Forum Replies Created
Hello Startyoung,
I am trying to get a feel for what you want to do regarding subdivision. Are you looking at buying something established and building another dwelling on the block?? Or are you looking at purchasing a vacant block of land and doing further subdivision??
Anyway, I am not that good with the numbers but in regards to existing property first I would look at the section 32 of the place you are interested in to make sure there are no restrictions on further subdividing and if there are others being done in the area is a good indicator. Check with council as well. Your local R/E may be able to provide help as they generally know areas intimately and corner blocks are very popular for dual access.
If you are looking at new estates, often they are restrictive in regards to further subdivision, however you may see potential unit sites on a land list, usually sold at a higher price. No matter what you do though, council approval is usually slow, and it is going to be a while before you see any positive cash flow if your looking at construction. Here’s a thought, are you looking at buying established and selling the back yard?? I have noticed a bit of that going on lately!
Anyway, I hope I have given you a little more info than you already had.
GraceyYep, BDM is right about the FHOG. You need to live in the place for one year or the gov might want their money back!!
Gracey.Well Fudge111 and fibejibe,
I am really just looking at ways to also legally lower our tax bill. 34 cents in every dollar made is an awful lot of tax to pay. This country is one of the most highly taxed in the world, and if there are legitimate ways through depreciation or anything else you can suggest then lets hear it! I have a scenario in an earlier post any I welcome any comments.
Thanks again…
Gracey[/quote]
Thank you for responses,
to clarify, 34%is the tax he is paying across the board on every dollar, so yes some of his income is on 48.5%. He has his own company and the idea was also for the company to rent the property off him so as to increase company costs and reduce his tax burden. We intended to do it with a comercial property because the company would also pay all tenant costs and these would be claimable as legitimate tax deductions…
Any one know if this is legal??!!Gracey
Hi Celivia,
In some circumstances landlords either remove dihwashers or say to tenants on the lease that dishwasher is not working. This is because (in Vic anyway) if the house comes with a dishwasher then the land lord has to maintain it should it break down!
GraceyThanks for your input. I am trying to get my head around -ve gearing. Is it not true that if someone is paying say $500.00 per week in tax, and they buy a property with 100% finance and rent it out wouldnt the short fall between rental income and costs be offset against their tax bill 100%. I think that is how it is worded in the ATO’s web site. If this is indeed the case wouldnt it be worth it? Can you set me straight?
Thanks
Gracey.quote:
I am wondering…
My husband will have an income tax problem if he does not incur some deductions. On his current income he is going to pay 34% tax. He would like to get his tax down below 30%. Is negative gearing a good idea? Comercial or residential.Gracey.
Just stating the obvious, but getting units through council is a lenghty process,assuming there is no restrictions in the section 32. New estates often have several restrictive covenants outlining what you can and cannot do with the land. Yes you can delay stamp duty but if you sell the land within 12 months dont forget about capital gains. I have noticed in areas that where land takes 12 months or more to develope it increases in value and as land is fairly scarce titled land is most valuable. This has certainly been the trend in and around Melbourne’s regional areas. I dont know if this trend will continue of course, but good luck! Oh, a buyer’s agent is a real estate agent working for the purchaser and will attend auctions and so forth to negotiate the best deal for the buyer, as a seller’s agent works for the vendor and negotiates the best sale price for the vendor.
GraceyHi Peter,
indeed where do we go from here….
Well I am not a property expert but have happily riden the wave of the property boom. I have watched my house value double since 1997 and in the last 12 months watched in amazement land prices in rural towns sky rocket in a bouyent sellers market. The developers are getting very rich and demand is exceeding supply and the result is staggering price jumps with the purchasers paying the price. I am nervous about interest rates because I work in new homes and it is nothing these days for a young couple to spend $250,000 on their first home with no deposit. I believe the writing is now on the wall that these easy times are nearing an end and housing will become unaffordable. It is my amatures view that all of us riding the wave will get a good slap once the FHOG is no longer available and interest rate rises sneak up even one percent, (which will happen in my opinion.) I believe the market will then drop down to a more sustainable level. My gut tells me the down turn is on its way and any one entering the market will need to wait a long time before they will see money from current prices. I will be waiting for the down turn before I buy again. I wondered if maybe I should invest in a wrap or lease options but at current market prices the value for money is not there for the purchaser or the investor. I think that I am just a bit too late. This of course is just my opinion and I would be happy to hear evidence to the contrary.Good Luck to all
(I wish I had a crystal ball!)
GraceyThanks for feedback…
I think that final calculations are a work in progress but it has been explained to me this way:
If the tenant buyer is going to purchase the house anyway, in 7 years, then they are happy to pay the interest payments on the loan. They also pay a further $80.00 or so towards the deposit and end up with $30,000 or so in equity. This is the positive geared element The purchase price is agreed upon at the begining and I am not sure whether 5% would be used, I suspect it would be a little lower. The tenant is definitely in a position to repay the loan as they have very good income, but fall into the 20% of purchasers that dont qualify using traditional lenders. I dont know everything about how it works and I guess it does sound a little hairy, but do you still have the same opinion given extra information. I am in a position to source these deals and come across people all the time.
Graceyquote:
Absolutely NO response to my last post, maybe I wasnt clear…
I can get a house (and land package) for a tenant buyer to purchase in 7 years. Price is $230k in a largeish country town currentley booming with a population of around 17,000.
Tenant will rent at around the price of the mortgage plus another $80.00 or so per week. I can get 100% finance to build no problem. The plan is that in 7years the tenant will have sufficient equity to obtain a loan and purchase the proprety. This system is a little different to what is talked about in Steve’s book and as I am new I just wanted to know what other investors think.
This is the second time I have asked the forum so maybe someone can have a think and send their opinion. Thanks.
