[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 15, 2007 - 9:23 am

[quote=The Contrarian]
Refinance your loans so that you pay off your PPOR and leave the loans on the investment properties….
Cheers.[/quote]

I'm sorry but I don't see the point in this. If you refinance your IP's to pay off your PPOR then this extra lending is not tax deductible as it will be used for private and not investment purposes.

At least that is what I understood you were suggesting Contrarian. Sorry if I misunderstood.

If you have the equity then you might like to refinance either your PPOR or one of your IPs to clear your personal debt assuming this is at a significantly higher interest rate. You could do this via a split loan and for a much shorter period than your housing loan. This new loan will not be tax deductible either but would save you interest.

Personall I would not sell good IP's to pay off my PPOR or personal debt unless my back was to the wall. 

Hope this helps
Elka 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 14, 2007 - 2:10 pm

Also remember that companies don't get the 50% CGT reduction if you keep a property for longer than 12 months.

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 14, 2007 - 12:44 pm

Hello Flash

I believe you would only be up for CGT for the difference in price for the last 6 months. I also think that you can still decide to treat your old PPOR as your current PPOR and not pay any CGT at this point. Naturally this will mean that you will be up for CGT on the increase in value in the first 6 months of your new PPOR when/if you sell this.

Things to consider would be which property has gone up more in the last 6 months and how long do you intend to live in your new PPOR. 

Maybe you should discuss all this with your accountant before you do anything else.

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 14, 2007 - 12:40 am

I must be misunderstanding the rules of paying CGT on an inherited property when you sell it.

If your share of an inheritance was a property that had been used as an IP don't you need to pay CGT when you sell it?
I thought that the capital gain was, simply put, the differance between what the person you inherited it from paid and what you sold it for. Is that not right?

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 12, 2007 - 10:01 pm

Terryw wrote:

 I would think it may be wise to put the money back in the loan (if you have redraw), then when you want to use it for investment you reborrow it again.

Of cause. That's exactly the right solution. I just couldn't think of it. 

Thank you
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 12, 2007 - 12:49 am

Thank you, I didn't know that.  
Still, they could be up for paying some of the CGT out of their own pockets couldn't they, assuming no other assets? 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 11, 2007 - 5:43 pm

Hello Terry

Frankly, I am not sure. I will try again. 

I don't have any non deductible loans. Both my loans are for IP's but being a "bad investor" I have been paying PI on them as well as having them coupled to 100% offset accounts. Talk about overkill. This was all set up before I learned better via this forum. 

This is what I am intending to change now. i.e make them both IO with 100% offset accounts.

Due to the fact that I have had substantial amounts in my offset accounts I have paid off more of the principle than I needed to. Now that I need to get new loans (for IO) the question is for how much should I make the new loan.

As I see it I have 2 options.

1. I can take it out for the amount that I  still owe.
2. I can take it out for the amount that I would have owed if I had not paid off extra principle. Lets say an extra $50K for example. 

What I want is option 2 but what to do with the extra $50K. I don't want to put it into the offset account ( along with the "clean" cash I have) as I think it will be seen as a redraw ? If I then take some money out of the offset account to put into a SMSF I will have problems with tax deductibility of the extra interest I will incur on the loan….. or am I wrong here?

The problem I see is, let's say I have $100K in the offset a/c.  I now put the $50K in there too. A bit later I contribute for example $75K into a SMSF. Won't the ATO say that 1/3 of the extra interest I now incur on the loan is not tax deductible?

I can see that using option 1 and taking a LOC for the $50K should work right?. However it will cost unnecessary extra interest when I use the money to buy my next IP hopefully some time next year.

Are there other options?
 
Sorry to make it sound so complicated when it's probably dead easy.
With any luck it's at least given the MBs on the forum a good chuckle.

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 11, 2007 - 11:16 am

Can you please explain what you mean by 100 points of ID ? Sorry if it's a common term but I live OS and haven't heard it.

Or do you just mean check their ID through many avenues?

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 11, 2007 - 9:52 am

Terryw wrote:

I guess a lot of people don't realise they could end up in the negative in the end when GCT is taken into account. Many never intend to sell and just wsh to live it up till death.

