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elkam
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March 31, 2009 - 11:42 am
Actually, my thought was for Alex to get as big a loan as possible and negate most of it by using an offset account.
However, I don't know how big a loan that can be given the short work history, and size of income though the $40K savings history may help.
"I never recommend off set accounts to anyone you are far better off putting any extra money straight against the principle in a free redraw facility making sure you have direct access to that money at no cost."

In the scenario that Alex in the future wants to buy a bigger PPOR while keeping the old one as an IP, the redraw method is just not tax effective Alan.
I didn't recommend Richard to "butter him up" and keep him coming back to help us.
As I am totally unqualified to discuss mortgages I will now gracefully back out of this discussion.
Cheers
Elka

elkam
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March 30, 2009 - 6:03 pm
Hello Post Enterprises
If you have investments you will need to lodge tax returns.
Your investments will have income and possibly expenses so you will need to declare and claim these.
Even if all your investments are shares with fully franked dividends I believe you will still have to lodge a return.
If you only have super, I don't know.
Cheers
Elka
elkam
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March 30, 2009 - 3:17 pm
Hello Richard and Alan
I'm a bit curious.
Neither of you recommended that Alex learn about offset accounts.
Is that because you fear she may be too young to be financially disciplined ?
For future flexibility it seems like the way to go, specially in her situation of having a huge deposit.
In 5 years time she may want a bigger house and want to keep the current one as an IP.
Sorry Alan, …….. for what it's worth Alex I would also suggest a chat with Richard.
I don't think you can find a better qualified MB.
Cheers
Elka

elkam
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March 30, 2009 - 1:34 pm
Hello RD
Why don't you find out who is managing the professional rooms in the property next door to you and go and have a chat with them. They could tell you everything you need to know including give you an opinion of whether there is demand in the area for more.
Good luck
Elka
elkam
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March 15, 2009 - 1:39 pm
henny wrote:
I just want to figure out, given that the loan amount is slowly going down (that is, we have built up redraw in the account), at what point the rent will cover the repayments and other costs on the remaining time for the loan…at which point, we won't have to pay anything into the place, and it will pay for itself.
Hello Henny
I think the following example will give you a very rough idea.
Total yearly rent                                                             $20,000
Total yearly expenses (excluding interest )               $ 5,000
Assuming an interest rate of 6% then ( $15,000 X 100 ) / 6 = $ 250,000
In this example the property will be paying for itself when the loan is at $ 250,000.
Of cause the $15,000 only covers the interest payments, not any principle.
You may want to search this site for more information as to why you should probably be using an offset account rather than paying extra directly into your loan.
Hope this helps
Elka

elkam
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February 14, 2009 - 4:03 pm
Hello G-O-M
Are you planning to move permanently to the new state?
If this is only a temporary move then ducksters suggestion of renting there yourself and buying an IP in the new state makes good sense. The interest on the new loan is fully tax deductible and as he has already pointed out, your current PPOR remains CGT free for up to 6 years this way. I think this is the least expensive option if you are not averse to renting. Do not pay off loan ASAP, use offset account. Same result, full flexibility.
If you don't want to rent your idea of selling to a DT is good as it will free up the equity in your current PPOR but don't forget if it's negatively geared then the loss is trapped in the trust.
Cheers
Elka
elkam
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February 9, 2009 - 10:59 am
Linar wrote:
Yes that does sound excessive. The GST should be 10% of the management fees plus statement fees, that is, $2.96. You have been charged 10% of the management fees plus statement fees PLUS rent. Your PM is incorrect.
Cheers
K
Assuming it's a residential property and not a commercial one.
Cheers
Elka
elkam
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January 26, 2009 - 1:38 pm
Hello wealthyjvd
Maybe reading the following thread will help explain.
https://www.propertyinvesting.com/forums/getting-technical/finance/4325393?#comment-177325
Cheers
Elka
elkam
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January 19, 2009 - 11:40 am
Hello Roy
I don't know which state you are in.
If in Victoria here is some useful reading.

