Forum Replies Created
when you mentioned extra repayments were you referring to the actual amount you pay? Because if you are paying monthly you can save heaps by paying weekly as the interest is calculated on a daily basis.
It may seem like you will never pay off the loan but even an extra amount paid into a loan will make a difference over time due to compounding.
You have equity in your IP that you cannot access.
You have PPOR debt that is not deductible.
If you were willing to cop capital gain tax and selling commission and solicitor fees and the cost of buying another investment property ie Borrowing costs, Stamp Duty, Morgage insurance you could pay off more of the PPOR loan and then buy another investment property with a higher debt to equity ratio. But you would probably be negatively geared and may not be affordableComments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
My advice is to watch the superman original movie 1978 where lex luther plans to drop the coast into the sea and has purchased the property that is going to be left ie above the sea level. Hence instantly increasing his newly created coastal property values overnight. Imagine th insurance clause to get out of this scenario. Not only will Thermal detonation and acts of terrorism are exempted but in the future your property falling into the ocean will be exempted from insurance.
Probably the coastal property owners will be in nursing homes by 2015..
I have a mind that thinks all the time and has actually thought how to fix this problem.
Create an inland sea in the middle of Australia by pumping sea water into the middle of Australia via wind mills.
Then pump the sea water into flood plains and evaporate the water with the sun and cool it with the inland sea and then pump the fresh water to different farming areas that desperately need it and to the start of the murray river.
This would need a government that thought longer than 3 years to create such a long term plan rather than waiting until were are under water to release a crisis plan.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
do the tenants pay their rent each week and what happens when the lease runs out. Are the tenants connected to a major employer in the town like say Bananas or mining . That could mean many people suddenly become unemployed and finding a tenant becomes impossible. These are factors to think about …
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
it may sound trivial but when you check out this house turn on all taps and check toilet by flushing it. Check how water drains away from sinks ie slowly or reasonably. If possible check hot water works.
This was discussed in API magazine as good checks to also do .Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Check for termites, check stumps under house, check age of electrical wiring as insurance companies do not like very old wiring . May need a rewire worth checking out.
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
be aware that if you were to do what DraconisV5 stated
if you can live at home a few more years. I would suggest this, buy 2 IPs before your PPOR.
You will have to weigh up missing out on the first home buyers grant into your figures.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Just an idea .
Maybe you could build an outside pergola with a table and chairs and maybe an ashtray. Or maybe an outside temporary marque with a table and chairs. I discovered one of my tenants had been a smoker and had set up a chair and table under one of my trees as an outside smoking area.
This way it is a sort of win win compromise for both parties.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I do not know how good they are but
http://www.cameronbird.com.au is another web site that sells properties that are new developments.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Joel, You need to look at what you are trying to achieve. It sounds like you want to live in the house you are planning on buying. In this case you are right that the interest paid is money lost. The upside is that this would be a`PPOR (Primary place of residence) which allows an exemption from capital gains tax if you managed to acheive a capital gain. What you also need to compare is what it costs to rent a place and the fact that you do not experience a gain in capital as you do not own it.
If you are referring to an investment property you can claim interest costs against income if the nettincome is negative. Repair costs and improvements are claimable in a negative gearing situation. If the property was positive or cash flow neutral if is costing you nothing or making you money. I suggest you read some books on property investing to get an understanding of the capital gains tax implications and tax deductibility and the two methods of negative or positive gearing..
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Another point to consider is that the net rental loss is considered as income by centrelink and may affect your family entitlements..
In rich dad poor dad he is referring to formal education rather than Investor education in the I quadrant he is referring to Quadrant E education. If you want to learn this approach to property investing look for a book called wealth magic written by Peter Spann. If you wish to do seminars check out http://www.freemanfox.com.au.
Steve uses a positive gearing approach where as
Peter uses negative gearing which relies on a growth strategy.
MArgaret Lomas is another book writer that you could look at getting her books.a pest inspection would be good also
You need to work out what your end goal is. If you live in the house you will get a capital gains exemption as a PPOR where as a rental property investment will incur capital gains tax.
