One – set up costs are expensive, as are ongoing accountant / auditor fees.Two – can't use one property to leverage another.Three – current ambiguity in rules as to whether CGT is payable once loan is paid out, on transfer from bare trust to SMSF.And the main reason for me. Sure, I might make a nice profit, but  I can't get at it until I'm 60. T…[Read more]

You can, but it isn't as simple as it sounds.Firstly, if you rented out your current home, the expenses associated with the home would be deductible, ie Council rates, water rates and interest. Interest is deductible because the borrowed funds were used to buy the house, which is now rented out.If you redraw funds from the loan for non-deductible…[Read more]

Hi Keiko,From memory, I think that is right, but it can only be done in a couple of states. (I think its Victoria and WA, but don't quote me on that.) I'll re-post if I can find some info.

tonywwp wrote:
Hi MikeI noticed Tony's comment up there, he is absolutely spot on.. Ive got 7 properties and now buying #8 and you need a broker who knows what hes doing. I can tell you 100% for sure that bank employees are pressured to not only set up lending structures to give the banks more security but also to sell you all the extra features…[Read more]

The ATO will use the market value substitution rule for the calculation of CGT. In other words, if you have sold it under market value, the ATO and CGT rules require you to pay CGT as if you havesold it for market value.

If you are not declaring the income, then you can't claim the expenses.Depending on other factors (what rent is being charged, did you advertise for the tenants,) the ATO may declare this income  as board instead of rent, so you wouldn't have to declare it as income.

shahabr wrote:
had a read, seems like you need to have a good amount in there before you can think about investing….30k wont cut it

You are right. Expert estimates recommend that if you have less than $150k, an SMSF can be too costly, due to fees, audit costs, etc.

The ATO are cracking down on Hybrid Trusts, and I think it's getting harder and harder to find a financial institution that will lend to such a structure.If it is only going to be negatively geared for three years, then I would recommend a discretionary trust. Sure, the losses will sit in the trust until you have profits to offset them, but the…[Read more]

Just to clarify, revenue losses can be offset against capital gains, but capital losses can not be offset against revenue profits.

The only reason I would recommend it is if you were in a unique situation like Linar where your home was surrounded by more than 2 hectares of land. I would say the capital gains PPOR exemptions and land tax…[Read more]

Just to clarify, revenue losses can be offset against capital gains, but capital losses can not be offset against revenue profits. The only reason I would recommend it is if you were in a unique situation like Linar where your home was surrounded by more than 2 hectares of land. I would say the capital gains PPOR exemptions and land tax exemption…[Read more]

Hi Julie,1) Increasing the loan for the purchase of your unit will not increase the interest deductions. Basically, the purpose of the loan decides whether the interest is deductible or not, so increasing it to add to your new PPOR will mean that a portion of the loan (ie, the extra bit) will not be deductible.2) Withdrawing from the offset will…[Read more]

If you want to have the properties in a trust eventually, then do it now. Don't wait to do it down the track, as you will be hit with expensive CGT and stamp duty. If your goal is to own several properties, then planning for it now can reduce unnecessary costs in the future. Be aware though that if the first property is held in a trust and is…[Read more]

Hi Dylan,

What ‘positive geared’ means is that the rental income from the property is more than all of your expenses. So yes, you can claim rates, strata fees etc.

Being positively or negatively geared doesn’t change what you can and can not claim as expenses.

ummester wrote:
[The house market in Australia, however, is something that many are passionate about:) Do you think that, if house prices continue to grow at the rate they have been in recent Australian history, that any worker other than the most highly paid will be able to afford them in another decade?

There is a big difference between slow…[Read more]

It depends on your accountant. He / she may want to see a sample of cheques or invoices that you have paid through the LOC. We have one client in your situation, and he has told us that everything that goes through his LOC relates to his IP's, and we trust him, so we have done hardly any checking. But we have made him fully aware of the rules…[Read more]

If it is rented for less than 6 years, there will be no CGT.

From The Age:A revival in sales of luxury homes has helped drive nationwide house prices to their biggest annual gain in six years, with all but Perth among the capital cities to end 2009 at record highs. After posting a 4.8 per cent gain in the December quarter, average prices nationwide clocked up an average increase of 12.1 per cent in 2009,…[Read more]

Funds held in an SMSF are for the sole purpose of retirement, so any other benefit providd to the members (such as renting SMSF property) is not allowed. You could talk to an accountant or lawyer regarding setting up the SMSF, but be careful which accountant you choose, as somne have little or no experience with the specific rules and the SIS Act.

Hi Stephen,Here is a copy of the ATO document relating to PSI income. It is written in ATO-ese rather than English, so if you would like any further information, send me a PM and I'll do my best to help you out.

Your friend will also be able to include the holding costs, such as interest, rates etc in the cost base. (Based on the assumption that they haven't been claimed previously, as the property is a block of land.)