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GreatPig
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June 22, 2004 - 10:49 am
Originally posted by Derek:
As to whether or not this equally applies to the general looking process – I would contend that while you are not classified as a ‘professional investor’ probably not – however when you get multiple properties then you may have a case to claim the general looking stage of research.
Thanks for your input, Derek. It would be nice if it was possible to claim it [smiling]
You would need to have some sort of paper trail to verify what you are claiming – diaries, appointments with REA, records of kilometres travelled, receipts/invoices for expenses incurred and so on
Hmmm… perhaps I should just get my wife to follow me round with a super-8 movie camera [rolleyesanim]
If it doesn’t impress the tax office, I might at least be able to release it as a movie…
GP
GreatPig
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June 22, 2004 - 7:13 am
Jo,
Originally posted by Monopoly:
surely once contracts are signed by both parties, and money is paid over, the sale would have to go through as a legally binding deal????
Sorry, I mightn’t have explained that properly. I had signed my contract and given it and the deposit to my solicitor, but she hadn’t signed hers. I left his office having been told the exchange would take place the next day, but it just never happened.
Even he was getting frustrated by the end as the vendor’s solicitor wasn’t telling him anything other than that they weren’t quite ready.
I do believe she really did have problems with the place she was going to buy – the building inspection apparently highlighted a costly repair she hadn’t expected and she decided to pull out (the REA was a friend or relative of hers and was helping her with it all), but it was still a big nuisance and a let-down at the time.
But as I say, all for the best in the end!
Did you get your money back, including all costs (ie legals etc)?????
I got the deposit cheque back, and the initial holding deposit, and the solicitor didn’t charge except for a few outgoings, but it still cost me the three reports and a lot of wasted time.
GP
GreatPig
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June 22, 2004 - 6:58 am
Originally posted by calvin@thirty4:
but how will the Tax Dept. know your folks live there?
They may well not, but I think they might be suspicious of any possible holiday location if your trips were of any length or too frequent for the claimed purpose of travel.
Mind you, if I go to Tassie and need to travel from Devonport to Queenstown to inspect an IP and decide to save some money by walking the overland track rather than driving, is that any business of theirs? [ponder]
GP
GreatPig
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June 22, 2004 - 6:46 am
Jo,
although I am sure it does
It happened to me when I was looking for my PPoR. I had a place with an accepted offer, contract signed, deposit cheque written, valuation, building and pest reports done, finance arranged, and was just waiting at home for confirmation of the exchange from my solicitor. Days dragged into a couple of weeks with the vendor’s solicitor constantly stalling, and then the vendor finally withdrew the house from the market – allegedly because the place she had planned on buying fell through. About a month or so later I heard it was back on the market and shortly got sold for about $20K more than my accepted offer (I didn’t bother putting in another one though). That was around 1997 or 1998.
Ultimately it was for the best though, as I found and bought a much better place a couple of years later (where I still live).
could you please tell me what ISTM stands for???? That’s a newie to me!!!
Sorry, shorthand obviously doesn’t travel well between forums!
ISTM = It Seems To Me
GP
GreatPig
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June 22, 2004 - 5:51 am
Jo,
Thanks for the response.
I was always under the impression that a deduction for associated costs on IPs was applicable only when you actually owned them
I thought I saw elsewhere recently that the costs of obtaining an IP (eg. lawyers fees for inspecting contracts, building and pest inspections, etc) were effectively part of the purchase price – although I don’t know about when the purchase doesn’t go ahead (like can you count the costs of inspections on three properties as part of the cost of obtaining just one?).
Even if they were possible claims, how would one prove the purpose of these expenses
Well that dilemma already exists for any business travel, even if you already own the places. If a trip to inspect your IP on the Gold Coast takes two weeks, and your folks just happen to live there too, the tax office probably wouldn’t accept that it was all investment related and I believe would pro rata the costs on what amount it decided was legit business and what was holiday.
ISTM that the cost of finding an IP is not much different to the cost of improving one to get it ready to rent. Both relate to preparing for investment income before actually receiving any.
