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Use a mortgage broker as they have many lenders to choose from to suit your lending needs.
I didn't see a mention of stamp duty that would be payable on purchasing the PPOR !
2k for expenses doesn't sound like stamp duty has been factored into the costs.
Don't want you to get a nasty surprise expense
it would be worth looking into what the stamp duty will be on 500 K property in your state.OR if it is a new property GST may be a cost incurred as well as stamp duty on land transfer.
http://www.sro.vic.gov.au/sro/SROWebsite.nsf/taxes_landtax.htm
Victorian web site
It is not on your rates notice. You may have to chase it up if you do not receive a state tax notice.
My parents got one because the revenue department decides that the house they have lived in for almost 40 years was not the primary residence and that the much cheaper country property was the PPOR. So they had to pay the tax and then complain about the incorrect assessment to get it fixed up.Most people see debt as a bad thing to avoid , yet they seem to borrow lots of money to buy a new car, TV, Stereo, furniture, carpet, fridge, stove, ect but they end up paying more for these items due to higher interest rates. These assets will be worth in 10 years time very little. A House should go up in value over ten years if you have a long term outlook rather than a short term outlook.
A good goal to have is to get the property in a cash flow positive situation because then the property is costing you nothing to hold on to.
If you can hold on to the property for the long term show your partner the property value each year and how much it has gone up in value from the previous year.these articles below may help explain the diference between good debt and bad debt
http://money.cnn.com/magazines/moneymag/money101/lesson9/
http://www.bankrate.com/brm/news/credit-management/gooddebt-baddebt.asp
http://moneycentral.msn.com/content/Savinganddebt/Managedebt/P150813.asp
http://www.count.com.au/Investor_Education/Principles/Ten_Simple_Rules/Rule_9.htm
http://www.thedigeratilife.com/blog/index.php/2007/07/23/good-debt-bad-debt-the-differences-illustrated/
http://www.fool.com/personal-finance/credit/2006/11/03/good-debt-bad-debt.aspxPay the higher interest rate !
Why would this be a good idea you are asking yourself.
Because you are cleaning up your credit record and once the credit record is clean you can re-finance later on to a lower interest rate.The 80% refers to your Loan to Value Ratio so you need to know how much your property is valued at from the valuer the bank will use and then you need to know the outstanding loan amount.
Say value is $500,000 for an example. The 80% LVR figure is $400,000 so if your loan was $295,000 then you could borrow $105,000. through a line of credit type loan.
This $105,000 could be used as a deposit for the next loan.
Problem is loan now is $400,000 plus next loan you are applying for.
What are the total repayments going to be?
is the question you need to find out and will you be able to afford it.Also lenders do not like no record of income so you may need to look at a low doc loan.
Borrowing over 100% is usually for new home buyers rather than investors of second properties.
Although you may be able to borrow more than you need for a deposit from the line of credit on the first house.Sounds like you may be in a commission job as a mortgage broker, where you are entirely dependant on your aggregator not dropping you if your sales are below their sales targets.
If this is the situation you may be wise to wait till your trail commissions can pay for this investment's repayment costs.Some people like me do not like living in the west due to the fact that the sun rises in the east and goes down in the west. So if you work in Melbourne you drive with the sun in your eyes in the morning and drive with the sun in your eyes in the afternoon.
this web site might be of interest to your situation
http://www.noagentproperty.com.au/This forum is an Australian property forum as I know nothing about USA tax I can only suggest you contact
. the free help with your tax return at an IRS Taxpayer Assistance Center. You don’t need to call ahead.
To find the Taxpayer Assistance Center where you live, visit http://www.irs.gov/localcontacts/index.html. To get help by phone, call the IRS at 1-800-829-1040.Landline did a story on this topic
have a look at
http://www.abc.net.au/landline/content/2006/s1958816.htmOnly thing is the amount of payment per tonne is unknown at this stage as it would be market set and they also talk about carbon being absorbed into the soil and the problems with measuring the carbon in the soil.
If you owned a PPOR rather than renting you also would incur Maintenance costs that your current renting situation doesn't incur.
The main point is getting into the game. Once you start paying down the loan and building equity your financial position will improve just remember this major wisdomBorrow money for appreciating assets
Pay cash for depreciating assets like cars, televisions, ect
Eventually you will build wealth doing this.Most people have these around the other way.
Borrow for depreciating assets
Spend cash on very little as paying off loans for items that are going down in value.Be aware that rent in inner suburbs of Melbourne have been recently skyrocketing up 20% due to a lower vacany rate and not enough investors in the market , so I do not know how your city rents will behave.
Have you read more books as the more you know the more value you can create.
