Forum Replies Created
Hello Foundation
No, no confused face here. [smiling] I also have a love affair with property that I find hard to resist, logic not withstanding.
Even though some of these questions are more suited to the frolic section, I will put my head on the block and ask anyway.
Why gold? I mean when we (the world) are off the gold standard right, so why is gold still a hedge against a devaluing currency. Put another way, I guess, what infuences the price of gold and why.
What are maple leaves? Canadian curency? Ok, Ok, laugh. It’s healthy. [upsidedown]
An even more basic question I have is how do governments decide how much money they can print/mint now. In the old days under the gold standard it seems to have been easy. More gold in the depository = more money on the street. But now?
I don’t understand the attraction of getting 6% net interest if it goes hand in hand with higher inflation. Surely that defeats the point. What am I missing. [blush2]
Ok that’s enough amusement for now.
More stupid questions will follow.Told you economics was not my strong point. [smiling]
Thanks
ElkaHello ogilvy
crj is 100% correct. I had a similar problem (not for as long thank goodness) with an industrial property and offered the first 2 months rent free.
The problem with lowering the rent it that it not only lowers the valuation of your property as crj mentioned but that it’s a long term effect as far as the rent is concerned. By this I mean that all yearly %age increases are based on the original rental for the term of the lease where as a rent free period only effects the first years income.
Also a lower rental may cause you more problems with the tenants in your other shop.
It’s better to offer even 3 months rent free or, as crj suggested , help with the refitting rather than lower the rent IMO.
Good luck [smiling]
ElkaHello
May I ask why you would want to sell the 3rd unit to yourself?.
As a beneficiary of a trust is it not possible to live in it as your PPOR? Does it effect things like land tax and CGT in the future?
Thanks [smiling]
ElkaHello Guys
I thought you are the generation that can find anything on the net so how come you need help finding this.? [smiling] [rolleyesanim]
I think this is the site Bravesparrow was trying to send you to.
http://www.dadhc.nsw.gov.au/DADHC
I just did a simple search to find this. [wink2]
Hope it helps
ElkaHello Foundation
Thank you for the time and effort you put in on that answer for us.
A great synopsis of the economic history of Austrlalia. Economics not being my strongest point it will take me at least a couple more readings to even be able to ask an intelligent question on the subject or to question the conclusion you draw.
One thing I have noticed is that you are a man who puts his money where his mouth (or in this case brain) is. From another of your posts I noticed that you are taking action based on your conclusions.
On another thread you posted that you were in the process of selling your home under a sell to rent arrangement. STRing you called it, I believe. This certainly fits in with your theory that:-
a. House prices will drop
b. Interest rates will rise more than we expect.So I am also very interested in the answer to Dazzlings question a few posts back.
[b]
“What’s the next step chief ?? Where exactly does one plonk one’s hard earned ?? “[/b]Thanks again [smiling]
ElkaOriginally posted by Qlds007:
[A property purchased and renovated / subdivided etc and subseqently sold may qualify for the reduced rate of CGT which can be as low as 10%
Hello Richard
Can you please explain the statement above. How can CGT be as low as 10%.
Thanks
ElkaHello Tammy
That’s interesting. I must say I had wondered how they came up with 6 years.
As far as where you can live after you move out of your PPOR, I haven’t seen anything on the ATO site which restricts you. The point is that you don’t designate any other property as your PPOR.
So, I guess you can move into another property you own but without checking with the ATO I would be very surprised if they let you rent it from yourself. This means that you would lose the ability to claim expenses for the period you live there. I would imagine the best thing to do would be to go into someone elses rental.
You could of cause buy yourself another house to live in but not designate it as your PPOR till you sold the first one. This would mean that any capital gains you made from the time you bought the 2nd house till you sold the first one and made the second your PPOR would incur CGT when you sold it one day. I guess whether you win or lose on that would depend on which house had the most CG in that period.
The most important things to remember are:-
1. You must live in it as your PPOR first for this rule to apply
2. You must not rent it out before you make it your PPOR otherwise other rules apply.
3. You must not declare any other place as your PPOR during that 6 year period.Go to the link I posted a couple of posts ago. It’s all explained quite simply with good examples. Also check with your accountant.
I hope I have not made any mistakes here but if so would someone correct me please.
Hope this helps [smiling]
ElkaHello Joshua
I only learned about it since joining this forum some months ago.
What’s even better is that you get to start the 6 years again if you move back in for a while. Below is a link to the ATO site where this is all explained.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm
Cheers [smiling]
ElkaHello World Changer
To answer the second part of your question.
Assuming your friend lived in the house first as her PPOR then she can rent it out for up to 6 years without having to pay CGT when she sells, irrespective to whom she sells. This is assuming she has claimed no other property as her PPOR during that time. Seeing as she has been OS I assume this would be the case.
