Forum Replies Created
What makes you think property, anywhere in the world right now is near the bottom…
StumpCam wrote:Strange how the banks don't even consider your CGT liability when assessing your net worth and LVR. I guess they don't care what happens to you after they sell you up and recover their principal. The ATO just has to pick over what's left.
the ATO will wake up one day………nah only of it makes the 7.00 TV or the front page of the paper…
The ATO is looking at travel claims as the buy your investment in the Gold Coast and it pays for your holiday each year has worn a bit thin.
I think if you have a agent they think one trip a year would be appropriate and if that was the Gold Coast they think fly in and fly out same day.Trusts in some states have zero land tax exemption which means you may pay land tax on the whole value, although with a villa it should not be too bad.
Also remember as you no longer own it it will no longer be exempt for CGT. so don't go in with a low value to save on stamp duty as the transfer price will be your original cost base in the trust…and as Terry said go see an accountant as these are big numbers, and there are differences between states.
Terryw wrote:gmh454 wrote:The elephant in the room on this is the unfunded Cap gain tax liability.
Eg: Investor bought prop for 250K five years ago. Now worth 500k. Has drawn down additional debt to cover shortfall, and living expenses up to 400K.
At this point the Cap gain liab yet to be paid is up to $ 62,5000 depending on marginal tax rates.
Have seen a real life case of this where I think the individual has no equity left but is living off unpaid unrealised CGT.
GMH
If you structure it right, you will leave that problem to your estate – which may be bankrupt
Terry that is the direction I am seeing people heading towards.
I guess as the financiers are secured by first mortgages then there is nothing the ATO can do.
I do not belive you can sell something you own to yourself. A partenership between your parents 50% / yourself 50%, is two separate individuals.
A partnership is not a separate legal entity.You are basically refinacing on house A to buy into house B. As you will still own 1/2 of house A, that portion of the original debt 1/2 $240K will be deductible, any additional borrowing will have been for the purpose of buying a new residence.
Suggest you get some tax advice.
The elephant in the room on this is the unfunded Cap gain tax liability.
Eg: Investor bought prop for 250K five years ago. Now worth 500k. Has drawn down additional debt to cover shortfall, and living expenses up to 400K.
At this point the Cap gain liab yet to be paid is up to $ 62,5000 depending on marginal tax rates.
Have seen a real life case of this where I think the individual has no equity left but is living off unpaid unrealised CGT.
and of course no one had considered what to do with a whole stack of 457 visa workers, we don't need anymore
soon the property shortage (so called – gotta have some fear in the market – those clowns could not sell without it) will be a memory
other factor is what happens when people become unemployed, they head to the beach – they get out of the expensive cities that eat up their benefits go coastal and relax and wait out the upturn.
and my guess is that the stockmarket could jump 33% next year – all the way to 4500
It works like this.
You pay say $50,000 too much based on incorrect rate of return, caused by rent guarantee,. Say true rent is $15k pa, they put the guarantee at $20k pa. They get a tennant for you at $15k and use $10k of the extra sale price to top up the rent for two years.
Reality is when they stop using your money to top up the rent the prices slump,
The big diff I see between this and 1991, was that I feel we were in recession about two years before it was called. Among small business they started to grind down around 1989 but we called it the 1991 recession. It was a very slow wind down.
This is like a car crash by comparison. What has surprised me is how many people have laid people off before they have felt any effect. This accumulates and snowballs, leading to the reality everyone fears. Hopefully it will be short sharp and over soon. (around 2 years).
Among my clients many are already setting in place future plans and counting who among there competitors who will fold, and what of the remains they can pick.
The big question for me is the effect that unemployement forced sales, tighter loan conditions fewer lenders will have to the property market, property values, abilty to fund debt. Think some of my business clients may be in real trouble next year, not through making losses but by having the extensive funding that they are used to using shrink if/when house values reduce.
How much they will go down, is open to conjecture but we will find out soon enough.
Regarding super I am amazed how greedy many of my clients have been. One client had a 800K portfolio of blue chippers, but moved to 85% of Mac managed funds. How to drop 1/2mil (had grown to 1M). Why in your late 70s do people take such risks…many of my over 60s were in very aggressive funds, the losses are around 40%+.
So when journos pick up a REI press releases that says rents in Mosman will go up a kilzillion % by next Monday (okay it was 40% in a year ) that was fine.
When they reported manipultaed sales figures that took out houses pulled from auction the week before that was okay. When they include price increses for real estate with factoring refurbs and renos that is tight reporting.
When every Sunday paper shows you "how much your house jumped this week specials" that was quality research.
They make money out of greed and fear.
They ran greed for as long as they could they will now run fear…..what's new.
Hi, work in Parra, and there was a lot, buildings going up then.
Can you tell us the outgoings ????
