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

March 3, 2008 - 1:19 am

Hello BluewaterFinancial

Thank you for your reply.

I also think that the AUD will appreciate against the Euro but am a little confused about your last sentence.
Surely if the Euro weakens I will get less A$ for my Euros and so should convert now before this happens
…………. or have I got that backwards??  
 
Feeling stupid
Elka
 

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

March 2, 2008 - 2:22 pm

Hello Nucopia

Why don't you just use your cash for 20% of the price (to avoid LMI)  and costs and take out an IO loan on the new IP for the rest?
Make sure you have an offset account with this loan and put the rest of your cash into this.

This way you have:- a stand alone loan
                              no interest charges
                              easy access to your cash if you find another IP or want to go on a world trip.

From your post above I assume your PPOR also has no mortgage on it. 

I'm anything but an expert but this seems easy and logical to me.

Cheers
Elka

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

February 27, 2008 - 12:18 pm

Hello petenobody

Great site thank you. Too late for this reno but I'm sure there will be more.

Cheers
Elka

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

February 23, 2008 - 11:32 am

5ijts wrote:

We were told that if you sell your commercial investment property at retirement-it will attract no capital gains tax whereas residential investment property would. Or have I misunderstood?
What is the amount you pay for capital gains tax anyway?

I am no expert in this area but think that statement may have been made in relation to property owned within a SMSF (both commercial and residential) or business property you transfer to your SMSF on retirement.

Commercial property attracts CGT just like residential when you sell.

Very basically the difference between what you bought a property for and what you sold it for, after taking into account all expenses associated with both processes, is your capital gain. If you have owned the property longer than 12 months you get a 50% discount and this amount is then added to your other income for the year and taxed normally.

 Obviously if you can manage to have lower income that year or have many deductions, you will pay less tax. The other possibiity is to spread the ownership so that the CG will be spread.

The easiest way to do this is via a trust as it gives you full flexibility to both allocate the income each year and the CG if you sell. However, seeing as you will be negetively geared,  a normal discretionary trust is not a good idea as all losses will be trapped in the trust and you will loose the tax advantages.

You might like to consider going to a property savvy accountant or financial planner before you buy anything. If you set up the right structure at the begining, both ownership and financial, it can save you heaps down the road. Depending on your age you may want to consider a SMSF too. Having a plan before you start is a great first step.

Hope this helps
Elka

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

February 23, 2008 - 10:13 am

Hello 5ijts

You might like to read this article by Michael Yardley about the differences between the two property groups.
Actually his site is full of good reading.

http://www.propertyupdate.com.au/articles/233/1/Residential-or-Commercial—which-is-the-right-investment-for-you/Page1.html 

Cheers
Elka

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

February 20, 2008 - 12:45 pm

Hello Oscar

I suppose selling the PPOR instead and moving into the IP and doing it up is not an option?
That would certainly solve the CGT problem

Just a thought
Elka

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

February 20, 2008 - 12:05 pm

Hello Tangata

I don't know how long your current tenant has been in the property but if the garden was in reasonably good condition (cleared/mowed/cutback) when they moved in and the lease states (usually does) that they are responsible for keeping the garden in the same state then your PM should be asking the tenant to fix it.

Check the lease with your PM and ask him to send the tenant a letter about maintaining the garden.

Cheers

Elka

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

February 19, 2008 - 11:55 am

Thanks Scott. I wonder if that's true for all states. 

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

February 19, 2008 - 11:42 am

Hello Jac

Do they have courtyard gardens?
Do they all have the same sized block of land on the title?
 
If so, I agree that on a quiet road the front one is the most desirable.

Cheers
Elka
 

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

February 19, 2008 - 1:47 am

Hello Scott

Did you check with your solicitor that asking for an adjustment on land tax when you sell a property is legal? Tammys post on your thread about this topic was pretty clear. 

Thanks
Elka

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

February 18, 2008 - 4:01 pm

Hello superhoop

My advice would be to put your head down and first get rid of the $3300 Visa etc. debt.
High interest, non tax deductible debt is a waste of your money and getting rid of it quickly should help you aquire some good money management habits.

Cheers
Elka

   

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

February 18, 2008 - 12:32 pm

Hello Robin

FTB = Family tax benefits

http://www.ato.gov.au/individuals/content.asp?doc=/content/21556.htm&mnu=1205&mfp=001/002

This is a link to the ATO site for explination and calculations. If you have never claimed this before I think you can claim up to 2 years back … just did a quick read so I might be wrong.

Hope this helps
Elka

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

February 17, 2008 - 12:29 pm

My two units are both ground floor with little gardens, one behind the other. People seem to call apartments units too now a days. The water meter was in the front of the property and turned out to be quite easy to split. No concrete had to be dug up. I was lucky. 

I think it's worth contacting Yarra Vally and also getting another plumber out for a quote. He may see a way that does not involve digging up a lot of concrete. Is there a plumber that the BC uses for all plumbing issues? He should be the most familiar with how everything is connected. However if he is the one who gave the original quote, if you like, I can PM you the name of the plumber who did my job. I find him good and reasonable but I don't know how far away you are from the area he works in. My place is in Caulfield.   

Cheers
Elka

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

February 17, 2008 - 11:34 am

Hello Paul

My sister was older than your wife when she had to start job hunting. She started in telemarketing but has since found two part time jobs that she likes better. It's just a matter of not giving up.

