Hi, after 5 years, there's no GST on sale. If you sell the new house upon completion, you may cop trade profit as well instead of CGT which is 50% of total gain.  Eg, if sale price is $380000, then GST is 10%. If you use the margin method of calculating GST, you'll still have to pay a substantial amount.

When you tote up everything, you may find that you have an IP which is CF+ but -ve gearing.

If you do decide to sell the new house immediately, make sure that the contract specifies the margin method of computation  of GST.

You can do the depreciation schedule yourself if you keep all records of costs. I did mine like that and my accountant charged me the usual not very high rate of doing my tax return.

KY

Hi, you seem very sure that house prices will come down when FHBG ends. Did that happen when you bought previously? Do people stop living in houses when FHBG ends?

Sure, sell if you don't need a house but not to anticipate whether prices will come down or go up. It's something that we can only guess.

KY

Hi Yanhong, if you listen to the likes of Scamp, you'll never in this life ever own any property. Run a check of his posts and you'll see what I mean.

Having said that, you still are faced with a decision. Before your last post about the higher valuation, I was going to say that $40k variation is NOT big. It's less than 10% of the offer price. It's still worrying because it affects your loan amount.

What I'd have suggested was to use the valuation to barter the price down. Since you have a subject to finance clause, you can argue that the finance is available only for the valuation price. If the seller doesn't accept the valuation, then you won't have to lose your deposit.

You can try lodging a withdrawal based on the loan amount you're able to get. i.e. 80% of $460000 = $368000 therefore you can only proceed with the purchase at $460000

If you're VERY uncomfortable with going ahead, then just losing $1250 is not such a big deal.

Good luck,
KY

Hi, Duckster is right. $75 p.w. is not difficult to pay down. Increase payments to $400 per month and it gets progressively easier.

KY

Hi, can you rebuild 2 on your PPOR block? If not, can you reno/extend and put a unit onto existing structure so that you have a large section of your current block to live in and an additional smaller unit to rent out for income?

You can then borrow off your current IP to do all of the above. However, number crunching is essential.

Good luck,
KY

Hi, it happens all the time.

And the ones who can't get ahead are the ones who did not take the 1st step.

Share this experience with you. Someone in 1994 had enough savings to buy an IP. Talked about it, looked at dozens of houses, wanted to squeeze the seller, would not offer the price asked. This one is not good enough, that one is not worth the money.

My 2nd house, [1st IP if we wish to call it that], I offered asking price $175K [which my agent told me was very low] as the owners had divorced and rental was a bit difficult. I later found out they paid $194K two years earlier so they'd have lost about $50000 all in when they sold to me.

I told the 94 couple about it and he [a home maintenance man] said he would not offer more than $160K.

After I'd bought IP 4, they urgently phoned to ask me [1 year later] what I paid for it – $88K. They refused to pay more than $88K for the one in the same suburb that they'd seen with an asking price of $105K and she said 'it's mad'

That was in 2001. And guess what? That house is $300K now.

They are bitter and jealous and I don't mention property in their hearing.

He's been on carer's pension for a few years and she works in aged care.

I can go on and on but I won't.

KY

Hi, can this be done?

Buy it as a residential property [house and land] I'd go through another lender.

Then with all the permits etc, apply for construction loan. The construction loan will most likely be classified as a business loan. Fees are appreciably higher but interest is charged only when building costs build up.

If you can't manage the holding costs, be very vary. It might be that you're position can be precarious.

Good luck,
KY

Hi, is this possible? Buy acreage property now. Use it as IP and improve as in what you'd like when you transfer family there. While it's an IP, milk all the tax benefits you can get eg. if you renovate, the renovation cost can be partly recovered by tax claims.

Then, say in 2 years' time, you move into acreage property [having claimed GST + depreciation] as well as sell your current PPOR at optimum price.

By deferring your move, you can save quite a lot of money but of course, you miss immediately living where you want.

You'd have to do your own sums, I don't know whether it'd work for you.

KY

Hi Ajay, I live in Adelaide and I DO NOT BELIEVE that Adelaide prices will go up the way that they did in 07.

I further think that they won't go down much either. So if you're buying 1st home with govt grant, not much point waiting. Buy as good as you can.

What I would not do is buy believing that after I buy, the capital gain will be such and such.

There were long periods when Adelaide prices languished [up to ten years] and who knows if we're going into such a period?

I bought in 98/99, caught the 03/04 boom and bought again in 05/06 and caught the 07 boom.

The reason I bought in 05/06 was I sold in 04. I saw that prices didn't go down and I wondered why. Based on those reasons, I had to buy again in 05. You can look through my posts in 06.

You'd do far better if you go and look at the houses for sale for a few months and then choose what to buy.

Good luck,
KY

Hi, well done. Exactly how it's done and you can look for the best property you can get for the amount that you've allocated. Have you considered that you can also leverage off your properties to buy shares? You get the same -ve gearing advantages and have potential to get a lot of capital gain.

Please understand that I'm not giving advice. You have to do your own calculations which you obviously have been doing.

Good luck,
KY