( when will you be selling it in the future)
An investment property can be paid off a lot quicker than a PPOR home and expenses incurred are tax deductible where as PPOR doesn’t allow anything to be claimed. You may wish to consider starting off buying a cheaper investment like a unit and trying to pay it off or at least get it paid off to a point where it is positively geared as soon as possible. Once the investment is not costing you to hold on to it you can then buy another one and do the same thing. PPOR stands for Principal place of residence. If you can stay at home until you have achieved a positive situation you would be financially better off. (be aware of maintance costs that can occur suddenly)This is general advice rather than financial advice as I do not know your goals, risk adversion, and financial situation and I do not have a licence to give financial advice even though I have done financial planning at University as part of my Bachelor of Commerce degree..
go straight to the source
I recommend that you phone up the tax department and ask them for some help as they are quite helpful check out
http://www.ato.gov.auYour current agent may not have any success in getting the lost rent and you may only get the bond back. You should look at taking out landlords insurance (CGU) to cover lost rent and malicious damage.
I would physically go and check the property is in good condition as tenants will not rent a place that has a worn out look , bad colour scheme, long grass, unkept gardens, ect. Paint the interior in Pastel neutral colours rather than bold colours, mulch on the gardens (cheap but effective). Do not rely on a condition report go and look for your self maybe take a friend and get their opinion maybe a different gender than you. You may need to think about reducing the rent rather than having a vacant property that can be vandalised or possessed by squatters.
I have gone through having a property abandoned and then vandalised. It is really worth looking at the property to see if it is up to scratch.
You may wish to let the current agent know that you are considering taking the management of your house to another agent before actually doing this, although I did not do this
I just rang another agent and they went around and picked up the keys. It was too late for the previous agent to make amends with me they where fired as mr Trump would say !
Maybe you could ask the property manager if they could inspect the property with you with the view of what might be putting tenants off renting it.Opening value cannot be written off immediately if it has declined to $300 from a previous year of depreciation. . If it cost less than $300 to purchase item then yes it can be written off immediately.
Also prime cost items can’t be added to a low value pool
No if item has depreciated down to $300. only if original cost is <$300 .
Taxpayer cannot acquire one or more assets identical in the same income year if the total cost is over $300 like two lamp shades at $290 as an example.
exception to this is Software it cannot be written off straight away even if under $300…Private use has to be apportioned pro rata also.
Once an item is declared as diminishing it stays as diminishing
once an item is declared as prime life it stays prime life.,To use a low value pool may not be available as there are eligibility requirements to enter sts and you have to lodge a form to the tax office. sts applies to all businesses (ie companies, fixed trusts, non -fixed trusts, partnerships and sole proprieters) and turnover less than one million dollars.
good idea to check with ato if you are eligible to enter simplied tax system as a rental property owner.
A quantity surveyor can assess your whole property for a depreciation schedule that you just give to tax agent/accountant .jec I am in the same predicament as you in that I worked my guts out doing a degree 2001 – 2004 and then haven’t found anyone willing to employ me. This was when the property market was really booming. In hind site I should have done an apprenticeship and I would not now have a 17000 hecs debt and would have been paid for 3 to 4 years.
Neil Jenman has a good way of dealing with sales in that you pay a certain commission rate up to $500,000 and then pay a higher commission rate for any amount above $500,000. This gives the sales rep a motive for getting the best price possible.
It may be worth your while visiting his web site at http://www.jenman.com.au/effective life after 1 july 2006
http://law.ato.gov.au/pdf/tr06-005.pdf
effective life item purchased before
1 july 2006
http://law.ato.gov.au/pbrdocs/tr200018_cv.htmprime life depreciation is the cost of the item / the effective years of life. it has the advantage of being fairly simple to work out its draw back is that the depreciation is the same over the life of the item for each year.
Diminishing depreciation is calculated by dividing 150% by the number of years of life to give you a yearly depreciation percentage however this will chabge to 200% / effective years life.
this is covered on page 15 of nat1729-06.pdf . THe advantage of diminishing is that you get greater depreciation at the beginning and as time goes by this amount diminishes by the amount of depreciation each year coming off the value of the item. This is particularly useful for cars as this is how cars depreciate in real life. Also you might what to research STS on the tax web site as there is also a method of depreciation know as a low value pool and also look at the minimum amount where an instant deduction occurs I think it is $300 if not part of a set but check on the ato web site.
