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Derek
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May 17, 2004 - 10:57 am
Hi Marc,
Go to the ATO website and do a search in the legal database under ‘Harts’.
At the heart of the case is whether or not investors should be able to allow their investment property loans to ‘capitalise’.
Harts are arguing they had a finance structure that legitimised the concept and are fighting tooth and nail to get a ruling in their favour. On the other hand the ATO is fighting to have the procedure disallowed.
At the moment the Harts have their noses in front but the ATO launched an appeal – the appeal is waht we are waiting for.
See also http://www.wealthoptimiser.com formore information about the specific loan package.
Derek
derekjones1@bigpond.com
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Derek
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May 17, 2004 - 10:41 am
Hi Dandan,
It is all relative and depends on a whole range of factors such as area you are buying in, the reason for buying, your investment beliefs, your portfolio needs, your income levels, capacity to negative gear, depreciation claims and so on.
Derek
derekjones1@bigpond.com
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Derek
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May 17, 2004 - 10:04 am
Hi Karl and Rita,
Running the ’11 sec rule’ over the property is but one part of the checking process you will need to employ to see whether or not this is a good price.
Check out business, infrastructure, schools, planning intentions, population movements etc and above all check out recent comparable sales.
There is little to be gained if you pay too much in comparison to similar properties in the local area. It ay take you a while to get your ‘equity back.’
Derek
derekjones1@bigpond.com
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Derek
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May 17, 2004 - 8:55 am
Hi Dandan,
Yep!! Wouldn’t buy there if it was the last property on earth.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:10 pm
Hi Misty,
Valuations are capital costs and as such are used to offset any capital gains liabilities. Pest inspections fall into the same category too from memory.
I recommend you visit the ATO website and download a copy of their rental property tax guide.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:05 pm
Hi Misty,
A) This trip is considered a capital expense and will be used to offset any capital gains you may incur on this property. It is not a deductible expense.
Any subsequent genuine trip to undergo maintenance or inspections would be fully deductible. Be aware that an inspection necessitates more than just a ‘drive by’.
You are also able to claim similar expenses in respect of attendance at body corporate meetings (if appropriate).
Under these circumstances you can claim travel costs (hire car, per km rate, airfare, train etc) for your mode of transport, accommodation and meals.
All costs are on a proportional basis when combined with a’holiday’ – you cannot claim teh duration of the holiday.
I would contend that if you are employing a property manager to undertake the management of your property then the number of claimable trips would be fewer than if you are self-managing. I would also contend that there is probably no absolute answer to the question provided you have genuine reasons for visiting.
Derek
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May 16, 2004 - 10:53 pm
Hi Misty,
Provided you declare the income too.
Derek
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Derek
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May 16, 2004 - 10:51 pm
Hi Misty,
You can amend the last four returns and as we are drawing to the end of this financial year you are running out of time for the oldest eligible return.
I don’t believe it will possible to ‘transfer’ deductible expenses across to capital expenses.
You only need worry about being auditted by the ATO if you push the envelope too far – if all expenses are substantiated then you will not have a problem.
Derek
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Derek
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May 16, 2004 - 12:07 pm
Hi MA,
I suspect that many will (me certainly) tire of reading a disjointed seried of answers and as such will have a little interest in this ‘thread’ despite there being some little gems contained herein.
Derek
derekjones1@bigpond.com
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May 16, 2004 - 12:04 pm
Hi Mitzu,
Certainly a question I would be firing off to the solicitor/conveyancer who handled the transaction.
If it is any consolation – consider one weeks rent in the context of what you are trying to do and it doesn’t amount to much – sure it is good to have but……….
Derek
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Derek
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May 16, 2004 - 11:38 am
Hi Marty and Misty,
Not an accountant so disclaimers apply.
Assume $100K property and with $20K building claims and selling for $200K and $5K capital costs incurred in buying the property.
Effective purchase price is $100K + $5K – $20K = $85K (and not $100K as many think)
CG is therefore $200K – $85K = $115K (I have ignored selling costs).
CG is $57.5K (half of $115 – held for more than 12 months) which is added to your other income and taxed accordingly.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:30 am
Hi Rob,
Without wanting to enter into the debate of ‘who said what to whom’ I will say that at the moment your current approach to posting responses will get lost in the ‘hurly burly’ of the forum. As such the very people you are aiming to assist will probably gain little from them.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:18 am
Hi Dan,
At the end of the day you need to go with your beliefs – however you need to consider the first priority when investing in property is to make money, either through growth or income – saving tax is a secondary consideration for me.
On a related matter access to FHOG should also be seen as a bonus and not the main reason for investing in the local area. Sure if the local area is a sound investment area and you can use the FHOG legislation to your advantage then go for it otherwise you need to consider your short and long term goals and act according to these.
My preference is for good growth in major cities where there is more likelihood of sustained growth being achieved. While I have serviceability and equity to use then that is where I will continue to invest.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:08 am
Hi SIS,
Landlords insurance for your own sleep at night and also contents insurance for yoru carpets, blinds etc. Public liability for the inside of your unit is also an essential commodity.
Do not neglect to check that your strata manager has paid the building insurance (I have arranged the sacking of a strata manager who let building insurance lapse).
It also pays to check what the strata management rules and obligations for your complex are – in some parts of OZ there are slight differences and some strata arrangements and obligations cover more/less than others.
Derek
derekjones1@bigpond.com
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Derek
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May 16, 2004 - 11:01 am
Hi Marisa,
Spent some of the afternoon playing with some numbers with a broker and you would be surprised how differently lenders treat the same set of circumstances.
At the end of the day you need to meet a particular lenders service and security checks – once these are met to the lenders satisfaction then it is largely full steam ahead.
Most banks will typically recognise around 70%-80% (there are exceptions who recognise more than this) of rental income and as such a positively geared property gives back more under these cicumstances than a negatively geared property.
Derek
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Derek
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May 16, 2004 - 10:54 am
Hi Rusty,
As Mini said you need to consider the total fees payable when comparing REA. There are some who have lower management fees but make up for it with higher inspection etc. fees.
I have seen management fees vary from 7% – 10%.
Derek
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Derek
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May 15, 2004 - 1:44 am
Hi John,
ATO website link that discusses subdivision and CGT issues
http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm&page=10#H4_6_1_6
Derek
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May 15, 2004 - 12:39 am
Hi SIS,
I’d suggest I am about a considered 6/7 – still looking to buy but with ’emergency’ funds available.
Derek
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Derek
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May 14, 2004 - 1:11 pm
Hi Skellies,
Or you could use a loan repayment calculator found on all good bank website.
I like the ones on http://www.realestate.com.au
Derek
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Derek
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May 14, 2004 - 1:06 pm
Hi Marisa,
That is correct. You are allowed to claim all costs associated with a property for the period that is was rented or available for rent.
As indicated copies of advertisements, property management contracts, phone call and postage records could all be useful if you were audited by the ATO.
If you happen to holiday in that property for one month of the year your total claims would be reduced by one twelfth, Ie. the period it wasn’t available for rent.
As an aside have you considered permanently renting out the property and using the $10K, or part thereof, on an annual holiday elsewhere. It may be ‘cheaper’ in the long run.
Derek
derekjones1@bigpond.com
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