Forum Replies Created
Sorry to be the bearer of bad news, but you'll get nothing back.
The reason is that you won't have PAID any tax on your rental income. You can only get a refund of tax if you have paid some tax in the first place.
The settlor is usually a 'natural person', rather than a trust, and is independent to the trustee. The settlor can not be a beneficiary of the trust, they usually hand over an amount to set up, or settle the trust, then disappear.
There are no tax implications for acting as the settlor.
The settlor would need to sign the trust deed to set up the trust, then they can go wherever they like!
g0biin wrote:Worst idea ever unless you can pay the money back in 55 days before the interest kicks in.
Never spend a cent on a liability if you can help it.I borrowed put $6gs on my credit card to buy a car only because I knew I could pay it off in the 55days. I needed the vehical to generate income. And $6G was was $4G more than I wanted to spend
98 model.A nice new car always sounds like a great but buy a model thats two years old would be a better idea to save cash.
Last tip would be forget the car and buy property mate.
The original poster has said he IS looking for a second hand car.
And buying property is great, but how will he go to inspect property if he doesn't have a car to drive there?
Thanks for posting Winston,
The 'Housing Commitments v IR' is really interesting. Goes to show that it prices could be severely affected without huge rate rises. Next year should be very interesting, especially if rates rise as predicted.
Also, the relistings graph backs up what we've been seeing locally. The Adelaide market has about 40% more houses on the market compared to the same time last year. The Real Estate section in Saturday's paper was so big I almost put my back out lifting it off the table!
casanovawa wrote:Dan42, paying it off inside 12 months would be pretty tough, not impossible, but tough…. if for any reason i couldn't balance transfer to another low rate cc for another 12 months when the deal came towards its end i would probably try and take a personal loan out for the rest of the time… even then, the interest saved paying 1 year of the money off at 2.9% rather than 11.99% would mean i would probably come out ahead???Yep, you're probably right, as long as you pay off a decent amount in the first year. And you're right, there are plenty of options out there to transfer to another low rate card after 12 months. It makes sense to me, if you are disciplined enough, and it sounds like you are.
I've done the balance transfer thing a couple of times, and I haven't found any hidden fees. I haven't been charged anything when closing a credit card account.
Most of the 'low rate for balance transfer' type credit cards only offer a discounted interest rate for 12 months at most. After 12 months the rate reverts to the standard rate, which could be 12, 14, even 16% or higher. Can you pay the balance off inside 12 months?
I think it sounds ok IF (and it's a big if) you can pay it off befor the interest rate reverts to traditional credit card rates. Otherwise, you would be better off getting a traditional car loan, if you don't want to touch your deposit money.
Jamie M wrote:orks wrote:What the hell kind of financial institution lets you use a line of credit as a deposit?It concerns me that someone who structures their own finances like that is out there arranging loans for people.
Pretty standard structure really. Take out a LOC or a seperate IO loan against a PPOR to be used as a deposit towards an investment property. Nice first post Orks…..or are you somebody else?
Yep, my wife and I did exactly the same thing. To answer Orks question, pretty much any financial institution will let you use a LOC for your deposit, provided you have the equity.
mattnz wrote:As you can see TKline you are preaching to the unconverted. I am a strategy manager working in a major bank and the more I read, the more concerned I am about house prices in Australia's capital cities. I am a property investor, (currently have 3 IPs) but have been very selective in my purchases. I live in Sydney but would never be crazy enough to purchase at the stupid prices that properties go for here, nor let myself get close to what the banks tell me I could afford to borrow. Not sure how to post a graph here, but there is a great one that demonstrates that from 1978 to 2010 the Australian workforce participation rate (i.e. male and female workforce participation) increased marginally from 57.1% to 62.5%. Over the same period Mortgage debt increased from 24% of Disposable income to 141%!! This certainly can't be explained by more women in the workforce, but rather relaxed credit from banks.141% of disposable income? Do you have a link to that information. 141% sounds extremely high. Depends on how they calculate disposable income, I suppose. I notice they haven't used 'income', or 'household income'.
Without seeing your graph, it's interesting that they have used average workforce participation. I'm not sure why they would use that, then use disposable income.
My point about dual income households is that reports using 'average income' are misleading. They use this statistic rather than average household income, because of the dramatic effect of using a higher number.
I agree with what you are saying about relaxed credit. If it becomes harder for banks to borrow offshore to fund home loans, and then banks become more selective with their loan criteria, home buyers will be able to borrow less and prices could drop. This to me is a major concern for the property market..
That sounds like a long time.
Is the property manager showing people through the property, and they are deciding not to rent it? If so, does the PM have an idea as to why it isn't renting?
I'd talk to the property manager first, and see what he / she has to say, as a first step.
When articles start using 'average income' instead of average household income', as this article does, it shows they are willing to bend the truth just to try and prove their point. They lose all credibility. Sure houses are more expensive now when compared to average income. Maybe because more households are now dual income? Didn't think of that, ey? Geez….
And Tom, great first post and thanks for the 'greater fools' line. Classy.