Thereby ignoring the possibility that their kids will be left with a huge debt which they will have to pay out of their own pockets.

only good if you don't like your kids

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 9, 2007 - 12:28 pm

Hello Hari

Why don't you ring up your current lender and ask who they get to do their commercial valuations. This way you should not need a new valuation if you go back to your current lender for a top up. In fact you could also check this with them when you ring.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 9, 2007 - 10:03 am

<font size=”2″>Hello D</font>
<font size=”2″>Can you give us an idea on the return available for a car parking spot after management fees please. Also, an idea of the price of a spot? Also what are the expenses involved.I assume there is no CG to be had but does the price keep up with inflation?

Thank you for any info.

Elka</font>

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 8, 2007 - 2:05 pm

Hello Boy in Blue

Here is a link to the ATO site which explains when the CGT event occurred.
As propertypower said it's calculated from contact exchange unless there isn't one, in which case the settlement date is used.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36899.htm&pc=001/002/026/016/003&mnu=5060&mfp=001&st=&cy=1

There is also a CGT calculator there. Why don't use give your scenario a try and see what you get.

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 8, 2007 - 1:55 pm

Hello Renee

The best place to ask is always your accountant naturally.

Having said that as the property was built in 1986 the depreciation on the original building has now expired.
However, has the place had a major renovation since then? New fences, carport, inbuilt cupboards etc.etc. all qualify as capital works and thus are subject to the capital works depreciation. Other items like painting, carpet, HWS etc. are depreciated over a much shorter period so it depends on when they where done. They may also need to be listed in your settlement but I am not sure about that.

Here is a link on the subject on the ATO site. There is the possibility to download a PDF file which explains both deductions and depreciation for rental properties.

http://www.ato.gov.au/individuals/content.asp?doc=/content/31258.htm&page=4&H4=&pc=001/002/013/009/008&mnu=45&mfp=001&st=&cy=1

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 8, 2007 - 3:39 am

Hello Hari

Can I ask what sort of commercial property it is?

Thanks
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 2, 2007 - 1:40 pm

Hello Chris

Yes, the 20% includes the PM (agents fees). Depending on where you buy your IP, the agents fees vary. I am paying  7% managements fees and 3% letting fee (for a new tenant). This is in Melbourne.

I think 10% is a bit low. I would work on 14- 15% to be on the safe side. 

Cheers
Elka 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 2, 2007 - 2:22 am

Hello Shel

In your position I wouldn't sell.

You need to calculate about 20% of the yearly rental for expenses (repairs, insurances, rates, water, agents fees, vacancies etc.).  This does not include the interest on your loan. However, don't forget that all this is tax deductible, including the interest on the loan.

If your current loan is principle and interest then it would be good to convert it to interest only. 

Cheers
Elka

Nicely done Kum Yin.   

 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 1, 2007 - 3:01 am

Hello

Why not do both at once. By that I mean buy a house to live in while you renovate it.
The advantages are that you will be able to get the FHOG and if you sell there will be no CGT to pay.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

October 1, 2007 - 1:02 am

Have you tried this tool from the ATO site?

http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=CGT_and_real_property.XR4&go=ok

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 30, 2007 - 12:26 pm

Hello Dave

Happy your willing to share your experience with subdividing and building. I went to the Fairmont Homes site but they don't seem to have the Memphis II model pictured, only the Memphis. Is the Memphis II a single story or 2 story home.

I have never subdivided but have an IP which I would like to subdivide and build on one day. Your journey, any problems you encounter and any tips you learn would be a great learning experience for me and maybe others on the forum as well.

It sounds like your subdividion is complete? Did you have any problems with the process and what sort of costs were involved. Did you have to submit your building plans to get permission for the subdivision.
 
Cheers

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 28, 2007 - 11:00 pm

What a difference the changes you made to the bathroom make. Looks great.

Did you use the spray gun to paint the tiles? Do you know how painted tiles stand up to being given a good clean/scrub?
I always worry that if they start to peel it's a horrific job to get the paint off before repainting.
Has anyone had any experience with this?

Well done
Elka