Your friends family should have just been paying her rent. It’s not relevant that it is her family. She would then have to declare this as income on her Oz tax return but she gets to deduct all expenses including interest, repairs, depreciation, insurance, council and water rates etc.
Assuming it’s negetively geared (i.e. rent does not cover all expenses) this loss is then deducted against any other income she has in Australia or carried forward till she does have income to deduct this from. I’m not sure how long a loss can be carried forward but I’m sure someone on the forum does.
Hope this helps
ElkaYou need to read the fine print .
You get 55 days interest free if you pay for things with your CC.
However, as Redwing said, if you take out cash on it interest starts from day 1. NOT a good idea.
Banks (or CC companies) get a commission on every item you charge on your CC from the people that offered you this method of payment. That’s how come they encourage you to use your card by offering you an interest free period.
They get no commission if you take out cash on your card. What they get instead is a big interest paymenet from you starting from day 1.
See, banks aren’t that stupid [glum] [smiling]
ElkaHello DraconisV
Maybe what the authur of Wizard Wealth was actually suggesting was that you use your CC to pay all expenses and then pay it off just before the end of your interest free period.
The idea being that you get to keep all your income (salary, rental income etc.) in an offset account longer and so save yourself interest on your mortgage loan.
Cheers [smiling]
ElkaHello Casper
I don’t think that it’s possible to answer the question this way.
You have to get the numbers and compare. For example what will it cost to do the renovations you mentioned and what is the expected (realistic) sale price after reno.
What is the price of demolishing and then subdividing the block and what will you then get for each block. Will they be sellable? You didn’t say how big the current block is. Is it possible to keep the current house and subdivide the back out or is the house in the middle of the block. Don’t forget to calculate your holding cost as well.
Given that you will pay CGT on either option when you sell make sure it’s worth the risk/effort.
I have never done any subdivision so I am anything but an expert.
Hope this helps [smiling]
ElkaHello balkan warrior
The thing about staying with your parents while saying that the new property is your PPOR is a bit tricky. The ATO has “tests” to see if in fact a place is your PPOR.
Things like :-
whether you have moved your personal belongings into the home
the address to which your mail is delivered
your address on the electoral roll
the connection of services (for example, phone, gas or electricity)In your situation I would set up at least a bedroom in the house and make sure I met the above “tests”. Anyway if you are renovating you will find it very convenient to sleep there sometimes.
The big plus with using the property as your PPOR first and then as an IP while you move back in with your parents is that you can rent it out for up to 6 years without being liable for CGT.
Cheers [smiling]
ElkaHello Cata and Tony
I’m really confused here.
I live overseas (20 years now) and own IP’s in Australia. My accountant tells me I am liable for CGT if I sell a property. I mentioned this on another thread here and someone said that this was not necessarily so.
When I asked how can you avoid paying CGT they said that as a non resident you can accumulate losses and use these to offset CGs. I didn’t know that so it was a good tip. However, I don’t make losses so is there another way?
Tony why do you think that a trust with company trustee set up in NZ but owning property in Australia would not be liable for Aust. CGT.
I thought all assets having connection with Aust. are subject to Aust. CGT. Am I wrong? [confused2]
Hello Tony
Thank you for that. I will call my accountant again as this may be the way to go.
Maybe there is even some way (unit trust as partner to SMSF?) that as your equity grows the SMSF can buy “you” out slowly to increase the tax free and CGT free portion.
Thanks again [smiling]
ElkaHello Derek
Surely that means:-
a. It’s legal to have a cooling off period put in the contract.
b. As there is no cooling off period defined in law, if you don’t put it in you can’t just change your mind.
Or have I misunderstood something?
Cheers [smiling]
ElkaHello Tony
Can you expand on what your accountant suggested for you re investment s within a SMSF please.
The problem is that any investment within a SMSF must be fully paid for. i.e no mortgage or leveraging if it’s shares.
I asked my accountant if he thought it would be a good idea to increase the mortgage of an IP property I own in my name and use that money plus some cash to buy an investment property in a SMSF.
He rightly pointed out that the money borrowed would then not be tax deductible so was this a win situation?
Did you get any comments/suggestions from your accountant that would solve this? Or any good ideas?
Thanks for your help [smiling]
Elka
Hello Gross
Thank you for adding spacing and some punctuation to your post.
The last one was great to read.
I have been trying to follow your deal as it’s facinating but going cross eyed from trying to read it let alone understanding it.
Much appreciated. [smiling]
ElkaHello Queengucci
The simple answer is no.
If you want to learn about CGT then the ATO has comprehensive information on this subject on their site plus simple examples .
Happy reading [grad]
ElkaHello Nordicskier
Can you please explain your formula.
Purchase price (in thousands) X 1.5 = weekly rent needed to 100% finance property.
At what interest rate?
How did you derive this formula.Thanks [smiling]
Elka
