Forum Replies Created
Hi Glenetti,
I won’t mention the Rugby – can I ask about the cricket[biggrin]?
Recommend you use the active topics section – it makes it easier to keep up.
Our marginal tax rates do vary according to your income level – the taxable table below explains the ‘deal’ if you can call it that in detail.
$6,000 $0 17.0%
$21,000 $2,550 30.0%
$52,000 $11,850 42.0%
$62,500 $16,260 47.0%Our GST is set at 10% with some goods and services being exempt. Typically these items are classified as being essential and include some foods, medical treatment and similar. It would be fair to say it is generally all encompassing.
Our current annual inflation rate hovers in the 2-3% range with interest rates at ~7% for standard variable rate. And we thought our rates were relatively high.
We have a Capital Gains Tax regime that is discounted by 50% if you own the asset for more than 12 months. Gains are added to your other income and taxed in accordance with the table shown above.
Interest incurred on borrowings used to purchase investments is deductible from our annual income along with other costs incurred owning and/or managing the investment. In property this includes rates, management fees repairs etc.
Our homes are exempt from CGT but costs and interest incurred on these loans are not deductible.
Rental returns in our capital cities range from around 3% and upwards – and without knowing every property in every capital city probably top out at around ~7% (with exceptions to be found by skilled investors). Returns in regional areas are generally higher than this.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Greg,
Ooops – Should have been ‘Home Start’ – some state governments have a home ownership scheme that may apply to your lady.
As I said somewhere else First Home for me was a long long time ago, and kids are not yet old enough to own house so the detail is but a ‘blip’ on my investment/home ownership horizon.
I am a little confused now – initially I thought you were wanting to wrap ‘her into a house’ (Is that a suitable description?) but now I sense you are wanting to create a business relationship with her joining you as a wrapper.
Once again I am on shakey ground but Centrelink have fairly rigorous (well I hope so as a taxpayer) checking processes which include both income and assets thresholds at levels determined by the ‘pension’ in question.
I wonder have these issues been fully explored and the possible ramifications been fully (and carefully) explained to the ‘lady’?
Sure, we (those on the forum) can appreciate the advantages of not being reliant on a ‘pension’ but here I suspect we are talking about someone from a very different generation who may fear being without the certainty of the meagre pension she is currently getting.
That’s about it for me – wrapping is another ‘blip’ not on my horizon.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
Someone want to lend me their bank account details so I can reply to my email?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Sibo,
Endorse Richard’s comments 100%
I strongly suggest anyone considering setting themselves up as a ‘spotter’ carefully think through the full process of their proposed modus operandi. When this is firm in your mind then run it past the various legislative people in your respective states – all it will take is one inadvertent step out of turn and what was ‘legal’ may now be illegal.
I would add seek independent legal advice too – public indemnity insurance may be required too.
Last thing anyone would want is a legal case on their hands. It’s all part of the preparatory research for mine.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi SRD,
A sinking fund is a fund established, and managed by, the strata company (or similar in your home state) that is put aside for major maintenance or upgrades of a strata company. Typically these repairs/upgrades are to external areas only as internal stuff is generally your responsibility.
A strata company is reponsible for the maintenance and upkeep of common property as designated in your respective state legislations and in the strata titles act as it relates to your complex.
Strata management fees (as distinct from sinking fund contributions) are fully tax deductible whereas sinking fund contributions are considered a capital expense and as such they offset any capital gians liabilities. I am a bit hazy on that one so you will need to check it out.
If buying into a s/hand strata managed unit ensure you check your would be unit is not in arrears for contributions (you could inherit the bill); ensure there are funds in the strata groups accounts commensurate with the age of the property – if not, why not – there may be perfectly valid reasons but you will need to check this out, check out the credentials of the appointed manager (I have just spent some time contacting owners in a group of units so we can sack the inefficient strata manager) and finally get involved with the strata group – they make decisions that do effect your investment.
Recommend you contact the REA Institute in your state – they’ll be able to point you in the right direction. There will also be a strata institute (or similar) in your state and there are government legislations that come into play in most (all?) states.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Carlover,
I haven’t had direct delaings with CWB but I have posted some pointers I expect people to have satisfactorily addressed by myself before establishing any relationship.
They may be of use to you and your research.
Some thoughts for you to consider.
1. How long have CWB been in business?
2. How many investment properties does your ‘consultant’ own?
3. How long has your consultant been investing?
4. How does your ‘consultant’ earn their money?
5. What will they get out of each and every purchase?
6. What service do they offer?
7. How much does it cost to use each aspect of their operations?
8. Can you use your own mortgage lender? property manager? valuer? If not – why not? (it is a free world)?
9. What sort of after sales support do you get?
10. Does their approach fit comfortably with you?
11. How much pressure is bought to bear?
12. Are all decisions made in CWB’s presence and without pressure?
13. Are there rent guarantees? (Run away fast if there are!)
14. How does the price compare to similar properties on the open market?
15. ASIC/ Ministry of Fair TRading Issues?
16. Where have CWB’s past sales been? What were they? How much is the open market paying for them now? What are they rented for now?