I would also advise keeping both properties for the reasons already mentioned. 

Given your ages I assume you have no children living at home with you any more. One possibility to investigate is whether, at least for a couple of years, you may be better off renting out your PPOR and renting something smaller/cheaper for yourselves. Not only will your living expenses be reduced but you will be able to claim all the expenses associated with your home ( interest, rates,water,insurance etc.)  against your tax as well as depreciation which is not an "out of pocket" expense.

You can rent out your home for up to 6 years without effecting it's CGT free status. In fact if you move back in for a few months before the 6 years are up and then move out again, you can start the 6 years all over again if you want to.

Renting out ones home is a very emotional decision that is harder for some than for others but it's worth considering. Check what you could get in rent for your home and what you would have to pay to rent something you could live in then sit down with your accountant and work out the tax advantages of the now deductible expenses on your home.

Below is a link to a post by Mortgage Hunter that stuck in my mind for several reasons.
 
https://www.propertyinvesting.com/forums/property-investing/creative-investing/25308?highlight=china%2Cebay&page=1#comment-142103

Best of luck with whatever you decide to do
Elka

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

February 16, 2008 - 5:33 pm

Hello Natalieo

It's good that you are  going to get professional advice before you start though I think you might consider going to a property savvy accountant as well as most FP are more knowledgeable about managed funds than property.

I am certainly no expert in this area but since no one else has answered ( you might be in the wrong section ) I will tell you what I know.

Re question 1.

Yes, the CG is just added to your other income for the year and so you pay at your top rate. It will certainly mean less CGT if the property is solely in your name. Since you have no income I believe your partner will need to guarantee the loan. Be aware that if for some reason you decide to keep the property you will have no tax advantages with negative gearing.

Re question 2

Sorry I don't know much about the products out there though I remember the question has been asked before. Maybe you can do a search on the site to find previous answers. One tip that I have picked up is that if you have a loan on your home and are planning to use cash as deposit for this IP …. don't !
Unless you have a loan which does not allow you to pay off extra principle than you should use the cash to pay off your home loan and then organise a LOC (line of credit) against it for the deposit. This way you have magically converted non tax deductible debt into deductible debt.

Also be aware that with a quick turnaround you will not be eligible for the 50% discount on CGs. To get the 50% discount you need to own the property for more than 12 months. This is calculated from contract signing to contract signing and not from settlement to settlement. Naturally your holding costs go up considerably so you need to calculate carefully which is better for you when the time comes to sell the property.

Hope this helps a little 

Elka  

  

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

February 16, 2008 - 1:30 pm

Hello Linar

Just thought I would warn you not to start counting your profit yet. If the vendor has not yet noticed the mistake they probably will at settlement. Be ready for problems specially if you have by then sold either of the blocks in question and have a buyer waiting to settle as well.
 
Would be interested to hear the end of this story. When do you settle on the blocks?

Cheers

Elka

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

February 16, 2008 - 1:18 pm

Hello

While I have no knowledge in this area I have read several posts on this forum which say that you don't loose the FHOG if you buy an IP first. It's simple to confirm. Just ring the SRO (state revenue office) in your state and ask or look at their web site.

While much of umes' post above is correct, a normal discretionary trusts cannot distribute losses (your negative gearing comment ume). These are trapped within the trust and are later used to offset profits for income tax purposes. There is one sort of DT called a hybrid DT which is/was able to overcome this problem but there is currently  a problem with the ATO regarding some of these sort of trusts.
 
There is plenty of information on the forum on both these subjects so if you do a search you should be able to find it.

Great to see you all starting so young. 

Good luck
Elka

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

February 16, 2008 - 11:54 am

Hello Virgininvestor

Unfortunately I don't believe that you are allowed to ask the tenant to pay the usage charge without a separate meter.

I think you have 2 options.

Cater for it in the rent and advertise it as "water charges included" or something. But as you say, if you ask too much extra you will have a hard time renting the place out quickly.

and/or

See if you can persuade the 3 other owners to have the meters split. If yours is not the only unit being rented out then it may be easier to achieve. 

I own two units ( the only two on the block) which were on the one meter and just paid the usage charges for my tenants.

However last year, with the constantly increasing water bill, I decided to have the meters split. I should actually have done this years ago as it was less expensive and complicated than I thought. I had the meter split into 3. One for  each unit and one for the common garden area which I still have to pay. On the 3rd meter there are no service charges as fortunately there is no toilet involved…. just the garden. It cost me about $580 to get this done.

Maybe you can get a couple of quotes for doing this and then present the case for splitting out the meters to the other owners. If there is a common garden area then you may need 5 meters. If so, check with your water authority about service charges for the fifth meter.

Let us know how you go.
Elka 

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

February 15, 2008 - 4:12 pm

Hello Paylor

Congratulations on your upcoming marriage.

Australia is a BIG country. It might help if you narrowed the search area down a bit.
Which state and which city might be a good start. 

Wish you the best
Elka

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

February 15, 2008 - 4:06 pm

Hello Virgininvestor
 
My understanding is that unless the place has it's own meter you, as the owner, will have to pay the water usage charge as well as the service chargers which you will be paying anyway. If it is on it's own meter then the water company can send the water usage charge directly to the tenant. At least that is the situation in Melb.

Hope this helps
Elka