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elkam
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@elkam
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July 7, 2007 - 10:23 am
Hello happyjack72
I pay 10% letting fee and 4% management fee for a single tenant warehouse/office property.
Since commercial leases are much longer than residential leases, the agent charges a much higher commission for letting but a lower management fee.

I don't know if they have different rates for different types of commercial properties.( i.e retail, office or industrial).
The easiest way for you to find out the going rates and if there is a difference between classes of commercial properties is to just ring a couple of commercial REAs in your area and ask.
Cheers
Elka
elkam
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July 5, 2007 - 1:58 pm
I own an IP in one of the "leafy" suburbs of Melbourne and have just completeda reno. on it to maximise my rental return. It seemed like the right time.

My builder has had two people come up to him (one a neighbour from next door and the other from across the road) and ask if he is the owner and wants to sell. He received one firm offer of $920K to pass onto me and another of "name your price". Neither went inside to look at the house. The value of this IP, though for me a lovely 1920s house, is in the land.
In December 2006 I had a valuation done on this place by the ANZ bank who used an independent valuer who did a thorough (inside too) valuation and came up with $780K which I frankly thought was a bit low. My own "guestimate" had been between $820 and $840K.
Comparing my high "guestimate" and the $920K firm offer that's 9.75% in six months !!??
Not selling
Elka
elkam
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July 4, 2007 - 4:11 pm
Hello GoldCoastGirl
I'm certainly interested as to what the outcome of your claim will be.
I agree that 5 months is an amazing amount of time for a residential property to be vacant unless it's overpriced, in the middle of nowhere or has some serious faults.
Good luck with your claim (even though I am a landlord )
Elka
elkam
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July 4, 2007 - 1:41 pm
OK. I had a minute to spare and since you are new to the site I have searched it for you.
Here is a link to a thread covering this very topic. If you go to the second post, by duckster, you will find a link to the ATO information you are looking for … as he says …. on page 10.
https://www.propertyinvesting.com/forums/getting-technical/finance/4320233?highlight=PPOR%2Cloan%2Cinterest%2Cdeductible
Elka
elkam
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July 4, 2007 - 1:24 pm
No. Sorry yixinyue.
I have just tried doing some searches on the ATO site but couldn't find what you asked for. Just in case, here is the link to the ATO site. Maybe you will know how to do it better or maybe someone else will be able to help you.
http://www.ato.gov.au/
Unfortunately the answer I gave you is correct. If you search this forum you will find that it has been discussed often as this happens to many people.
One of the beauties of planning ahead and using an offset account is that this is avoidable.
Cheers
Elka
elkam
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@elkam
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July 4, 2007 - 12:42 pm
Hello yixinyue
The problem is that the interest on the loan you take out against your current residence and use to finance your new residence will not be tax deductible. The ATO looks at what you used the funds for and not where they came from. In this case the funds will be used for a private purpose.
If you use the funds to buy another investment than that's a different story.
Hope this helps
Elka
elkam
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July 4, 2007 - 10:46 am
Hello camakos
My thoughts are that energy efficient homes (in fact all buildings) are a must for the future but that we will be led towards this end in slow stages ( to avoid the kicking and screaming) because of the extra costs on top of the already high price of housing.
Have you done any costing to see what the difference in price is between a non energy efficient house and an energy efficient one.
This may be a good time to ask something that has puzzled me forever. In a country where we have so many hours of sun, specially in the north, why are we not using solar energy to generate most of the electricity we need in our homes. I have heard that it is expensive to install but if many people used it the price should come down. When you fly into Tel Aviv airport you see that every house has solar heating. Why not here? This may be a very naive question but I have often wondered if this would not be a good business to get into.
Cheers
Elka
elkam
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July 4, 2007 - 10:25 am
Hello Baspet
I hesitated to answer you in case I got the same treatment as GoldCoastGirl who, from my reading of her post, answered you in good faith and in the spirit of being helpful. However, thinking that you may just have had a bad day today I have decided to venture where angels fear to tread.
I think the best way to set a rental is simply to check what comparable properties are being rented for in your area. Your research, together with your PM's recommendation, should give you a pretty good idea.
I wish it was as simple as dividing all your expenses by 52 as this would make all IP's CF neutral at worst but that is not the reality.
I have never rented to a corporate tenant so can't comment on that.
Hope this helps
Elka
elkam
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July 3, 2007 - 4:21 pm
Hello blogs
Actually it's not such a complicated situation. If the two brothers own the apartment 50/50 and both names are on the title and they pay the loan 50/50 then Jons' solution above is spot on.
The brother who is going to live in it will have to pay half the going market rent to his brother as rent for his half of the apartment.
The rest of the arrangements (half of all repairs,water (service charge but not usage),council rates,body corp., insurance etc. etc.) stay the same.
Actually, as the place has been the "leaving brothers" PPOR until now, if he is going to rent somewhere else rather than buy himself another PPOR, he should be able to rent out his half for up to six years without incurring CGT if he sells, I should think.
Cheers
Elka
elkam
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July 1, 2007 - 2:03 pm
Thank you all.
M that is exactly what I am doing now. Using a professional tiler who is going to use the technique you mentioned.
$400 for the floor and on the wall above the sink.
Elka
elkam
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June 30, 2007 - 3:18 pm
Hello woodyvale
I think you certainly have enough equity in your PPOR to cover you for a 12 month period, specially as you seem to be financially prudent and your wife brings in some income.
It may be a good idea to get a LOC asap over your PPOR now while you are employed as later it will be much harder.
Seeing as you will want to use it for both personal and business expenses I think you will want it to be split into several loans (maybe one private, one investment and one new business? ) but maybe a good MB will be able to advise you.
Changing your PPOR loan from PI to IO for a year or two will also reduce your outgoings for the time it takes to get your business off the ground. If you do it now and also have an offset account, then it will cost you no extra interest but will enable you to save up some cash for later.
I certainly would not sell the IP at this point.
I don't know where your IP is but you may want to look at whether you're getting the most you can out of it. Rents have been going up. Maybe even a small out lay coupled with some elbow grease on your part may help reduce the gap ?.
Good luck in whatever you decide to do.
Elka
elkam
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June 29, 2007 - 12:01 pm
Hello Ian
Have you considered also knocking on the neighbours door to verify that they have moved the kitchen and to ask what if any problems they encountered and how the plumbing was done in their case.?
Just a thought.
Elka
elkam
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June 27, 2007 - 2:58 pm
Hello pasandbec
I have been reading the ATO site lately and it seems that the method I outlined above for calculating CG is true if you started renting out your PPOR before 21 August 1996.
If you started renting out your PPOR after 20 August 1996 it seems another rule applies. Here is the link to the ATO site. The first example may be what you are looking for.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=3&H3