17. What are similar properties (to the one being considered) renting for? Check with a couple of REA in tthe area?
18. What is the vacancy rate in the area like?
19. What infrastructure is planned for the area?
20. Are brochures high on ‘gloss’ and ‘glitz’ and low on facts?You may also find doing a search of ASIC’s website by company name and, more importantly, by director (s) names to be a useful exercise.
Any issues the regulatory authorities may have can be obtained by you if you look hard enough.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Millhouse,
Without meaning to be so harsh – but that is a question you should have asked before buying the property. These pre-purchase issues + others are equally as important as checking the numbers.
Did you get a building inspection done? If so, what did the appropriately qualified, and licensed, inspector say?
He/she is/was in much better position to address the issue raised.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
A 7.1% drop in population figures between 1996 and 2001. At this rate CG is sure to be minimal and tenants are not going to be falling over themselves to get into your property.
I wonder how the population trend has been since – I would argue more research is required.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Geo,
Oh shucks – I have just realised I have buggered up my chances of winning the lottery.
“Due to mix up of some numbers and names, we ask that you keep your winning information confidential until your claims have been processed and your money remitted to your nominated bank account.”
I missed the confidential clause in this.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Greg,
I wonder if this is really a win win situation.
Based on your description this lady is particularly thrifty and has done extremely well to raise three kids by herself. As such I wonder if she has some cash stashed away somewhere, which combined with her FHOG, gives her a deposit.
Even though she may be on Centrelink benefits I wonder if she has ever sat down and discussed the possibility of buying her own property. Something like ‘First Start (?)’ or similar may be possible.
As I understand it Centerlink people can get a loan if they meet the particular banks lending criteria.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi TVLachos,
I assume you mean http://www.stableone.com.au.
Without having dealt with this particular company I can only provide you with some comment of a general nature.
I have cut and paste a list of suggested comments that I posted elsewhere that you may find of interest in determing whether or not Stable One suits your needs.
Some thoughts for you to consider.
1. How long have Stable One been in business?
2. How many investment properties does your ‘consultant’ own?
3. How long has your consultant been investing?
4. How does your ‘consultant’ earn their money?
5. What will they get out of each and every purchase?
6. What service do they offer?
7. How much does it cost to use each aspect of their operations?
8. Can you use your own mortgage lender? property manager? valuer? If not – why not? (it is a free world)?
9. What sort of after sales support do you get?
10. Does their approach fit comfortably with you?
11. How much pressure is bought to bear?
12. Are all decisions made in Stable One’s presence and without pressure?
13. Are there rent guarantees? (Run away fast if there are!)
14. How does the price compare to similar properties on the open market?
15. ASIC/ Ministry of Fair TRading Issues?
16. Where have Stable One’s past sales been? What were they? How much is the open market paying for them now? What are they rented for now?
17. What are similar properties (to the one being considered) renting for? Check with a couple of REA in tthe area?
18. What is the vacancy rate in the area like?
19. What infrastructure is planned for the area?
20. Are brochures high on ‘gloss’ and ‘glitz’ and low on facts?You may also find doing a search of ASIC’s website by company name and, more importantly, by directors names to be a useful exercise.
Any issues the regulatory authorities may have will be obtainable by you.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marlin,
I suspect you have confused the 6 year PPOR CGT exemption CGT rule with any restrictions that may apply to the FHOG, mind you I have never had the need to read FHOG legislation so I may be wrong.
The 6 year rule as it applies to CGT states you can largely only have one PPOR at any one time – there are a few minor qualifications to this when moving houses are involved. If you do only own one PPOR then you can rent it for six years without incurring CGT.
Under the scenario you have discussed I suspect you will miss out on FHOG for your siblings because of your involvement in the Cairns property and also CGT exemption because of your name being on a new PPOR residence in Sydney.
In terms of ownership it is possible for the three of you to form a simple tenants in common structure.
Under this arrangement it is possible for ownership to apportioned in accordance with your collective wishes, who brings what to the ‘table’, or respective finances, or even according to who fights hardest – the reason can be entirely up to you. Eg 33.3% each, 40/40/20, 98/1/1 etc.
Obviously a trust is also a possibility where unit in the trust could be bought in proportions similar to the tenants in common process.
In terms of finances the three of you have an achilles heel – the amount of potential credit card debt available to you. A lender will consider these cards to be fully extended – even if the card has never seen the light of day apart from when you opened the letter.
As Scremin indicated a discussion with a mortgage broker is advised. At the moment you have missed some of the important details that will be required to provide reasonable discussion.
Namely your level of income and also the value of your Cairns property. And then, depending upon the answers provided you may be in a position of being able to release equity from your Cairns property (this part of your Cairns debt now being non-deductible) and using it on/towards a deposit in Sydney.
