Forum Replies Created
It doesn’t matter how much the land costs, after loan repayments, rates etc unless you have a tenant it’s going to be a -ve cashflow property.
If you are considering building then you have to weigh up the “opportunity cost” of lost deals as you take your eye off the ball – so to speak. That is, the time spent on building could be better spent locating +veCF deals.
Cheers
JeffHi Milo,
I’ve always been told never to take out global or balnket loans. Partly because you are linking the liability of one property to the other(s) and therefore all would, or could be controlled by the lender, and partly because of documentation etc if your circumstances change and you need to say, sell one of the properties or re-finance or whatever.In saying this I must admit, I have had blanket loans in the past for various reasons.
If you choose to merge your loans the amount relating to the IP can be apportioned for tax purposes. Your accountant can do this for you.
Cheers
JeffHi Westan,
I’m not sure on this one, you should ask Steve, he’s an Accountant.There must be a way of transferring some, if not all of the capital gain and or profit to yourself as you are now a NZ resident for tax purposes. Look at charging a commission from your NZ structure to manage/sell the properties for the Australian trust. This “fee” would then be taxable in NZ but an expense that would reduce the taxable income in Aust.
The assumption I’m making here is that you will have enough tax losses from your NZ structure to offset the income produced as a result of this “fee”. I suppose it depends on the size of the capital gain doesn’t it?
This is why I use a Limited Liability Company in NZ, it’s so much easier to transfer the shares of the Company and therefor the ownership than to transfer the title – and the cost is negligible.
Regards
JeffJust a suggestion, for about NZ$300 you could form a Limited Liability Company to own the properties. This way you could transfer the shares into a trust at a later date thereby avoiding additional legal and title transfer costs.
The NZ shares could then be owned by an Australian Trust if you so choose.
Good Luck
JeffSo far there is no capital gains tax in NZ as such – it is based on your intentions when you first purchase the property eg if for immediate resale then the capital gain maybe classed as profit.
As an investor, where the purchase is to derive income, when you come to sell the properties the government will claw back the depreciation claimed only if there is a capital gain. This is termed “depreciation recovered”. It’s free use of money no matter which way you look at it – claim the depreciation.
If you go to a site http://www.goodreturns.co.nz there is a book titled “Slash Your Taxes”. It gives a pretty good insight into expenses etc that one can claim in NZ.
Cheers
JeffThe depreciation rates on buildings in NZ are 4% diminishing value. When buying a property you can also have the chattels valued separately ie floor coverings, light fittings, curtains etc. these chattels depreciate at higher rates than buildings. Refer to a site http://www.valuit.co.nz, it’s around NZ$400 for a depreciation scedule to be prepared.
Also try http://www.ird.govt.nz there is a depreciation booklet available and also one on rental property tax deductions.
Happy hunting
JeffWhen sourcing property deals the asking price and the lowest acceptable price maybe way apart. I suggest you make offers at prices that fall within the 11 second rule. The vendor may choose to accept, counter sign or reject your offer. What do you have to lose.