And can I help it if all the popular holiday spots also happen to be good places to look for IPs? []
GP
GreatPig
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June 20, 2004 - 10:04 am
Misty1,
Take a look on the Somersoft forums, under Innovative Techniques. There’s an active thread on that over there now (or a reactivated one I should say).
http://www.somersoft.com/forums/index.php
GP
GreatPig
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June 19, 2004 - 12:08 pm
Originally posted by Mobile Mortgage:
Wasn’t trigger the name of Roy Rogers Horse?
Just noticed this from a few days ago.
Yes, Trigger was Roy Rogers’ horse. Tonto’s was called Scout (as in “Git-em up Scout”).
GP
GreatPig
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June 19, 2004 - 3:48 am
Originally posted by MortgageHunter:
I am familiar with Old Kent Rd but King St in Monopoly?
I wondered the same thing. Unless talking about a different version, I think he meant Mayfair.
GP
GreatPig
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June 18, 2004 - 10:45 am
Banderos,
As I say, I’ve only had the possibility suggested to me. I’d have to look into it further before proceeding that way.
Still, Australian trusts are used to help minimize tax, so I don’t see why using a NZ trust for the same purpose should be considered much different.
GP
GreatPig
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June 18, 2004 - 2:36 am
Originally posted by Terryw:
So even tho there is no CGT in NZ, they will have to pay CGT in Australia on any gain
I believe this is the case. However, I’ve had suggested to me that to avoid that you can invest in NZ through a NZ-based trust and if necessary distribute capital gain to NZ beneficiaries (perhaps a company or LAQC owned by the trust if there’s no one else). Then you don’t actually own any assets in NZ and don’t personally receive any capital gain. Of course there’s extra cost in setting up the NZ structures and any gains would have to remain in NZ.
However, I’m also not an accountant and have only had a vague outline of this suggested to me by a NZ accountant who used to practise in Australia. Confirmation of the details would be required.
GP
GreatPig
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June 16, 2004 - 10:29 pm
Originally posted by NZ Mortgage Broker:
and reasonable asset position.
Including Australian assets, or only NZ assets?
GP
GreatPig
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June 14, 2004 - 10:54 pm
Rob,
Thanks for the recommendation. I already have their number (it’s in the phone book).
GP
GreatPig
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June 14, 2004 - 12:02 pm
Thanks for the response Mel.
GP
GreatPig
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June 14, 2004 - 7:56 am
Mike,
Thanks for the info.
Seems the ATO has covered all bases. For everything you can do, there’s always a “but”.
GP
GreatPig
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June 14, 2004 - 1:49 am
Originally posted by The Mortgage Adviser:
The peson getting the wages owns the company as well so benefits from greater deductions in the company.
But if their marginal rate is higher than 30%, the net result is more tax.
Or am I missing something?
GP
GreatPig
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June 14, 2004 - 1:46 am
Thanks crj and Jaffasoft for your replies.
GreatPig
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June 14, 2004 - 1:41 am
Rob,
Originally posted by The Mortgage Adviser:
What is also forgotten is the tax deduction available for paying a higher wage to the directors or staff. The company gets a larger deduction for paying you more.
I don’t understand what you’re saying here. The company claims wages as a deduction but they are taxed in the recipient’s hands at his or her full marginal rate.
So where’s the benefit?
GP
GreatPig
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June 14, 2004 - 1:37 am
Mike,
So how do you get the money out.
What do you think of the possibility of having a non-working or low-income partner as a share holder with a different class of share (say a preferential, redeemable, non-voting share), then only paying them dividends?
I looked at this but was told there are dividend streaming provisions to be wary of.
GP
GreatPig
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June 14, 2004 - 1:19 am
Originally posted by The Mortgage Adviser:
Tax avoidance is fine
Actually I think tax avoidance is much the same as tax evasion. [ponder]
It’s tax “minimisation” that’s acceptible. [juggle]
GP
GreatPig
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June 13, 2004 - 1:57 am
Originally posted by The Mortgage Adviser:
Many of them try to not pay themself much because they think they pay less tax through the company.
Okay, I see what you mean.
The 30% company rate compared to a 42% or 47% marginal rate is deceptive since company tax is 30% right from the first dollar.
GP