Based on a $350000 property in Sydney – collectively you will need to find $70K for deposits (based on 80% lend) and an additional 5-6% for purchasing costs (~$18K).
Further research and information required Marlin.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Torachan,
There are two ways to make money in property – income and growth.
The income process is patently clear to all and sundry = more money coming in than going out = positive gearing.
Sometimes overlooked by some proponents of property is the growth equation.
So if I own a property that is costing me $100/week (as an example and to keep the maths simple) I need to be fairly certain it will grow sufficiently to make more than $5200/annum to cover my costs.
For me, and my circumstances, I aim to gear myself (neutrally I might add) in pursuit of capital growth which can be reasonably assured with good comprehensive research.
PS – I wouldn’t even entertain -$100/week.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Elves,
Hmmmmmmmmm
OK, I did as you suggested and have spent a little time researching the matter of CGT deferment as it relates to the question originally asked without any clouding of the issue with reference to shares, collectables, previous postings and so on.
Initially I read the following ATO guide that covers a great many issues surrounding CGT http://www.ato.gov.au/distributor.asp?doc=/content/31570.htm
I read through the above document to find out what CGT deferral options are available to individuals. Of all the listed exemptions not one applies to the scenario originally asked by ‘Daisygirl’ – sure some less common events are eligible for deferral but still no mention of a buy and sale of a property.I then decided to follow the small business lead and read the small business specific document http://www.ato.gov.au/content/downloads/n8384CGT.pdf and found a very useful definition which defined assets as either being active or passive. The upshot of this is that active assets are eligible for CGT rollover and passive assets are not.
The same document specifically talks about rental property, and I quote “However, certain CGT assets can’t be active assets, even if they are used, or held ready for use, in the course of carrying on a business, for example, loans bonds, share options and assets whose main use is to derive rent” which is one of the primary reasons for owning investment property – by extension this means investment properties are not active and therefore not eligible for CGT deferral.
A search on ‘Active Assets’ as defined in the ATO’s legal database revealed a section 152-40 which defines an ‘active asset.’ Once again specific mention also specifically refers to a rental property as not being an active asset and therefore ineligible for any form of CGT deferral.
http://law.ato.gov.au/atolaw/view.htm?find=%22active%20assets%22&docid=PAC/19970038/152-40
But I digress as the original question specifically asked about residential property and rollover opportunities available there and not about small businesses. (In saying that it would seem that even small businesses have limited opportunity to defer CGT incurred with investment properties.)
I then searched the Somersoft forum when I dropped in for some chat time earlier this evening and did a search on ‘deferring CGT’ and up comes the following thread http://www.somersoft.com/forums/showthread.php?t=5327&highlight=deferring+CGT
Dale Gatherum Goss is a highly regarded tax accountant who specialises in property investment matters and is also the author of two books; Tax Battles and Trust Magic.
It would seem that in the context of the original question CGT cannot be deferred. Notwithstanding the above a tax payer still has capacity to offset gains with losses in accordance with the relevant section of the Tax Act.
Derek
derekjones1@bigpond.comEdit – repositioned end quotation mark 5th para.
Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Mark,
I actually don’t have a problem with what you are proposing provided you let the vendors and agents know that your offers are submitted conditional on the first one being accepted by the vendor within ‘X’ days.
This way you are up front and honest, letting both the vendor and agent know where they stand in relation to the other properties of interest to you.
I am sure we can all relate to this process being on the other foot ‘there is another buyer interested in the property too’
In my eyes, provided you are open and up front, there is nothing to lose, including your integrity.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hello Sonja,
Be aware that mortgage sales do not always = good buying price. Research still needs to be done.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Mark,
Just as a bank has rules to guide them when determining either you or your property are a ‘risk’ to their money so does a loan mortgage insurer.
Without knowing the details of the property you are wanting to buy I would suggest that the LMI provider has determined the limit, for this situation, to be 90%.
Someone posted (sorry someone) posted a link to a website that LMI providers use to determine acceptability of risk. Check to see if your locality is one of those consider ‘marginal’
http://www.pmigroup.com.au/LocationWizard.asp
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Simon,
And with this financial year drawing to a close – time is of the essence for those who have picked up new information that can be back-dated and applied to previous returns.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by FW:Hi Fish
Also, a couple of times when Rick has been interview by shows that are planning to do a hatchet job, he has offered to get in touch with some of his wrap buyers so that they can show the positive side too. They’ve never been interested. I wonder why?
Keep smiling
FelicityHi Felicity,
Hmmmmmm a rhetorical question – is the answer good news = no news?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Gina,
I am under the impression that the agent is required by law to present you with all offers. If you can prove that this didn’t happen then your agent may have a case to answer for. After all it is your property and it is you (not the agent) who determines whether or not it is acceptable.
A follow up call to your state based RE institute would be advisable to see what recourse (if any) you have.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
