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Hi Gaz-Ed,
I know this sounds harsh but……….
As you have already been burnt by either poor advice, misinformation or ignorance I would think that this really does highlight the need for professional advice to be taken when buying and selling property.
I consider an accountant’s bill an investment when it has the potential to save many dollars further down the line.
But in the meantime do as Russ has suggested read (or download) a copy of the CGT document off the ATO website as this will point you in the right direction.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Project,
I suspect this month no change and next month +.25%.
NZ interest rates have just gone up 0.25%, USA predictions are upwards and as soon as USA goes so will we.
Certainly looming Federal election will create some dooubt but I believe McFarlane has the runs on the board and a good track record (IMHO) and more importantly to raise if he sees a need.
By the way I have just fixed another loan at ~6.8 for three years as ‘insurance’.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Yack,
The issues of quality control and colour selection come to mind.
One of our properties had the bedrooms painted (poorly I might add) in some rather individual colours. At the moment everything is fine as the tenant is still there – but as soon as he moves out I and wife will be off to do some therapuetic painting.[biggrin]
And then the rent will go up by minimum of $20/week confirmed by PM.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Dimind,
Have you spoken to your PM?
Has your tenant done a ‘runner’ without paying or are they just leaving early?
Depending on which of the events led to the lease break will determine the course of action you need to take.
I am assuming they have done a runner and owe money – get in touch with your landlords insurance company and start a claim process.
Also get in touch with the tenants tribunal (or whatever it’s called in your state) and get a copy of their guidelines. There may also be a landlords group in your state who can provide more detailed advice.
Ensure your PM registers the previous tenants on the ‘blacklist’ to help prevent them from repeating this behaviour.
Start looking for a new tenant.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi wejons,
Buying a property with the sole purpose of reducing tax has to be considered a little silly to say the least. If however you fully research an area and find a property with all the indications of realising growth in excess of the negative cashflow then I would consider that you are in front at the end of the year.
For me growth is my major focus and I am of the opinion that this is most likely to occur on a more regular and long term basis in cities. I consider there are far fewer risks invetsing in larger centres over the long and short term.
At this stage of proceedings I am focussed on gathering a portfolio of growth properties that will allow me to pursue a number of options upon retirement along the lines that Mel discussed and also an extension of borrowing off the equity as per Steve Navra’s cashbond strategy.
Asset/debt ratios and income levels are essential ingredients when banks assess you for further borrowings – therefore both do have a place.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Redilia,
And do not be seduced by thinking annual rent reviews (in line with market?) means the rent always goes up.
I do know of investor who found their rental income reduced.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Sonja,
There is no legal obligation – you are the customer in this scenario. And you ‘moral onligation’ is determined by you and your beliefs.
For me I would deal with the ‘best’ agent – however you determine that. Just remember they will all still be acting on the vendors behalf and not yours.
Extreme example but would you deal with the first agent if they were a jerk?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Acey,
Ninemsn, Somersoft and here it seems they are extremely good.
8% finders fee + REA commission?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Voytek,
Ultimately the best solution is for to identify the causes of the ‘jitters’ – believe me you are not the first person to experience them and you certainly won’t be the last.
My advice is to sit down and write down all the things that are making you nervous. When you have finished see what strategies you can put into place to avoid (or more likely minimise) the risks you have identified.
You are best advised to start slowly, get your head around what you are doing, establish relationships with people you can trust and experts in the finance area and they will be able to provide professional input as you require it.
Ultimately you need to remember no form of investment is risk free but managing the risks is possible.
In my mind no risk = no gain – just learn to minimise them.
By the way – doing nothing is also very risky.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Yarwood,
Hmmmmmm – gets out the crystal ball, starts rubbing and rubbing and rubbing. Gets it up to full glaze and presto………………………..
Developable blocks are the way to go and I would phone the water authority to see if there are any plans to roll out sewerage connections in the near future, then ring some of the city councils to see if there are plans to rezone areas within their locality and wherever possible suitably zoned larger blocks within these areas.
Get some plans done and then either sell them with development approval or develop them yourself.
For what it is worth I suspect the Westminster, Rockingham and Midland trains have largely already left the station – of course that goes with saying that there aren’t little gems left behind waiting for an astute investor to come along.
I consider Morley a little more exspensive but still slightly undervalued relatively speaking for developmental opportunities.
For simple buy and holds I consider the Warwick, & Greenwood area to be sound propositions.