Speaking to your accountant is always the best place to start.
Sorry if I mislead you.
Elka
elkam
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June 27, 2007 - 8:32 am
Hello seanmig
I have been reading the ATO site lately and it seems that the method I outlined above for calculating CG is true if you started renting out your PPOR before 21 August 1996.
If you started renting out your PPOR after 20 August 1996 it seems another rule applies. Here is the link to the ATO site. The first example seems to be what you are looking for.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36910.htm&page=3&H3

Speaking to your accountant is always the best place to start.
Sorry if I mislead you.
Elka
elkam
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June 26, 2007 - 9:22 am
Great. Thank you Bren. Just what I need.
elkam
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June 25, 2007 - 11:19 am
Hello dwong8
There is more to a trust then just asset protection. For example flexibility of income distribution which you may not use today, but will give you options in the future.
There is a lot of information on this forum over trusts. Why don't you do a search ( top right of screen) for this subject and have a read.
Cheers
Elka
elkam
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June 25, 2007 - 10:46 am
Hello Jon
I have never seen such an auction in Australia. Sounds even more fascinating and certainly not a process I would enjoy being involved in. Sounds too cutthroat for me. You only get one chance in both the Amsterdam auction and the reverse auction.
I mean a house is not a packet of gum. It does not have a finite price but a range and I am not sure that you always get the best price with this method. If there is little interest in the property this method seems no better than the "normal" auction process. If there is a lot of interest in the property then the bidding up method gives people several chances to "stretch" the price they are willing to pay, specially people buying a home.
With the Amsterdam auction I have wondered what the person holding the price at the gong is supposed to do. Bid against themselves in the second phase?
Elka
elkam
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June 23, 2007 - 11:37 am
Hello David
Great. Thank you. Seems to be working well.
Cheers
Elka
elkam
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June 22, 2007 - 11:33 pm
Thank you both.
Elka
elkam
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June 22, 2007 - 1:15 pm
DraconisV wrote:
Ok. I buy a prop for 200K, with 2.5K selling costs and the FHOG, so I actually fork out 195K. I don't think the size of my deposit matters here(but we'll just say 40K, or about 20%).
I think you mean buying cost here?. B.T.W 2.5K is much too low. Don't forget the dreaded stamp duty. Buying costs are about 6% of the purchase price.
Ok, i move right in and start renovating, I spend 15K on renovations in the 6 months, Correct Elka I stay in the property as my PPOR long enough to qualify for the FHOG then after the 6 months I am back in my parents house. over the next 4.5years(5 years from purchase) i decide to sell and use my capital growth to buy a real PPOR.
So I have bought and kept for more than 12 months, so I get the 50% CG discount.
I lived in there for 6 months, does this actual 6 months mean anything?? What if i was 7 months or 8 months(would that make a difference?).
No. How long you live in it first is irrelevant. It could be years.
The important thing is that you live in it long enough for it to qualify as your PPOR.
The other important thing to note here is that you moved in as soon as you bought it and did not rent it out first. If you had done that then the 6 year rule would not apply.

I'm getting from what your saying is that I lived in my IP(former reno "PPOR") and now as I lived in there can get complete CG exemption for up to 6 years or so(or whatever time the gov says so), so that if i buy my IP(former reno PPOR) in 2010 and sell in 2015, with 4.5 years or renting out, I can then sell and not pay any CG tax.
That's correct.
If all of this is true and I don't pay any CG, then what happens with the situation where I get tax deductions while owning the IP. like building and fixtures deductions that actually reduce the amount my property is worth. Will they have any impact on my CG or any impact if at all???
No impact as you will not be liable for CGT in this example.
Hello Christopher
The point your missing is that under your scenario, where you have a PPOR which you rent out for less than 6 years and then sell having owned no other PPOR in that time, you are not liable for CGT. This means that what you paid for the place, what you spent on the reno, what you sold it for and whether or not you owned it for more than 12 months are irrelevant. The profit you make on this sale is CGT free.
However, I have answered some of your questions in the body of the quote.
As far as the expenses while it's being rented out go, these are all tax deductible but naturally you must declare the income you receive as well.
If you go to the ATO site there is a lot of good information, together with examples, over this subject.
Hope this helps
Elka