Normally I'd say stick with the signed lease, but I notice you say the market rent is probably now around $550-$600 a week.

If it were me, I'd offer a reduction of $50 – $75 a week (Still above market) with the tenant signing a 12 month lease from the date of the rent change.

It's not a s much as you were getting , but it's above market, and…[Read more]

You only pay CGT on sale, so if you kept the townhouses for rent, then you wouldn't pay anything at this stage.

But that's not avoiding the tax, it's only delaying it, unless you never sell.

Borrowing in the Unit Trust may be an issue, as it could mean the SMSF investment may breach s71.

Best to see an expert and get this all sorted out before starting. SMSF's ownership of units in a related unit trust were tightened a couple of years ago.

Option 1: – Shouldn't have any implications, as boarding is treated differently to renting. You would not be able to claim any expenses related to the boarder.

Option 2: – As discussed above, you would have to move in to be eligible for the main residence exemption. Depending on what it cost you to buy the land and build, and what you can sell it…[Read more]

omacamo wrote:

Option 2: I sell the place now before I have lived in it. I have had advice from a professional tax agent saying that the rule for classing a place as your PPOR is that you only have to prove intent of living in this property and if circumstances have changed then the exemption will still be valid even if I have not lived in…[Read more]

LC888 wrote:
I was thinking of Geelong area (Newcomb) but getting conflicting advice from people around me, hence, now, thinking twice if I should focus on western suburbs around Melbourne (15km from CBD or thereabouts), which is still affordable ($450K) instead of Newcomb ($300K).

What do you think?

I don't know the area all that well, so…[Read more]

Hi Mat,

Couple of questions – Do you both work? If so, are your income levels similar? Will the property be negatively geared to begin with?

LC888 wrote:

Shahin, last month, the net operating cost was $505.41. I bought the townhouse in 2007 for $375,000; it was appraised last year by my agent to be priced between $365,000-$385,000. When I applied for a line of credit using the townhouse as a security, it was valued by ANZ at $383,000. Therefore, annual CG is almost…[Read more]

Agree with Richard. Deliberately looking for a low yielding property just to reduce tax is poor advice, in my opinion.

Re: what should you do – it depends on your goals and priorities. I would look to using the equity in your SA townhouse to help purchase more property. But only if this fits with your long term goals.

Re: tax – Paying tax means…[Read more]

Hi Jamie,

Just noticed CBA have done the same.

If you are building to sell, the profits will most likely be treated as revenue income, rather than capital profits. This means that you won't be eligible for any CGT discounts.

You will need to register for GST. You will be able to claim the GST on your building costs, and will have to pay GST on the sale of the apartments. You may be eligible…[Read more]

Unfortunately not. There are rules relating to related party transactions that would not allow your SMSF to purchase your residential property.

Further to what Terry said, you need to be able to show it was your main residence for a time. Things like getting the electricity and gas connected, changing your mailing address, changing your drivers licence address would be taken into account by the ATO.

To reiterate what Terry is saying, a trust can distribute profits to the company to recoup losses (assuming you pass the same ownership test) and then can distribute the remainder to individual beneficiaries.

That way you would pay the minimal amount of tax.

Also, just to clarify, the company doesn't get the CGT discount even if it receives the…[Read more]

If you are moving from IP to PPOR, the capital gains tax is calculated on a 'percentage of time' basis. For example, if it was an IP for 1 year, then PPOR fro 4 years, then sold, you would pay CGT on 20% of the gain. (As it was an IP for 1/5th of the time of ownership.)

You only need a valuation if you go from PPOR to IP, not the other way…[Read more]

I'm with Jamie. You are in someone else's private property, so they can make the rules.

It sounds like you are past using a spreadsheet. There are a few 'cashbook' type programs around, like Cashflow Manager, which are easier to use than MYOB or Quickbooks.

Have a look at http://www.cashflow-manager.com.au

Have you used the commercial property in your own business, or is it a straight rental?

Totally agree with Richard, the advice from real estate agents in particular can be very damaging and costly to the client in the long run.

But the client also has to take some of the responsibility, for relying on the advice of a real estate agent in the first place.

I think as accountants we probably don't do a good enough job of telling…[Read more]

Hi Jessica,

Agree with Terry, you are getting advice that isn't tailored to your situation.

If the trust distributes profit only to you, then there is no tax saving. You would pay the same tax on trust distributions as you would on profit from rental properties if they were held in your own name.