Forum Replies Created
- Keira wrote:
If you plan on turning it over quickly, it needs to be your PPOR from the day of settlement which means either living in it or having it vacant whilst doing work but NOT having tenants. If you put tenants in first you still get a CGT discount, for every day it was tenanted and you match that period of time living in it you get a pro-rata discount… for eg…. My place was tenanted for 12 months. I then lived in it for 6 and on-sold it. I get 50% CGT discount for holding it 12 months then i get another 50% off that because i lived in it for 50% of the length of time it was tenanted.
Does this mean that instead of paying 50% of the CGT you pay 50% of the 50%(so 25%, like a 75% discount).
Also then say i rent it out for first 6 months, and then live in it as ppor for 3 months, again same deal, but if i live in there the same amount of time as the tenanted(6months/6 months) then i get a 100% discount on the 50% discount and pay no CGT..
Is this all correct??
Chris.
If you pay part of the principle off when you come to turning it into an IP you will have a low tax-deductable debt.
You may wantto buy another PPOR then and you will then have a big debt on that which is non tax-deductable.You can get an offset facility which you park your money in,
say you have a loan of 100K, and you have 10K in the offset, then you pay only interest on the 90K. Its like paying the loan off but you can access the money easily and you won't wreck up your tax-deductability.Cheers,
Chris.Richard, would a wrap like the one that you talk about be a good venture for a first timer in the property market??
Coz a CoC return(of 16%) requires a certain % of deposit(so what LVR do you go for??)
I'm going to buy a property in late 2009(first one) with a deposit between 25-28K, the property im looking for is around 200K with 5% closing costs factored in my loan amount will be(assuming 25K dep) around 187K (LVR be around 93.5), so with the margin it would be a sale price of lets say 250K.
Expenses with wraps, I would usually say with the buy-hold method that we should factor 15-20% but what % of expenses will be for a wrap??
Chris.
Qlds007 wrote:If you wrap the propert from day 1 you are getting COC return of around 16%.What sale % margin and % interest rate higher do you use to achieve this??
Cheers,
ChrisThank you everyone for your posts. I realise it is constructive criticism, so i am not taking it personal.
You are true Kiera it is hard to get a foot in the door, but you are also correct in saying that we all want to suceed but not stoop to the level of fraud.
Maybe being eligible for the FHOG later if i don’t live in my IP sounds good. I will not do this.
Thanks everyone,
Chris.Thanks Foundation. I’ll contact the office and see what happens.
It seems like what I am proposing is fraud, it doesn’t make me feel good that this is the truth. hmm, if they can’t catch me(small chance) then why not give it a go.
uh, i dont understand, i’m sure the ATO would take the money back, how can they not, would I be obliged to live there for 6 months no matter what. They have to take the money? dont they??
Chris.
simbacat wrote:Aaaah, a penny just dropped!
I didn't realise that the $140k portion of the new mortgage for IP would not be tax deductible if it is then used towards PPOR. It is all getting a bit clearer for me now.Thats if you refinance(and get 140K) and the proceeds go to paying off the PPOR.
With refinancing the purpose of the funds is the factor that decides whether it is tax-deductable or not, they have to be used in investments for it to be tax-deductable.But if you sell your property to your spouse, then you just get the money, like any person gets when they sell their house, you could buy a car, go on a holiday, pay off your PPOR, do whatever, the tax-deductable debt is now going to be the $330K debt to your husband.
This selling is to allow you to pay of your PPOR, its just to help you in tax effective means, though I have no idea if the numbers stack up well, i would be interested of the outcome.
Regards,
Chris.Ok, so house prices won't fly with growth forever above income increases,
Will house prices increases stay (sort of) level with income increases.
E.g. if income goes up 5% pa, so does house prices, also what are the actual house price increases??Chris.
Woah, Foundation(sorry don’t know your first name).
Your throwing lots of stuff at us and you are kinda scaring the s**t out of me.I have also read your other thread here https://www.propertyinvesting.com/forums/property-investing/general-property/4322827
So what I get from what your saying is;
Rent rises depend on wage rises, so rent goes up with wages.
Now do wages go up with inflation??(as that would show me how rent rises relate to inflation).House values rely on the amount of money credit banks are willing to lend. With this crazy curve you have going up there with credit flying up, you say there is gonna be a squeeze??
and hence bank will not be lending extra money out.
So if property prices rely on the willingness of banks to lend more and more, and then banks stop lending more(or less), does this mean that property prices will stagnate or fall for long periods of time.
What do we do, your scaring me, I thought property was safe and i was going to be set, i’m now afraid of getting into the property market….Yours scared s**hless,
Chris.Masih wrote:5 – Remember Law of 14. If the capital growth is 10% then rent will be 4%. If rent is 10% then capital growth will be 4%.Where did you get this law from?? I've never heard of it before, have you got any info on it, it sounds good as I have been assuming in my calculations of capital growth 5.5% and rent 4.5%(total 10 instead of the 14).
Chris
tammy wrote:Chris,Do you mean Wallsend on the west side of Newcaslte?
Tammy
Yes, you are correct…. Is there anything wrong there???