Eastish of Perth – the suburbs extending out from Belmont, Redcliffe and Carlisle. These three have had their little boom and are now ‘too expensive’ . The suburbs out from them will be the next developmental zone and as such large block will attract a premium – Polly’ pipe is still having an effect on these suburbs.
The next tier of property growth zones will be along the southern railway line but moreso in the areas well served by planned stations. The rail line as such has largey had it’s effect – the more focussed investors will look for developmental opportunities closer to the planned stations – which takes me back to where I started – the water authority and city councils.
But wait ……………………..is that a flaw in the crystal ball? Hmmmmmmm I guess time will tell.
PS I got into Rockingham sometime ago and before a lot of others.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Acey,
Had a go at writing down goals at one stage in my life and realised very quickly I didn’t need to write them down.
Call me fortunate or committed (as one of my staff members told me I get what I want[biggrin]) but I have found that over the last 20 years I have managed to achieve most of my work, investment, sporting and life goals pretty well as planned.
Now I know where I want to be in 10 years time and we (wife and I) sit down every 6 months in July (tax time) and January (new calendar year) and check to see what we achieved last 12 months and what we want to do in the next 12 towards our end goals. The odd little celebrations along the way are a hoot too.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hmmmmmmmm – two similar messages on another forum and this one here – they are either really good or ……..you work for them.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Gina,
And your 20% trade dollars will enable you to leverage into ???????????????????
Money talks when investing.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Robo,
Building something for $180K will not always return you $400/week. If I built a property to that value in Perth my rent would be in the $160-$180 range depending upon the area.
If I built the same property in my local area I would get $140-$150/week.
If I built that same property in Brisbane I would get around $180-$200.
If I built that same property in Cairns as a holiday let I may well get that or more.
The property market and Australia is too big for such sweeping statements. There are markets within markets.
Maybe the $400/week gives you a number that meets the 11 sec rule – but that doesn’t necessarily mean it will be achieveable.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marc,
Definitely one for a property savvy accountant but the issue is the collection of rent which classifies the property as a passive asset and as such makes it ineligible for CGT exemptions.
If however you were to build/buy and sell without receiving rent from a tenant then the property could be considered as an active asset and then would be taxed as income and not capital gains.
While doing some research for another thread I came across this thread at Somersoft that may be of interest to you.
http://www.somersoft.com/forums/showthread.php?t=5327&highlight=deferring+CGT
Please remember I have no qualifications in this area and expert advise is recommended.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Samwise:Derek, Is there an advantage in doing this? Most of my tenants are on expired leases and going along fine.
Yo Ho Samwise
A personal preference so that I can manage my properties possible vacancy dates to conincide with the better times of the year.
To give an example of this one of our properties serves Perth university students and we have structured the 12 month lease so that it is up for renewal at the end of January when o/seas students are starting to look for a rental for the new school year.
Of our other properties not one can become vacant in the middle of winter – barring a break lease situation.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Robo,
That is a very dangerous assumption to make – while those figures may apply in your local area – they will not apply to everywhere.
Certinaly agree with the 12 months and 1 day issue as that potentially will save Sue some CGT liabilities – although based on her comment about being on a low income the ‘bill’ may not be that high anyway.
Sue,
I am also curious about who is advising you to build on the block – why is this suggestion being made? how much are building costs? what is the rentla demand like in the area? what is the long term future of the area like? are you better off taking the money and runing? what is your personal plan? where does the block fit into the plan?Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Robo,
If I was in your shoes I would certainly be paying I/O this new property and would continue to do so while your PPOR has a debt attached to it.
I don’t know how much faith you have in your accountant but if he is wanting you to reduce your debt levels you will be able to point out that you can direct the extra repayments that were otherwise being directed to your new property towards your PPOR non-deductible debt – that should keep him happy.
I would certainly ask why he is suggesting the P & I loan – he may have a valid reason but based on the information provided I can’t see it.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Monopoly,
I believe the more important issue is how much is value of the assets compared to the debt.
For example I would argue, all things being equal, that someone with $2m debt on a portfolio worth $5m is better placed than someone with a debt of $400K on assets to the value of $450K.
Now whether or not you can sustain either level of debt financially and emotionally that is a question only answered by the person directly involved.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Alias,
You could only depreciate the work you could not claim an outright deduction.
Repairs are precisely that repairs – any improvements move the work into renovations sphere and make them eligible for depreciation only.
You would howver be eligible to claim a proportion of the other costs – the proportion being determined in relation to the amount of space your tenant used compared to yours.
You would also have to declare the income.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
