[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 25, 2008 - 1:17 pm

units4me wrote:

If you decide to keep it and rent it out, do it for the long term, because capital gains tax becomes a factor then.

Not for nearly 6 years unless you buy yourself another home elsewhere.

Cheers

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 24, 2008 - 10:35 am

Very true Scott.

That's why, if your accountant confirms that my understanding of the 6 year rule is correct, I would get all this sorted out before I signed anything. 

 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 24, 2008 - 8:02 am

Hello tuggerwaugh

I rent one of my IP's to a family member and don't use a PM.
 
They just transfer the rent into my account each month, clearly marked as rent for this IP and this seems to be sufficient. I haven't had this checked by the ATO but my accountant is happy with this arrangement. 

Naturally you need to keep the documentation for all outgoings (insurance, rates, repairs etc ).

As long as you rent out at market value you shouldn't have a problem.
I didn't ask my family member to sign a lease but it has been suggested on this forum that you should, even if it's only a very short one, to protect both parties in case of disputes.

Maybe you can search the site for more posts on this topic.

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 24, 2008 - 12:34 am

No problem.

Let us know how you go.

Cheers

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 23, 2008 - 3:44 pm

The problem may not be that you lose 6 months out of 2 years CGT exemption but that, because it will be seen as having been an investment property first, it will not qualify for the 6 year rule.  This is what you're planning to use based on your original post. 

 (That's the one that says that you can rent out your PPOR for up to 6 years without losing it's CGT free status. )

At least that has always been my understanding of the rule but I would be happy to be shown that I am wrong.
You should check this very carefully with a good accountant.

My suggestion would be to see if you can get vacant possession.
If the vendor is keen to sell then get him to approach the tenants with an incentive to vacate the property before you settle on it.

If he lets them know that their lease will not be renewed and offers to pay their moving costs now that may do the trick. 

Worth a try.

Good luck
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 23, 2008 - 12:16 pm

Sorry Scamp. Won't happen.Now you're talking about Holland not Australia.
Different mentality …….. even in the Labour party.

No offence
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 23, 2008 - 11:52 am

Congratulations.     

I imagine the first thing you need to do is find out about retail leases and what outgoings are usually the responsibility of the tenant ( insurance land tax, rates, water, small maintenance? ) as well as any obligations/restrictions you have as a landlord. Also what is usual as far as yearly rental increases go (CPI or  a fixed percentage?) and decide what is the shortest lease you will accept.

All very different to residential so this is the time to go educate yourself if you're new to this area. 

One tip I have is if you find a prospective tenant who wants to negotiate a reduced rental and you are willing to drop the price……. do not reduce the rent. Grant a small rent free period instead.

This way your property keeps its value and the decrease does not impact the rent for the following years. 

Now that you have bought it can you tell us where it is please?

Good luck
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 23, 2008 - 1:13 am

Hello Jamie

How long has the other shop been vacant?

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 21, 2008 - 10:42 am

Thank you Stuart

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 19, 2008 - 12:47 pm

Hello Stuart

Thank you for your reply and the link.

As you say it depends on the quality of the advice. I certainly have no problem paying $3K for good advice and even don't care if the advisor gets commissions but I am not sure if I am going to get it.

The person I went to doesn't appear on this site which is no surprise. He is part of a large stock brokering firm I use.

Anyone willing to suggest someone in Melbourne ?

Thanks
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 19, 2008 - 12:33 pm

Hello Staggerlee

Sorry but that's not true. Stamp duty forms part of the cost base and only comes into play for the purpose of calculating the CG on a property if it's applicable.

Perhaps you can read the info on this site to understand about tax deductions for an investment property.

http://www.propertyinvestment.net.au/tax-deduction.htm 

You might like to look into doing it the other way round if you're not emotionally attached to living in your own property.
 
First live in the home for lets say 6 months and then move and rent it out for up to 6 years. This way many expenses, the biggest being interest on your loan, become tax deductible without ruining the capital gains tax free status of your home. 

Your accountant will be able to explain this and help you crunch the numbers to see if it's worth while for you.

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

May 16, 2008 - 12:31 pm

May I ask what sort of investment property you have/had in Holland Scamp.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 23, 2008 - 1:48 pm

Hello Paul

As it will be a brand new house you will also have great depreciation deductions to claim which will also help save tax on your other income.
 
Speak to your accountant about this too and maybe get him to help you calculate your actual holding costs.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 19, 2008 - 12:09 pm

Hello Sue

I've always used PI loans for IPs but now want to change over one of them to IO.
I don't really want to pay the loan out earlier.

I'm just trying to figure out how much to make the new loan for given that I have nothing I want to do with any extra money at the moment. I don't want to put it into the offset account, for the reason in my post above, so I though that if I could put it back into the loan and it would later be available as a redraw that may be a good thing to do given the tightening credit situation.
 
I have emailed my banker and will post the reply for anyone interested.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 17, 2008 - 12:20 pm

Hello Maree

By your title I assume that the lease is still current in which case you, as either the renter or the owner, need a very good reason to be able to terminate a lease. After all it's a binding contract. 

If it's only because the tenant wants to move then I think the usual procedure is for the tenant to advise the agent and ask permission to terminate the lease. Most owners will then agree subject to the current tenant paying the rent until a new tenant is found plus all the costs associated with re leasing the property (advertising, agents re leasing fee etc.).

Depending on how long the lease still has to run, the tenant may be able to negotiate some of this. If it's a new 12 month lease then I can't see much room for negotiation but if it only has a couple of months to go then that's a different story. At least it would be for me. 

If the lease has actually expired then you are usually on month to month tenancy which means that both parties only need to give each other a months notice, in writing, to vacate. 

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 15, 2008 - 7:32 pm

Hello suavemechanic

There was a thread about this subject some time ago. This involved land tax in WA and though  the laws are different in each states you may still find it an interesting read.  

https://www.propertyinvesting.com/forum/topic/19858.html?SearchTerms=land,tax

Unfortunately we never did get the end of the plot.

Hope this helps
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 15, 2008 - 12:26 pm

Thank you all for your helpful replies.

To explain a bit further. Last year I converted one of my loans from variable PI to variable IO (both with offset accounts) and asked the bank just to make the new loan for the amount outstanding. This reduced my loan amount by about $70K prematurely.

I have a second loan that I want to convert to variable IO and am thinking that it may be smarter to ask for the full amount of the original loan this time even though I would put the extra straight back into the loan immediately. The reason for this is that I have savings in the offset account which I may want to use to put into super and I don't want to mix savings with redrawn funds as this would muddy up the tax detectability of the interest on this loan. 

If we are likely to get to such a credit squeeze that it will be very difficult to get extra loans my thinking is that the banks will probably always let you "redraw" back to the original loan. Do you think this is right or am I over thinking this.
 
Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 10, 2008 - 11:56 am

Hello Darian1179

I've been renting to my sister and her husband for several years. I have never had a lease with her and I do the management of this IP myself to save PM fees.

Each month her husband just transfers the rent into my account clearly marked as rent for this address.

I have never been audited so I can't guarantee that the ATO would be happy with this proof but my accountant is so I assume he knows what he is doing.

I have a close relationship with my sister and her great husband so this works fine but I can imagine that it has potential for family problems. 

Hope this helps

Elka 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 9, 2008 - 5:13 pm

Thank you both.

I have registered with Ozforex and even though I haven't transferred any funds yet they seem very efficient and professional. After registartion they phoned me to complete the verification process and to ask if I needed more information. Very helpful.

Cheers

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

March 3, 2008 - 11:30 am

Hello Michael

Thank you for that.

Cheers
Elka