http://www.consumer.vic.gov.au/CA256EB5000644CE/page/Renting-Landlords?OpenDocument&1=910-Renting~&2=20-Landlords~&3=~
Cheers
Elka

elkam
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January 17, 2009 - 4:03 pm
Don't forget that if you transfer the house into your mothers name at some stage, assuming that she is not living in it with you, then any capital gain from that point on will not be tax free.
Is there a special reason why your mother wants the title solely in her name instead of only the percentage that she is financing ?.
Cheers
Elka
elkam
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December 17, 2008 - 9:20 am
That will do it.
Thank you Richard.
Elka
elkam
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December 16, 2008 - 8:58 am
robyn 2009 wrote:
Hi everyone, thanks for your feedback. I forgot to mention that my landlord insurance DOES NOT cover for carpet – ok lesson learned. Given the damage and risk of patching in a high use area, I will ask for the room to be replaced. The tenant wants quality accommodation and in return for their loyalty I have agreed to reduced rentals. I'll keep you informed.
Hello robyn2009
Am I understanding this correctly?
The current tenant caused the damage.
You are going to replace the carpet rather than patch it.
You have reduced the rent for this same tenant.
Please tell me I've misunderstood something.
If tomorrow they drop something else which leaves an ugly mark on the carpet, are you going to replace all of it again?
Elka
elkam
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December 15, 2008 - 2:25 pm
Hello Richard

Would you please mind explaining how one organises it to only have to pay 10% CGT.
Great result BTW
Cheers
Elka
elkam
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December 15, 2008 - 1:47 pm
Have you advised the water authority that it's a rented premise and the name of the tenants?
Not sure about NSW, though Scotts post above implies that it's the same as in Victoria, but where a property is separately metered then the tenant is liable for all the water usage charge and the owner pays for the connection/sewage etc. charges. If they know it's a rental then they send out 2 bills. One to you without the usage charge and one to them directly for the usage.
Cheers
Elka

elkam
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December 14, 2008 - 4:19 pm
Hello claireow
Using your information in the above post, the maths is not hard.
Basically, assuming IO loan to make life easier for the calculation.
$480,000 X 6.15% = $29,520 interest per year
( $480,000 – $10,000 (in offset account)) X 6.95% = $32,665 interest per year
Seems like a no brainer if your intention is only to buy one house to live in.
If not there may be other things to consider.

Cheers
Elka
elkam
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December 14, 2008 - 3:45 pm
At this point there should be no CGT to pay on the sale of 50% of what used to be your PPOR, however stamp duty probably is. How much is that in the state you live in.
Also, as Dan42 pointed out what you gain now you may pay for later.
In other words, putting the house into your name now so as to get more tax deductible debt will mean that, should you sell the property at some stage, all the capital gain will be added to your taxable income rather than split between the two of you.
This is not a problem if you believe that you will never sell or that there will be no capital gain between now and then or that you and your wife are both on the highest taxable income group or at least will be at the time you sell.
Something more to add to the calculation.
Elka
elkam
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November 24, 2008 - 10:55 am
Whether a property is cross collateralized or not does not effect it's being negatively or positively geared.
As duckster posted, if you have a large cash deposit then the property is more likely to be positively geared. With a large deposit why would you have your loan cross collateralized.
On the other hand cross collateralizing a property does not make it positively geared. You still owe the bank the same amount of money in relation to that property and therefore the interest bill ( usually the largest holding expense ) is the same. Cross col. just means that the loan is secured by more than one property.
Whether it is positively or negatively geared is dependent on the income the property generates.
Sorry, not trying to be argumentative here.
Elka

elkam
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November 24, 2008 - 1:06 am
Nice detailed post Duckster.
If you are in situation 2 ( lots of cash for a deposit ) and have a mortgage on your PPOR ( non deductible interest payments ) then the best solution is to use the cash to reduce your PPOR mortgage and then go to situation 1 solution 1. ( establish line of credit against PPOR and use this as deposit and avoid cross collateralization ).
Though your total interest bill remains about the same you now have less non tax deductible interest and more tax deductible interest.
If you search the forum you will find better explanations of this from some of the cluey brokers on the forum.
Cheers
Elka
elkam
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November 23, 2008 - 6:07 pm
Hello C2
Very simply
Cross collateralizing is when you offer more than one property as collateral for a mortgage. This is usually done to avoid paying LMI. The banks love it but most investors don't as it's messier and can be more expensive if you want to sell one of the properties.
Negative gearing is when the expenses for a property exceed it's income. This loss can be deducted from your other income and is more helpful for people paying tax in the higher brackets. This reduction in tax is a help in financing the holding costs of the property while it appreciates. Expectation of good capital gains is the justification for negative gearing.
A bit confused about your question as the two are not an either/or option for me.
Does your question relate to a specific situation ?
Cheers
Elka
elkam
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November 18, 2008 - 10:39 am
Personally I would start with going to an accountant knowledgeable in investing and retirement planning rather than just a financial planner.
Most financial planners ( including the one I went to ) will just get you into managed funds which may be good soon but is not the only asset class to consider. Most will not consider direct property.
I don't know the people Terry recommended but have seen their name mentioned on this forum before.
Looking at their site, they say they do all the things you need and the first appointment is free.
If you do decide to go and talk with them can you please post your impressions.
Cheers
Elka