C2 wrote:One main thing that appears to have been over looked and currently is helping Australia avoid the recession or depression that hit Australia previously is immigration. As we open our doors to more immigrants they create jobs whilst also putting money in to the economy.
The immigration that we have experinced recently, has had two purposes, one to bring in skilled (and cheap workers) and two , more consumers.
as the world slows and spending slows with it the migration will slow, stall or stop, as when unemployment rises (and it is …..ask a banking, real estate, finance, financial planning, building, retailer) then the "need" for the 417 visa workers, will evaporate. Right now there are thousands of bank guys working out how to , be an accountant, tax agent, ….taxi driver (met a guy who was a advising economist on 200K+ prior to 1990 driving a cab, was a great guy)
What was the mantra last year, migration, China, mining boom, economic growth, .. property doubling every 7 years, property never goes down, best time to buy is today, …..is gone,
The migration was driven by the economy not the other way around..
Macnatt wrote:I disagree with Scamp about massive job losses in the mining industry. The mining boom is underpinned by the asian markets which have esacped the financial meltdowns of the US and Europe virtually unscathed.
Natalie the mining industry is fine so far, but if you look at the effect that the drop in commodity prices has had on the share price of the miners, the fund managers are betting that asia will slow as the US contacts.
The job cuts have already started with the Indian IT industry.. what that will do with whose individual job I cannot tell but there will be a shrinkage in the mining sector somewhere.
and yep there are some pretty forceful opions being expressed on both sides,
Talked with a client broker last night said the clients who have 5 year loans rolling over end of this year up to mid 2009 are now checking out propsects.
She is still getting funds but the problem has been that the valuations are "15%" less than that the client has calculated on..
so some with high debt portfolios or others who are hoping to fold some debt costs into the loan are in a interesting situation
I am an accountant in Sydney and we had clients buying investment residential in the CBD Balmain Mosman Northern beaches (whale beach) Hills, and mid west , Pendle Hill Wentworthville.
Now I know many on this forum have made kazzilions with there investments doubling every second week but from a broad spectrum of my clients as investors many of which are relatively clever (one sold his home for 13.5M a few years ago – Kerry Packer was quoted on front page of Fin Review as saying he would never work in Sydney again – and he was right – still earns over 1 1/2M a year though) they have not managed to meet the average.
For the ones that bought after mid 90's and have sold we have only seen moderate gains. Probably best was
Balmain 1997 $700K sold around 2004-5 for $1100K
Whale Beach 2001 2.2M sold 2007 6.25M (but spent 2M in improvements ) and that was probably peak for whale beach would be lucky to get 4.25 now.at the other end Inner city apartments held from 1994 to 2002 with NO GAIN, and a Mosman property harbour views but very run down bought around 2001 for 625K revauled recently for 1.125M (but has had 500k spent on it)
Unit as Newinton bought for 290K around 1997 cannot sell for 400K
I know the averages show huge gains, but they do not reflect money sometimes huge, invested in improvements and also have a suspicion that sometimes vacant land is included at one time and then in the next figures that 5 acres of dirt valued at 500K now has 30 houses on it at 600k+ each…
something about lies damm lies and statistics
but what will it appraise at tomorrow…..
Scott No Mates wrote:I'd agree with Chopper – at the moment it is a hold.Prices for sales are being hammered unless you are in the Eastern Subs or North Shore where the market has been quite strong
Just in off the ABC, in regards to dropping state revenue "the upper end is feeling the pinch as defined by "x" number of houses in Mosman selling for over 10Mill last "y" and now only 1selling in "z", sorry can't remember what the xyz were but it has started to bite them too…
Ahhhh that article reminds me of the good old days.
back in 1991, had one client arrested and two promised cheques fall over on a shipping delay. 30K I was counting on gone. I owed Citibank $4400 and was 35 days late. Got a letter saying that if all arears and current was not paid, the house would be repossessed at that time. Wife not happy……., made it ,but these guys were serious.
Had a client who was a Citbank roving manager. She told me one of the more aggressive managers from the late 80's was spending more time kicking people out of their homes than making loans. Their theory was "if you leant it you collect it".
Simple really, wait for them to leave, get in locksmith, removalist, sherriff, put the worldy goods on the street, wait for them to return, (guess he sat on the lounge) and give the legal notice saying if they try to reenter they will be criminally charged – "have a nice day" and that was Sydney lower Nth shore.
Ohhhhhh the good old days are coming back….
Scamp do not agree with all you say, but have seen more than one economist talking of the western "supply and demand – with minimal government intervention " model has been broken. Under that model, the recent boom, bust, boom cycle seen in the states since 1991, should not be happening.
There are many players, that have worked out how to make staggering money through these cycles (not talking property investors) and the government has lost control of the economy.
Yep things change.
