Hello Show me the money.

Do you know a lender who allows a 100% offset account with a 3 year fixed loan?. If so, I am interested to know which one.

Thanks
Elka 

Hello pasandbec

All selling costs, including the ones you mentioned, are deducted from the sale price for CG calculation.

If you lived in the property as your PPOR for the first year and then rented it out for 4 years then the calculation of taxable CG would look  something like this:-

     CG (over the 5 years) X 4/5        except that the ATO calculates it in days and not years as here.

You would then get the 50% discount.

However, there are some things to remember.

The difference between what you paid for the house and the sale price is not the CG. It's a much more complex calculation and takes into account both the buying costs (including stamp duty) and selling costs as well as depreciation.

A very important thing is… when did you buy your new PPOR. For example if you rented for a year before you bought then you would still count the first house as your PPOR in that year and the calculation would then be CG X 3 / 5.

The other thing is I believe you can choose which place to treat as your PPOR. It may be that you had great CG on your first PPOR but less on your current one. Or you intend to live in your current one for a very long time. In both those cases it may be worth while to treat your first house as your PPOR for the whole time and so pay no CGT. Of cause this has disadvantages for your current PPOR so you really need to discuss all this fully with a good accountant.

Hope this helps 
Elka

Hello Martin

I'm in the same situation as you are in as much as I am currently renovating 2 places long distance. It's very frustrating having to pay for things that you would be able to do yourself if you were there. However the most important thing is to have people you trust to do the job for you.

Have you only had one quote done? I must say it seems pretty rich to me. If you like I can PM you the name, telephone number and email address of a builder who I believe is honest and has been doing some of the work for me. It's worth getting a quote from him I think.

Cheers
Elka

Hello sjordan

I don't know which state you are in but here is a link with the addresses of all the state revenue offices.
 
You might like to read about stamp duty and land tax. Please note that your home (PPOR = primary place of residence) is land tax excempt.

http://www.ato.gov.au/corporate/content.asp?doc=/content/8792.htm

This page is on the Aust. tax office site which is definately a good source of information.

These are two reasons why the RIA (justly) complains about the taxes on property.
 
The other two are GST ( goods and services tax. I think like your VAT?)
 and CGT (capital gains tax) which, although not land/property specific, certainly effect the price of properties. You can read about them on the ATO site

However, council rates are reasonable and are used to pay for things like parks and facilities within parks, infrastructure repairs, drainage repairs and improvements, rubbish collection etc.

Hope this helps 
Elka

Hello whyalla

$1500 ???? You've allowed it to slide too long and now it's an amount that may be a problem for the tenants to pay in one go.
 
Maybe get your PM to send them a last reminder together with what the consequences are of being in breach of the lease. You may like to offer them the option of paying it off in instalements. i.e 3 X $500 if you think they may need it.

I would also have a serious talk with your PM if I were you. If you can't get better management then change.

I assume you hold one months rent as bond but who wants to have to go that route. 

Good luck
Elka

Hello MArcus10

Nice problem to have.  

Your PPOR debt is certainly the killer as I guess you are paying out around $4K per month on it and none of it is tax deductible. Of cause an option you haven't mentioned would be to move out of your home and rent much cheaper elsewhere in which case you would not only have the rent to help pay the mortgage but all expenses would be tax deductible including interest and depreciation. Doing this for up to 6 years would still keep it CGT free.

However, I don't know your situation, age, kids etc. and that's a very emotional decision which only you can make.

However, looking at the question you asked I don't think it's primarily a matter of looking at "what should I sell which reduces the most debt". What I mean is that it's not just a numbers game.

I think it would be a case of going back to the reasons you bought the property in the first place and then seeing if it has performed as expected and what you believe it's going to do in the future. Then dispose of the ones that have not performed or have reached their full potential for the forseeable future.

What was the purpose of the land. Were you going to build for investment? If so, is it no longer profitable?

By my calculation if you sell the land you can clear most of your PPOR debt though the CGT bill will be hefty I assume.
 ( It may be worth your while getting some advice about both of you making a tax deductible contribution to your super to reduce your tax bill. Better in super than in the govt. coffers. It depends on your other income of cause.)

I assume IP3 is your latest buy. Is the reason you bought it no longer valid?

Unless you see no future in IP1 and IP2 any more why would you sell these?. Do you no longer see capital growth in the properties?  If you've reduced your monthly PPOR mortgage repayments to about $1K – $1.5K then $300/mnth to carry the properties should not be a problem. I really don't see any reason to sell those except underperformance. If you sell the blocks of land you will have enough equity in your PPOR to borrow aginst it for further investing anyway. 

Just my thoughts
Elka   

Hello Chris

Also something to consider in your calculations is that if you turn your PPOR into an IP rather than sell it, you can rent it out for up to 6 years (as long as you are renting and haven't bought another PPOR) and it still maintains it's CGT free status. You can even move back in before the 6 years are up and then move back out and start another 6 year period.
 
If you decide to go the route of pulling equity out of your PPOR for deposits on other IPs (irrespective of whether you move out and make it an IP or not) go to a good MB who will help you set up all loans so that they are all stand alone. Also one who is savvy about property investing may be able to advise you on structures (trusts etc) or in whose name to buy the IP's.

Good luck
Elka

Hello simpsd

Yes definately get a depreciation schedule done. With a new place the deductions will be considerable.

While your renting it out all expenses will be tax deductible including interest on loan, insurances, rates, water, management fees etc.

Make sure you take out landlords insurance also.

If you come back to your home before 6 years are up, it will stay CGT free.

Have fun in London
Elka

Hello Jeff

Good that you've shared that as there have been people on the forum who have asked advice about "pretending" a place was their PPOR while they renovated it without actually living there. No flies on the ATO unfortunately.
 
Cheers
Elka

Hello Seanmig

The CG on which you will be tax will be calculated by first working out the CG over the 10 years and then only charging for the percentage of time it was rented. .i.e. 3/10th of the total CG over the 10 years. You will of cause get the 50% discount.

However, if after turning your PPOR into an IP you have not declared another place as your PPOR it can even be totally CGT free.

If your not averse to a little reading the ATO site is very informative.
Here is a link to a good place to start.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36883.htm

Naturally you should speak to your accountant too.

Hope this helps
Elka