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JustAllan
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@justallan
Join Date: 2003
Post Count: 168
April 25, 2004 - 8:25 am
I’ve found this a strange way of thinking too – but I guess it depends on the value of your PPOR. I mean, if you’re living in a $30,000 house, I don’t see the point. But if was a $450,000 one…
I think they’re saying that you rent your own home out, but you in turn rent yourself for less than that rent you’re receiving. This gives you more free cash to use for investment purposes.
Also thinking about it, if you “transferred” your home from yourself, to your business asset (IP – investment property), you can now claim all sorts of tax deductions – that – if it was still your PPOR – you would have had to pay for out of your own pocket. Also, because you’re now renting yourself – you don’t pay those where you’re renting either – your landlord’s does (or his tax deductions do).
Allan.
JustAllan
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@justallan
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Post Count: 168
April 25, 2004 - 8:06 am
Originally posted by Marc1:
Thank you guys! I wrote an e-mail to Simon just now, (somehow I thought he was from Melbourne)
Er… I thought he lived… somewhere else again. Has Simon moved since November?
So all I need now is an insurance broker and directions to find a financial calculator to take with me on my property hunting expeditions.
For a financial calc., try Officeworks or just search for a freeware software one. Type in “financial calculator” into a search here: http://www.download.com
Thanks in anticipation
Marc
You’re welcome.
Allan.
JustAllan
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@justallan
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Post Count: 168
April 22, 2004 - 5:55 pm
Thank you!
JustAllan
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April 22, 2004 - 4:03 pm
It doesn’t matter to the government *how* they purchased the property. As long as they own the dwelling. It must also be their first property and have a council-approved dwelling (not an unapproved temporary shed/caravan/etc.). The title must be in their name – but not necessarily the land according to the government website, which says this:
“A person who builds their home on land that is part of land owned by another person can still be eligible for the grant. Refer to the First Home Owner Grant Ruling – FHOG001 Recognition of non-conforming interests.”
That document is here:
http://www.osr.nsw.gov.au/pls/portal/docs/page/downloads/rev_rules/rrfhogs1.htm
They can also receive land as a gift and then “purchase” a dwelling and put it on the land (subject to council approval). But you can’t claim the grant just for vacant land alone – it must have a dwelling, or if building a new home, construction must have started – slab poured for example.)
For more information, go here: http://www.osr.nsw.gov.au/pls/portal/url/page/osrhome/tax_prof/firsthome
Allan.
JustAllan
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@justallan
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Post Count: 168
December 18, 2003 - 5:01 pm
1. My apologies folks, that it sometimes takes me so long to get back here…
2. To riffraff – Interesting suggestions to think about.
3. Kay – Yep, we would probably live in it long enough to appease the government.
4. Scott – About losing rent assistance – now this is something that really shocked me… I asked Centrelink about this very thing a week or so ago. Apparently if you own a dozen IPs, but you rent yourself – you ARE STILL eligible for rent assistance!? (As long as your income from the properties is low enough to still qualify you for Centrelink payments, of course.)
5. Redwing – Yes, incoming IP rent would add to our income – but everyone on the dole/pension/etc. can earn a certain additional amount before it reduces their payment. After that certain level, you then lose 50 cents in every dollar, and at the next level you lose dollar for dollar. Unless your a wife with kids, then it only ever reduces by a maximum of 70 or 75 cents (not sure now exactly) for every dollar at the top end of that scale.
As to ducking and weaving with the housing & taxation dept. – I’m not looking to “cheat” (and I know you’re not saying that). But I am trying to be make certain we’re not disadvantaged either.
Thanks to all… Oh – and I left out one of the figures, as I forgot about our current rent. (If we move into a PPOR, we wouldn’t be paying that rent anymore.) So the maximum savings that we could then service a loan with would be close to $1670 per month.
Allan.
JustAllan
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@justallan
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Post Count: 168
December 18, 2003 - 4:06 pm
Much thanks!
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 12, 2003 - 3:49 pm
quote:
How will you be affording to buy a property if you and your wife are both pensioners?
Thanks, Eternity – and hi Kay…
To be honest, I don’t quite understand that part myself – yet! [] What I do know is, a couple of lenders I spoke to several months ago, said we’d qualify for about a $70,000 loan. (They were in Sydney, so I didn’t follow them up any further.) Simon Macks has also offered to help, once we have a larger deposit and six-months savings record. (We currently have $5,000 in savings, with zero debt.)
Also because we are housing tenants, apparently we don’t pay stamp duty on a loan. (Unless Johnny Boy cancels it in the meantime.) Then there’s FHOG – again – unless Johnny cancels it.
Then, from what others have told me, our ability to save is way beyond most people’s as well. With strict budgeting, we acheive savings of over $1200 per month. (Although, this doesn’t seem to matter to most lenders – they want to know how much you *make*, not how much you can save.)
Allan.
JustAllan
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@justallan
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December 12, 2003 - 3:40 pm
They do all work – but I had to download them twice – and one at a time. Or else, the download seemed to complete when it didn’t.
Download them one a time and see then…
Allan.
JustAllan
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@justallan
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December 12, 2003 - 3:30 pm
quote:
Hope this makes things easyier for you.
Definitely – thank you! I’m actually on a pension – so in my case, my income is so low I don’t presently pay tax. I’m assuming though, that I would have to deduct tax from any income from an IP, reguardless of how low my income was – is this correct?
Also – if you only paid say $500 tax in a year, and the loan interest you paid came to say $2000 – would you only get $500 maximum back, because that’s all the tax you paid in the first place?
Allan.
JustAllan
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@justallan
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Post Count: 168
December 12, 2003 - 2:59 pm
quote:
My money is with Mel and Terry.