I myself have read about 80% of the books out in the book stores but I do not earn enough (PAYE) income to borrow more large sums for property investing.I was in a mortgage development program that was marketed as flexible and casual but after
I did all the lender accrediations and the mortgage broker certificate I discovered that it was really a full time business.As I am looking after two children under three I had no chioce but to terminate my agreement due to my aggregator having
no understanding of my time limitations as a carer parent.You really need to have sales skills !
Also you need to consider how will you cope not earning any money for 3 to 4 months until the commission is paid.
It is a highly competitive industry and finding and keeping mortgages is not an easy task.
If you decide to go with an aggregator do they provide you with sales leads and do they expect a sales target to be achieved.What needs to be considered is the tax rate you are on
Example
tax rate was 33%
negative gearing loss per year $10,000
Tax saved in dollars = $3300
Loss = $6,700 per year out of your pocket
If you lost employment you have to find $10,000 per year and would not get $3300 per year back as no employment income
if you hold property for say 5 years you need to make $33,500 after capital gains tax to break even
At a tax rate of 33% you have to make $40,120 just to cover the loss you made
This doesn't factor in unexpected maintenance costs & periods of being vacant & selling costs and next property buying costsIt really comes down to what level of risk you can tolerate
The risk that the gain will be large enough to offset the losses each year when you sell and the risk of higher interest rates (this will bite more when negative gearing is higher) or loss of your employment..
The 50% discount relies on you holding an asset for at least 12 months from the enter into contract dates not the settlement dates.
If you own the land jointly with someone else then the gain is divided in half between the joint owners if the title is joint ownership.
You both pay tax but the gain is 1/2 and with 50% discount then the gain is 25% each.
Be careful of doing repair work to ready a property for rental as the actual repairs would not be claimable as a repair but rather through future depreciation.
This is due to you buying a house in a condition of needing repair and then repairing it. The Tax Law would classify the repair as an improvement. If the repair was the result of having rented out a property previously and having to repair the house due to wear and tear then this is a repair.
Under Tax Law the interest you paid on borrowings, Council Rates, Purchasing costs while holding the land would be considered holding costs.
These costs may be able to be added to the cost base of your land thus reducing the capital gain so long as you didn't claim any other deductions on your tax during the holding time (know as double dipping – you can only claim one way not both)
And you kept good records of these costsSee http://www.ato.gov.au/individuals/content.asp?doc=/content/36902.htm
P.S Welcome to the web site
If you sell the IP you have to pay capital gains tax and stamp duty on the next IP you buy.
Something to think about –
You have 1560k in your PPOR that will not attract CGT and unused equity that you cannot access due to having not enough income to service any more loans.Recommend you read Steve Mcknights book regarding negative gearing compared with positive gearing and how to tap into fully releasing unused equity.
Your PPOR house is not tax deductible so if you could make extra repayments on the non investment mortgage any savings in interest are worthwhile. For example say you managed to repay an extra $5000 you save at 7% interest the charge of $350 a year.
Iif you are taxed at 40% you have really saved $583 because you would have to earn $583 to have $350 to pay the interest that you have saved having to pay.Pro investor. I like the too rent dependent statement because if the bank employee is downsized at any time in the future they lose all their income in one hit
.,It is less risky to be rent dependent than wage dependent nowadays.If joint owned your gain will be divided into 50% wife and 50% hubby
$40,000 becomes $20,000 for hubby and $20,000 for wife
if owned > 12 months 50% discount applies to capital gain
$10,000 to hubby $10,000 to wife
Worse case scenario 50% tax rate Capital Gains Tax of $5000 for hubby and $5000 for wife
Need to look at marginal tax rates of wife and hubby to work out likely tax as capital gain is added to your incomes and then taxed.
I am assuming you claimed deductions on costs of holding the property like interest, rates,ect against rental income.
GST is for new buildings or substantial renovations on 2nd hand houses rather than for 2nd hand houses being resold.
You need to also factor in State Stamp duty for your purchase of the next investment property and sales commissions paid to real estate agents for selling the house.I had a property not rent because the colour scheme was ghastly purple and hot pink. May be you could get some friends to look at the property from a different set of eyes than yours to get a different perpective.It was the boyfriend of my real estate agent that mentioned when he saw my property that the colour scheme was hideous.
Also built in ward robes are a must and blinds / curtains
I planned to add a built in wardrobe before renting out a property and had to add it in to the lease agreement that the wardrobe was being installed.It might be worth your while to enquire with this scenario at Citibank as they are a global banking company with branches in many countries and may be the only hope of a bank that might be open to cross country investment .
