wanted to buy a commercial property at auction. We assessed value at $Y, rocked up to auction, I was the only bidder (in fact the only person there besides the agent and auctioneer). They said the reserve is 2/3rds $Y and we can sell it to you now. I said you drive a hard bargain and knocked them down in the rush to sign. Between our use of the premises and tenants I had lined up for the excess space we were getting an itial return of just under 1/3rd of the purchase price.Don't feel embarrassed about offering a particular figure.
Mining towns can be high risk. Not only are they affected by the national/local economy but mines are also affected by international events, exchange rate fluctuations etc.
Don't think that just because the company controlling the mine is big that it won't close the mine eg BHP – Ravensthorpe
Mining workforces are mobile, often employed by contractors rather than the mine.
If investment in mining is part of your portfolio, that will reduce your risk rather than if it is the whole.
I've done well in a small mining town – PPOR purchased 2000 sold 2006 – doubled, industrial property purchased 2004 appraised at slightly more than double now (in a town which 2 years ago lost 400 plus jobs)
Less risk – look for the regional town/city that services the mining region.
Good news! On your scenario you will be taxed as adeveloper, so no capital gains tax, you will just be taxed on everything you make. Don;'t forget GST either.
My suggestion would be to consider agreeing to sell the property to your son by entering a contract at the smae time as you buy it. This would eliminate CGT years down the track. Contract terms could cover it so that he pays all expenses in relation to the property including interest on your mortgage.
That's pretty impressive. What due diligence have you done ie construction costs, sale prices, exit strategy.
PC_Melbourne wrote:Based on what you have said, and assuming your husband makes a good income & the company paying him is up for it. – Get salarys paid gross into a family trust. At tax time distribute ALL family trust monies to all members of the family including the kids. This will assist in overall tax minimization if the income can be paid in this manner.Don't follow this advice. This is a definite No No as far as the ATO is concerned. Worst case scenario is you will be taxed on any distributions made to you and your husband will be taxed on the whole income.
Remember before you can carry forward losses this is after applying any exempt income such as Family Tax Benefit.
What was your reason for investing? Was it simply to get tax advantages now or did you actually have a purpose such as being able to afford to retire.
How do you calculate being able to afford to pay a $420K loan on $1000 per week even if interest only
Bear in mind that you and your partner can ony have one PPOR between you, you can both elect whether it is yours or your partners otherwise it is 50% for each. You need to do the figures to see which way to go on claiming PPOR.
You sya your partner has a house too. If your partnerw ould be entitled to claim that house as a PPOR for part of the time you have been together then you and your partner would have to elect which house had PPOR status or half of each house. Otherwise your real estate agent is correct although you should have a valuation done in case you are audited. Selling costs including commission would also reduce your capital gain
There's quite an interesting book Debt & Delusion which was updated a few years ago http://www.debtanddelusion.com/
Certainly might be something to factor in to your risk management
The simplest way (for them) to minimise CGT is for them to be living in the 1988 house as their PPOR when they die, then the children have 2 years to sell it without incurring any CGT.
Your solution needs expert advice
Seek professional advice. There may also be a CGT liability on one or both of the houses. You have not given enough information.
I prefer API
It looks like you will need approval to build from the Board. This should indicate whether they think there are likely to be any problems.