Thanks, Simon – now stop wasting time here, and answer your email! [] (Just joking – when you get time…)
Allan.
JustAllan
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December 12, 2003 - 2:27 am
quote:
$105 is cheap, and if you were to purchase a PPOR you would be paying something like 300 to 500 per week in interest alone!
Sorry – forgot to mention anything we buy will be from say $40,000 to $70,000. (So interest shouldn’t be high.)
JustAllan
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@justallan
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Post Count: 168
December 11, 2003 - 1:34 pm
Weren’t St George already offering 5% from a long time ago?
JustAllan
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@justallan
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Post Count: 168
December 11, 2003 - 1:33 pm
Great stuff – thanks folks! Actually it brings another question to mind, that seems so good it can’t be true. (Would OUR government allow this?)
And that is, you…
1. Purchase an IP, priced at $150,000.
2. Rent it out to tenants, postive geared.
3. Claim the loan interest as tax deduction.
4. Tax department grants the full deduction…
Now, if you continued this way unchanged, for the full duration of the loan – say 25 years – would that mean your total loan repayments will have only been $150,000 – that is, the same as your initial purchase price because the tax dept. effectively paid your interest?
Apologies – I’m not thinking too clearly lately…
Allan.
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 11, 2003 - 1:19 pm
quote:
Allan, did you get a receipt for the book.
You may want a refund!
Heh – does the library do that now? []
So… Which is it folks – PPOR turned into an IP – loan repayment interest tax deductible, or no? Anyone 100% on this??
Thanks for the replies so far, too…
Allan
JustAllan
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@justallan
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Post Count: 168
December 10, 2003 - 2:10 pm
Thanks to both of you! So tell me this… I’m assuming you can’t claim the interest on tax, if it’s your own home (ha – wouldn’t THAT be great!). But what happens in this situation:
1. Buy home as PPOR and live in it for a month or so you can claim the FHOG. (No tax deduction allowed.)
2. Move out after a month, rent property out as an IP…
Is the interest now tax deductible?
Allan.
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 10, 2003 - 1:52 pm
quote:
I agree, you can rent out a property you have previously lived in and ‘gear’ it. Perhaps she was referring to the fact that you can’t claim deductions for interest if you’ve drawn on the mortgage for the place you’ve just moved out of (i.e. in order to buy new property)?
Here’s the first two pages, up to and a little beyond that point… The quote is in blue (I hope)!
—
Chapter 1:
ARE YOU READY TO BUY, OR ARE YOU JUST A SITTING DUCK?
Your First Choice: A Property For You Or A Property For Your Wallet?
If you’ve never owned property before, you might be wondering if the first property you buy should be your own home or an investment property – perhaps to help fund the purchase of your own home later on. Many first-time property buyers get incredibly uptight trying to forecast which will be best for them financially – and the temptation of the First Home Owner Grant has made the choice even harder for some people. But the long-term financial outcome is only a small part of your decision. You’ll want to take convenience and lifestyle into consideration too. So while your decision may seen complicated, there’s really no need to break into a fretful sweat about it. Simply consider the following five main points.
1. You’re NOT entitled to the $7000 First Home Owner Grant for an investment property – even if you fit the full citizenship guidelines – unless you’re going to be living permanently in the property yourself within twelve months. Yes, you can rent a property out for the first eleven months before you move in, and you can use all your expenses during that time as a tax deduction. But to keep the Tax Office happy AND get and keep the $7000 grant, you would have to buy the property as your own home, rent it out for a short time only AND as an added precaution make sure that your income from the property during this time is higher than your deductions. (So you’re paying tax on a profit, not appearing to avoid it by making a loss.)
2. You can’t use interest as a tax deduction on a property if you’ve already lived in the property yourself. (Unless you’re positive gearing. But while you’re away on a long holiday if you would appreciate the extra cash, not to mention live-in housesitters to help keep the burglers at bay while you’re away.)
3. Only a portion of your expenses will be tax deductible if a portion of the property is used for private purposes. (If you live in part of it, for example.)
—
Me again: No matter how many times I read it, it still sounds wrong!
Allan.
JustAllan
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@justallan
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Post Count: 168
December 10, 2003 - 1:26 pm
quote:
The following will now occur:
A HECS repayment threshold of $35000 in 2004-5 and $36184 in 2005-6. This ups the original repayment threshhold from the amounts mentioned of $25348.
Will this affect only new graduates, or people who previously had a HECS debt as well?
Allan.
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 9, 2003 - 4:25 pm
quote:
Sorry to be stupidly obvious, but is it an Australian book?
Yes, it’s “Your Investment Property: How to choose it, pay for it and triple your returns in 3 years” by Anita Bell. On page 2! (Makes the rest of the book sound promising, hey?)
Allan.
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 9, 2003 - 3:14 pm
quote:
Hi Bear and Gang!
http://www.the-richest-man-in-babylon.com/
I think it’s free from this link.
Yep… if you spam a few friends first, to get it.
JustAllan
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@justallan
Join Date: 2003
Post Count: 168
December 9, 2003 - 1:23 pm
quote:
The admin of this forum do not like having people posting their email address into threads such as this as spammers are attracted to the site. So please avoid this in the future.
Well… In other forums I’ve participated in, when you click on the person’s nick, you can send them a private message. This is used for sending email addresses and the like. I suspect if this feature was “enabled”, there would be far fewer people posting their email address!
In reply to “aamee” (I think it was): Sorry, I’ve been away from the forum for a while. To answer your question, yes I was originally looking for how to discover council rates… But that’s ok – I didn’t even know land tax existed – so I’m *grateful* I was misunderstood, as I’m sure a lot of others are who have received the spreadsheet as well!
Allan.