Forum Replies Created
Either my calculator or my logic must be in trouble.
Based on both of the above is it really possible that in the first year you are actually paying 14% interest and it only goes up from there?
original loan $80,000
interest paid 3,200
loan balance at end of yr 88,000So in fact you are paying $3,200 + 8,000 = 11,200 / 80,000 % giving 14% [eh]
Doing the same calculation for year 4 gives me 17.04%. [hmm]
So which is it please. My logic, my calculator …….. or neither?
Got your ticket yet Foundation? [glum]
Elka
Hello Gross
Firstly I want to tell you that I think it’s very generous of you to take the time to share your knowledge with us.
The probelm is that I for one have never developed anything and so my questions will be very basic.
Am I right to assume that the term gross realization means the value of the property after the develepment is completed? i.e site plus development.
What is a da
Elka
Hello Terry
Thank you for your answer.
I have read my trust deed several times(good bedtime reading [sleepyanim] ) and it seems as if the trustee can do anything anywhere in the world, including going into parnerships, buying/selling shares, lending and borrowing and much more. It is so all encompassing that I still can’t figure out what could be different for different goals. I know it’s asking a lot, but do you have a simple “for instance”? [confused2]
Am I correct in assuming that with a hybrid DT, only the unit holders recieve a share of the profits and then in the proportion that they hold units? i.e the decretionary part is not available until the units are bought back by the trust.
Thanks again [smiling]
ElkaI think Fern means…
one way to find out is ….. ask.
I don’t function well before my 3rd cup of coffee either. [sleepy2]
Sound like an exciting time ahead for you. Have fun.
Elka [smiling]
Hello Fern
Basically the margin scheme is about paying GST on the difference (margin) between the cost and sale prices rather than on the whole sale price. Lots of ifs and buts.
Here is a link to the GST margin scheme explination on the ATO site.
http://www.ato.gov.au/taxprofessionals/pathway.asp?pc=001/005/018&mfp=001/005&mnu=10409#001_005_018
Regarding your question about CGT. I am not an accountant but think that while you, as a private investor, would be entitled to a 50% discount if you hold the property longer than 12 months, this would not be true if you are a registered builder. As a registered builder it would just be seen as income.
Hope this helps [smiling]
ElkaHello Dave
To add my opinion [smiling] I would rent it out. You can afford the shortfall and now that you will be able to claim the interest on the loan as an expense this will become smaller after tax.
Good advise about a depreciation schedule.
As this townhouse was your PPOR (primary place of residence) before you started renting it out you can rent it out for up to 6 years and still not be up for capital gains tax when you sell as long as you don’t declare any other place as your PPOR.
If I were you I would first find a good real estate agent and then a good accountant who knows about property investing.
Good luck
ElkaThank you both for your replies. I have been offered shares through my broker as I have most of the other B & B shares and just can’t decide if now is a good time to buy into a residential trust.
Thanks again
ElkaHello Terryw
But whose name actually appears on the title.
Is it Elkam (or Company XXX) ATF YYY Trust.?
I assume that the relationship between the person or company to the trust is documented on the title somehow to distinguish it from a personal ownership?
or it it just XXX trust.
Thanks
ElkaHello Stuart
You wanted an emotional response so here it is… [biggrin]
Eh??? Laundry off dining room??? In this I agree with Mark, unless the dining room is part of an open kitchen and then it makes a bit more sense. However not if it is a formal seperate dining room.
The construction you discribe for the laundry is called a Europeans laundry (not sure why) and is fine though I don’t see a place for the dirty laundry basket.
Hope this helps
ElkaHello Mat
A couple of years ago I removed a big gum from one of my properties in Melbourne and didn’t even think to worry about this. I didn’t ask anyone but just had it done. I didn’t get any complaints.It cost me around $800 including drilling out the roots.
Cheers
ElkaHello ptn
The short answer is yes. If the trust deed allows it.
Any trust deed worth anything should include such close family members and many many many more. Not by name but as a catagory.
However I don’t think saying that it’s “just for tax purposes” is wise. [rolleyesanim] [smiling]
Cheers
ElkaThank you for that Anita. If we need to use this option I will be back.[smiling]
Sorry for the long delay in answering. I either did not get or missed my wake up call.
Best wishes
ElkaHello all
Interesting thread. As a total novice to this area I have a basic question. [blush2]
What is the normal price of an option for a residential property. I mean is there some sort of “formula” based on the price of the property and the period of the option?
Thanks in advance
ElkaI don’t see any reason not to contact the agent and ask for the vendors details, even after 6 months. What have you got to lose? As Simon discovered, contacting the vendor may be the quickest and certainly the cheapest solution for you.
Elka
I’m no lawyer but common sense tells me that you should recieve 1 month plus 8 days rent from the previous owner.
I think I would go to another lawyer to get advise about who made the mistake and what your options are. For me it would not be so much the money but the fact that I was being cheated.
Good luck
ElkaHello
I would get the house independently valued to ascertain a fair price. You didn’t mention whether she has family but this way at least no one will be able to claim that you took advantage of her on the price.
Also I would inquire if there is any agreement you can make to cover the years before she goes into the retirement home. If anything, G-d forbid, happens to her in that time period her heirs may just put it on the open market or even decide to live in it themselves.
Cheers
ElkaHello Browncat
What a horrible situation for everyone involved.
You haven’t said so but from your post I assume that your not in a position financially to be able to give your mother the amount of money she needs to live on, as rent. I assume this would be well above market value as it would not be fair for your mother to have to just “survive”.
If you are/were, a Lease option would be better then buying the property. It wouldn’t invoke a CGT event which would cost your mother massive CGT (around $120K+ I think ) and would also cost you stamp duty. If it was for a period of 30 years and she was willing to leave the property to you in her will then it would give you almost the same security as if you had bought it now. I assume it would also be consideably cheaper than paying the interest on the loan you would need to take out to buy it. You would need to make an agreement on what would happen if you wanted to sell the place after X years. She would naturally get the bulk of the sale price but you should have built up some equity in the place in the mean time through capital appreciation. Maybe you could renovate/improve the place slowly to also add value. On top of that you will have paid something towards your puchase each week in the rent. For example anything you paid above fair market rental.
If the above is not possible, is the property interesting for subdivision?
Do you farm it and if not is it possible to rent out some of it for farming/ grazing? Will it help bring in some income for the option above?
Hope you find a win win solution
Good luck
ElkaCongratulations. Looks like a beautiful area. [specool]
You should do well on it.
Best of luck
ElkaAt a guess I would say ATF stands for as trustee for
Ooooops sorry. Meant stamp duty. Thanks Terry.
