Even if you operate through a trust, you will have issues splitting the income due to the Personal Services Income / Entity rules, as all the income comes from the one source.You would need to find a good accountant in your area, who has his/her head around what can and can't be done in regards to the PSI rules.

Unfortunately, transferring personal services income such as contracting income is harder now due to the PSI (Personal Services Income) rules. Does your partner contract to multiple parties, or is the contracting done to one (or predominantly one) party?If your partner is contracting to one party, the PSI rules restricts deductions and income…[Read more]

mattnz wrote:
This article advises us that the average mortgage in NSW just hit a new record of $414k. That isn't the average house value, but the average mortgage!! http://www.smh.com.au/business/westpac-rate-rise-pushes-customers-to-switch-banks-20100105-lsbd.html Let's combine that with median household income stats… Median household…[Read more]

daniellee wrote:
Hi Was wondering about this article…http://www.smh.com.au/business/property-prices-on-way-down-warns-bank-20091204-kays.html1 – There is a general perception that many FHBs have become highly geared in their rush to get into the property market during the low interest months of late 20092 – Credit has been restricted by the b…[Read more]

They will be up for CGT on their share. As it is being transferred for no cost, the CGT value will be the market value at the date transfer. The CGT will be (market value less cost) x 2/3 (parents' share) x 50% (as owned over 12 months).Have your parents paid any interest, holding costs or repairs? If so, they could use the amount spent to…[Read more]

Hi Jazz,Deductions are available for when the property is available for rent. If no-one is renting it during the off season, yet is still advertised and available, the deductions can be claimed.When renting to friends at a reduced rate, the deductions for this period should also be reduced. eg, if you rent is at 40% of market value, your expenses…[Read more]

Hi Blissy,1. Bank Fees on the loan (monthly fees etc) are deductible. The borrowing costs at the beginning of the loan (application fees etc) are deductible over a full five year period. As for bank accounts, it depends on the relationship between the property and the account. 2. Yes.Dan

$2000 to $5000 sounds like a lot. For a straight forward company and trust setup, you could get it done, with accountants advice for about $1100 to $1400, depending on the level of advice. For a first time setup, I wouldn't advise setting it up yourself, mainly because an accountant or lawyer will be able to advise the best way to set up the…[Read more]

Any borrowing costs related to the IP would be claimable, but bear in mind that borrowing costs from your new lender (application fees, mortgage reg, legals etc) are deductible over 5 years, or the term of the loan, whichever is shorter. They are not all deductible in the year the expense is incurred, unless the borrowing costs are less than $…[Read more]

Hi Darren,Just to elaborate, in your structure, Company A is the legal owner of the property. Companies are taxed on their profits, unlike trusts, which distribute their profits and the beneficiaries pay the tax on their distributions. So Company A would pay tax on any profits it makes. It would then be able to pay dividends to the shareholders.…[Read more]

Terryw wrote:
Yes, it may, but what usually happens is the givt commissions these reviews and then ignores the findings.

That's so true Terry. Especially in an election year.

Singer wrote:
couldn't he have seen that no government would let house prices drop by 40%?What a funny statement – given what jaw dropping decreases we've been seeing around the world in the last year.

Singer,I was referring to the Australian market, which was the focus of the post, and Steve Keen's 40% drop predictions. Could you see a…[Read more]

Loose Nut wrote:
Hey I'm sorry but this is going to be kinda long… but I am really confused, and you guys really seem to know your stuff). My wife and I (24 and 26) bought a townhouse in Redlands (next to Brisbane) just over two years ago as our PPOR. We paid $269k for it and borrowed $254k. We now owe $337k as we pay extra off each fortnight.…[Read more]

WJ, yes, I am talking about Australia. I agree, there are some basket case economies, particularly the US and their astronomical debt levels. I don't know what will happen in the next 1 / 2 / 5 years, but I think there are some unique cultural aspects in Australia (among lowest countries with loan in default, highest in home ownership) as well as…[Read more]

That's great news. All the best to yourself and your mum.

http://www.smh.com.au/business/property/house-price-rises-to-extend-into-2010-apm-20091211-kobu.html

wealth4life.com wrote:
Dear Dan I don't know what planet you are from or how much experience you really have …Low end market is strong it always is at the bottom …

Isn't the entire point of your post that the bottom end could suffer the most if rates go up? But know you're saying it's always strong at the bottom?

wealth4life.com wrote:
In…[Read more]

new_start wrote:
This is a great blog and he predicts a severe crunch due to too much debt?? definitely worth a read and he updates quite frequently. not sure if it will happen but hemakes some damn good arguments… particularly because of the FHOG etc? I think it will hit home owners more than…[Read more]

My wife and I were paying 8.9% less than 18 months ago. I don't think rates going to 8.5% will have a major impact. And Australia has hardly any sub-prime lending.

Here's my advice – go and see another financial planner. One preferably who isn't on a huge commission from the $330k investment into managed funds.Can your mother not afford the costs associated with owning the house? You have said she owns it outright, so there are no mortgage payments. So she is going from paying rates and taxes (say $1500 -…[Read more]