Quote:Hi Chris,
If you've saved up some deposit and you think prices might be too high by the time you finish uni, why dont you look for something Off-The Plan with long completion date…say 2 or 3 years? That way you can get in early in the market and dont have to worry about paying off a mortgage while still studying. Parramatta is a great area though I'm not sure if you can get anything in your price range for OTP. You'll be looking at 340k+ I guess.Well I have saved up around 5K this year (from part time work while studying), my girlfriend had 4K saved up but she bought an 8K car last month, so she will be paying that off for a while(shes studying to, part-time work).
Yea Masih, I have heard of these deposit bonds, where you pay a small amount and they pay the deposit then, later you pay the lot. But I have heard something about getting approval for these bonds, like you need to have a certain income(3 times the bond or something???)
Um, I have heard alot of bad publicity aimed at off-the-plan in these forums lately.
I am worried also that the (around) 25K that we will have saved up and my income( around 50K, hers 15K) will not be enough and we will have to forfeit the purchase.
I have been looking into west of newcastle, this area called kurri kurri, it has large land(nice for subdivision, cut into 2 and then build) and average prices are like 200K, and rents are around 200 per week.
I don't know, I have been researching lots of areas on real estate.com.au, blacktown, seven hills, another place south westo of newcastle called townsend(it looks good, but subdivisions are hard to come by there).
There is a thing I have with units, I want to build equity, subdivisions and builds are a way to go, and with renovating the existing house i can build equity quickly. large houses can do that, unit can't.
I'm in a real pickle of indecision and confusion…
Chris.
Hye Masih,
Well, i'm not ready to buy into the market yet, I am just finishing my first year of 3 at university and my gf is doing a long tafe course, we are saving like mad and at the completion of my degree(end of 2009) we should be able to jump in at properties around 200-250, but i'm worrying that I won't be able to get anything good for that price(like close, i might have to move further west of sydney), I live in blacktown and prices here at the moment would be nice for that, but i'm looking at buying my IP in north paramatta but prices there are a bit more steep.I could buy my 1st IP here in blacktown, then after 12 months or so, with increased earnings of both of us and maybe some capital appreciation, i could buy another IP but this time in a better area(more cap growth).
Chris.
Masih wrote:Besides, the more rate rises, the higher the rentals as most people wont be able to afford to a buy a house. So demand for rental properties will definitly go up.Thats exactly what I think too.
You will have more expenses but more income, balancing it out.
The difference is the stall(or slow down) of rising prices.
I will be getting into the market for the first time around the end of 2009(start of 2010) and I want to see rates go up and up and up, coz I know that rents will go up balancing the rate rises, and will stop prices going up between now and when I am ready to buy some property. The rising rents may not cover the rate rises, but they do help balance.Come on rates, i want more, higher, come on!!.
Lol, talk about doign things differently, high rates rock.
Chris.
Hmm, propertypower, that is a good idea.
As i would like to buy my first IP(in sydney aswell) around end 2009 – start2010 and i am worrying about size of depoist, if i can get in in time to not have missed out on alot of the uptrending of the market.I could get in even earlier, like with still half a year of uni left(mid2009) and do what you suggested and won't miss out as much on the uptrend. I would have about 20K in savings then, and buying 200-250K property, so about 8-10% deposit. My income would be only(combined) 30K pa, we are both studying. Would they lend??
Also with the FHOG you have to live in for 6 months out of the 12months, could you claim it and say "oh well i'll rent it out for 6 months then i'll move in for 6 months" and then don't move in in the second 6 months, then say to the ATO, oh I broke your rules, i don't deserve this, and give them back the FHOG, could you do this(would it have any implications on future chances of getting FHOG.
As the FHOG would significantly increase my deposit and would help get me into the property initiailly, then over the next 6 months, make up that FHOG(with increased earnings) and pay it back. Like a 7K interest free loan, which isnt seen as a loan by the bank, just extra money.What does everyone think of this??
Chris.
Hmm, Stumunro you say that some areas over the next 2 year will show good growth, what regions(not subrurbs) do you think will take slightly longer(i would prefer western, cheaper,200-250K properties) to get some growth going, as i will not be in the property market in such a short time as you have mentioned.
Chris.
Would I be able to get a copy of that article aswell Simon.
Chris
Mortgage Hunter wrote:As long as you don't live in the IP you can still get it later. This changed in 2000 but many people still don't know.Really??, thats my good news for today. Thank you very much Simon.
P.S. Just an after thought, when the FHOG was introduced the prices of properties were much lower, as a result the FHOG made up a greater % of the purchase price(and much more of the deposit), now that prices are higher the FHOG is making less of an impact on the help it gives to first home buyers. Do you reckon they will jump the FHOG up to meet the increased level of purchase prices of properties.
Chris.
Mortgage Hunter wrote:Buying an IP does not stop you from getting the FHOG at a later time when you buy a home.This is confusing. I've been thinking the other way.
Ok, situation time;
I buy an IP with my partner(both names on title of prop and loan), we dont get FHOG(as IP).
Later we buy PPOR, with both names(blah,blah), do we get the FHOG??Does it matter in the end(about names on titles) if we are going to get the FHOG anyway??
Thanks fr your help Simon,
Chris.Thanks for your reply Shel,
So could I arrange for this sort of thing(but with title on property) so for my name to be on the IP(only) and then with the PPOR her name only and she can then claim the FHOG????
Chris.
