Forum Replies Created
If you half own the land on the title the CGT will be split between the joint owners.
As you will only be working part time your annual income if timed correctly will be less for the next financial year and will be added to your annual income to calculate what tax you will end up paying.
BEWARE – this added income is deemed by the family office and Centrelink as income so if you are claiming benefits like parenting payments or CCB it could be affected ! and you may have to pay them back money at the end of the financial yearWhat you also need to be aware of is GST liability when selling new property and may need to be registered for GST so you can claim GST credits for GST paid in the construction of the buildings.Also you may want to ask about margin scheme in regard to GST.
http://www.behanlegal.com/KnowledgeCentre/Taxation/GSTtheMarginScheme/tabid/272/Default.aspxIs it true that we only pay tax on profit above & beyond our build cost? (EG, build for 150 – sell for 250, pay tax on 100k?)
No you have forgotten to take into account the cost base of the land as well as the building cost base !
See
http://www.ato.gov.au/super/content.aspx?menuid=0&doc=/content/00237979.htm&page=72&H72Jodee have a look at this web site
http://www.sourcepropertyservices.com/backyardsrus.asp
They are not in the northern suburbs but they do everything for a developer.
If you want to learn check out
http://www.activepropertynetwork.com.au/Another thing would be Window Safety Film, Barriers to Kitchen , stairs. A place to place nappies out of children's reach. Secure back yard so kids do not escape. Possibly 50 degrees hot water .
Can you borrow money from this strange lender against any increase in equity that may have occurred.
Like a small equity loan to use as a deposit for another lender?A longer settlement time is the way to go next time. You get any property value increase and the purchase price stays the same.
Have any item you value written in the terms of the contract .Have you heard of Metropole they advertise in Australian Property investor magazine
they may be what you are looking for – I have never used them so you would need to check them out yourself
http://www.metropole.com.au/develop-a-property/Depends on the expenses you incur !
You could be out of pocket by that much475k mortgage at say 7% interest = $640 dollars a week
Expenses like insurance, council rates, water rates = $2000 guessimate per year could be more ! $40 a week
Now up to $680 a week
Rent was $475 a week
So net income = 475 – 680 = minus 205 a week
$205 * .30 = $61.50 back on your tax a week $143 loss from your wallet a week after tax return refund worked out as a weekly value.
Also note you have to repair anything that breaks down. this has not been accounted by me into expenses.
Your rates may be more , insurance may be more , water may be more
What your accountant may have not told you is you can claim an extra expense on paper
The cost of the building can be depreciated over 40 years at 2.5% a year but the drawback is that you reduce the cost base of the property and eventually increase capital gains tax if you sell it later on.
As an example say it cost you 200,000 to build the house you multiple this by 0.025 (2.5%)
this example it would be $5000 a year in extra paper expenses
5000 * .30 = $1500 a year however you need to be $15660 over the marginal tax threshold for 30 % to get 30% back as a refund
$28 dollars extra a week
You may be able to claim fittings also
You should employ a quantity surveyor to advise you on what you can claim as depreciation on your investment.
They can work out a depreciation schedule for you to give to your accountant.unfortunately property is a long term investment
and cash flow can not seem attractive at first
but this loss is offset by hopefully
a capital growth in the property.
This is where the risk is if you do not make the gain in value to offset the losses incurred.Also 7% interest doesn't factor in principal payments that your loan may be charging as part of the repayments at this moment.
the repayments are not tax deductible only the interest.Not advice rather information to check out to help with options to make a decision.
vendor financing this out may be a solution !
see https://www.propertyinvesting.com/forums/property-investing/help-needed/4335800?highlight=vendor#comment-231536
pauldobson
http://www.jvpropertypartners.com.au/I.Prop wrote:Gday everyone, It's a happy place to be when one can find a forum with like minded people! I have a question that could do with some answering please. Here's my scenario: I have a personal credit card with a high amount of credit available and I have been using this card for my personal expensesSo it has a private loan purpose amount of debt already on it which makes it messy to determine which part is for investment and which part of the debt is for private purposes.
I.Prop wrote:I also have an unused flexi loan available. Apart from my cash savings, I intend to use the above credit available to purchase an IP overseas (not able to get a loan here to finance IP). My question is: Can I still deduct on the interest payable if from the point of property purchase, I stop using my credit card for personal expenses and only for my investment property?maybe if you pay off the private debt off the credit card ! Before using it for that purpose.