Distributing to the shareholders of a company is done by way of dividend. If the company has paid tax in previous years, then the shareholders get a franking credit on their dividend.
ie – shareholder gets a dividend of $70,000 fully franked. The franking credit os 3/7ths of the dividend, or $30,000 in this case.
In your (shareholders) tax return, you have income of $100,000 (70k + 30k) with a franking credit, or tax credit of $30,000.
Hi D,
A company pays tax at a flat rate of 30%, so you would pay the same amount of tax on each sale.
BUT, you don't want to get into a position where you sell all the properties in Year 1, pay the tax and then have a loss in Year 2 (because of expenses relating to the sales) because the loss will just sit in the company until you have more income to offset.
But to answer your question, a company pays a flat rate of 30% regardless of the size of the profit.
You'll need to live in the property for 6 months to satisfy the criteria of the FHOG. This will also satisfy your CGT criteria as well, because there is no minimum time to live in the property to qualify as your PPOR in the legislation. (Courts have suggested 3 months)
Borrowing to buy a $445,000 house will be dependent on your income, which you haven't stated.
Depending on your state, you may be eligible for limited stamp duty, but I'm not totally sure about this. Getting a 100% loan would be difficult, but this isn't my area of expertise, so I'll leave this to the MB gurus.
Susannah Bowden wrote:Sideways to the original question: I have set up a family trust with a company as corporate trustee and now wish to put a positive gear property into the trust. The conveyancer says that a trust cannot be registered as an owner on a title. A trustee is registered on the title. But if the company is the title and Steve suggests not to put a property into a company how does this work? ConfusedHi Susannah,
The company name goes on the title. This is because a company is a legal entity, whereas a trust is not. However the company is solely acting as trustee, so the trust is the operating entity, or beneficial owner of the property.
In other words, the property is owned for tax purposes by the trust, not the company, as the company is acting solely as trustee of the trust, not in its own right.
I hope I haven't confused you further!
How much is the investment worth? I'm guessing it's worth more than $7000. So if she can't get the FHOG, she has an investment property for the cost of $7000. I'd do that deal every day of the week.
When you say 'unprofessional', what exactly do you mean?
You're pretty much bound by the contract, unless they have breached it in some way.
Is it just me, or do Philip's posts make no sense? And the attack on Harb is out of line. He's just pointing out we have heard all the doom and gloom talk before.
Yes, Nixon took the gold standard away from the USD, so what?
And no, I don't want to read a book by a guy who has failed at every business he has ever undertaken, other than writing books about how to get rich! God bless Aamerica.
Basically Deppro and other quantity surveyors assign a cost to various assets in the property, so you can claim a deduction for the depreciation of these items against the rental income.
It usually is more beneficial for newer buildings, as you can claim a 2.5% capital allowance (depreciation) against the building cost over 40 years frome date of construction.
For an older house, it depends on the assets in the house, such as oven, air conditioning, carpets, blinds, etc. Generally, depending on the age and value of the above assets, it's a good idea and well worth it.
I stand by what I have said previously, that you can not claim a deduction for money invested in a discretionary trust.
A managed fund is a unit trust. You borrow to buy units in the managed fund, so the deduction in your own name is for the purchase of the units. If you had a closely held unit trust, then you could claim the deduction.
But you are ot purchasing any units or income stream when you loan money to a discretionary trust. You are not entitled to receive any income from a discretionary trust, the distribution is solely at the DISCRETION of the trustee, which is why no deduction is allowed. It doesn't matter if your intent is to derive income, if the trustee doesn't want to give you any income, you don't get any. It's your bad luck and you have no recourse. This is much different to a unit trust or managed fund, where the purchase of the units entitles you to receive income based on your unit holding.
No one ever said the profits are quarantined, they must be distributed to eligible beneficiaries. The losses are quarantined in the trust.
Point 3, I agree, your investment is a loan to the trust, not a purchase of units or an income stream. There is a BIG difference. If you loan the trust money, you would expect to be paid interest. If the trust doesn't pay for the funds borrowed (ie – pay you interest) there is no commercial operation, and your interest deduction would be denied.
Your accountant is wrong. Here is a link to ATO Income Tax ruling 2385, called Expenses Incurred by Beneficiaries of Discretionary Trusts. The preamble states: "In a decision handed down by the Administrative Appeals Tribunal, the Tribunal held that a beneficiary of a discretionary trust was not entitled to deductions for expenses said to be incurred in relation to the trust income"
theplatypus wrote:Yes but how is the capital gain amount reached? I mean, if I don't get it valued now, then when I sell it in 10 years, won't they calculate it based on its value then rather than the value BEFORE I moved in? Whereas if I get it valued now, then I will know exactly what the capital gain was before I moved in and whatever increase in value there is while I'm living there shouldn't apply?Getting it valued will have no effect on how the capital gain is calculated.
CG is worked out on the percentage of time the property was income producing.
ie – Purchased July 2005 for $200,000
Moved in July 2007
Sold July 2010 for $350,000
Property was an investment for 40% of the time (ie, two years out of 5) so your capital gains is ($350,000 – $200,000) x 40%.
98 model.