I.Prop wrote:I will be declaring my income earned from overseas. As there is a clear nexus for my flexi loan to the IP, the interest payable should definitely be deductible too yes? I will only use the loan for the IP and nothing else. I am purchasing the property under a trust (for asset protection amongst other things) and as I understand it, the negative gearing can only be held under that trust and cannot be netted against my personal taxable income?Ask the accountant if you can use a hybrid trust and if you can borrow money to buy units in a PIT that may or may not be able to be negatively geared against other income.
http://www.trustmagic.com.au/inf/Hybrid-Trusts.pdf
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4328668I.Prop wrote:The tax losses can however, be carried forward indefinitely until the IP is positively geared? Am I 100% correct on this? Is it also true that overseas income may not necessarily have to be declared if the funds are not repatriated back to Australia?Depends on if you have to pay tax in the country you earned the income from and what sort of Tax treaty exists between the two countries.
Usually has to be declared as Foreign Income and Foreign tax paid on tax return.
If you are deemed an Australian Resident by ATO and earn money in another country you can still be taxed by OZ.
http://www.ato.gov.au/individuals/content.asp?doc=/content/28908.htm
http://www.ato.gov.au/businesses/content.asp?doc=/content/64494.htm
I.Prop wrote:I will undoubtedly be checking with my accountant too but would not mind some clarity when I speak to him next week. Greatly appreciate the assistance.That would be a good idea as foreign income can be complicated to know how it will be treated and tax rulings on hybrid trusts can also be tricky and could be knocked back by the ATO.
When you sell the 400k property you made a capital gain of 80k – 25k = 55k which may be liable to capital gains tax that you would be required to pay tax on. Also the sales agent may require a commission on the sale out of part of your 80k profit.
Usually banks lend out to 80% of the LVR on equity meaning you will only be able to borrow to 320k max so as to protect them from an equity valuation decrease.It would be a good idea to ask bank what LVR they will lend to for an equity loan.
It has good public transport by train and by tram from west preston.
Property investing has an overseas deals forum area.
This web site I found may suit
http://www.propertyshowrooms.com/forum/Forum37-1.aspx
but I have not used it and it seems to have a low number of members on it.I do not know anything about this scenario or how the tax office treats this setup
but the link below may be useful
but I recommend you seek professional accounting advice before committing to any tax minimisation scheme.Tax ruling I found on the subject
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/83291.htm
rulings can change so check with an accountant !Not sure but I think the negative losses stay in the family trust and capital gain tax and land tax will be a possible downside.
check with an accountant !Garden Last
Learning to be a Landlord workshop
The workshop will be held at Carlton Baths Community Centre, 248 Rathdowne Street on Thursday February 10 from 6.00pm to 8.00pm. For bookings, please call Cindy (phone number is on web page below via link below) by Tuesday 8 February.
See
http://www.consumer.vic.gov.au/CA256EB5000644CE/page/Listing-MediaReleases-2011-01-25+-+Learn+to+be+a+landlordI recommend you go to this workshop or talk with consumer affairs as they will be keen to provide any help you may require as a Landlord.
One thing to mention.
Once your income drops the lenders will lend a lot less or no loan at all .
While you earn income the amount lent will be higher.
I have been in this situation for 6 years as a stay at home dad and my borrowing capacity is a lot lower than when I worked full time.
if the property has settled with the builder then stamp duty would be payable twice when you buy from the builder.
This can happen but I think the contract has nominee placed on it but varies from state to state see last link.
read links below for more information on this situation
http://www.blakedawson.com/Templates/Publications/x_article_content_page.aspx?id=60369
https://www.propertyinvesting.com/weeklywords
http://www.harwoodandrews.com.au/publications_bulletins_detail.aspx?view=89
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/24486Be really careful
is it in a flood zone ? !!
Jeparit looked good but it recently was floodingBed bugs are a rising problem in Australia and are hard to treat as they live in mattresses and in carpets and floor cracks.
Steaming the bugs or replacing the mattresses seems to be the only effective method.visit this site.
http://www.consumer.vic.gov.au/
and may be
I recommend you have a read of Goodbye Welfare
You may be able to relate to this author as she was in a similar situation like you are at.
It may be in your local library that is where I came across it..No one wants to predict how future interest rates are trending and if they advised someone incorrectly then they could be liable.
If you fix your rate and lost employment and had to break the loan the break costs can be large.
Are you likely to be able to make extra repayments ? If yes then this is when a split combination loan allows you to make extra repayments on the small variable part of the loan.
Usually for investors it helps them fixing the loan in that costs of interest are fixed.
There is a risk involved with fixing a loan if interest rates go down and you get stuck on a higher interest rate you fixed earlier.
You need to consider if you can cope with this possible future situation and if you are able to tolerate the risk.Or is it truly 'luck of the draw' in that, well, no one really knows?
With the current floods in QLD this will have an effect our economy.
But how this will effect interest rates in the future I do not really know but
Reading the business pages of the newspapers to see what experts are predicting as far as interest rates in the future might give you an idea how they might be affected. The rebuilding cost is estimated at 13 billion plus. Mining in QLD is affected, Food production is destroyed and exports have been stopped or delayed..
It is not a perfect and guarantee method of predicting future interest rate events but it may help you to decide which way to go.
