Hi,

Just a word of caution- dont listen to everything the real estate agent says. He is just trying to make a sale, and if you dont buy the apartment he will not get a comission. So of course he will tell you that there are no probelms with the apartment because if you dont buy it he doesnt get paid!!!!

One thing you should consider is how many apartments are in the building? If there are 100 apartments and you are faced with a $100k repair bill then that is not a big deal. But if there are only say 15 apartments in the building, then a $100k repair bill is a big problem.

Cheers,
Luke

Terry I agree, but untill you decide that you want to purchase another investment you should leave this in an offset account. I have recently done exactly as you said (organised a $30k subloan on my PPOR loan, paid it down in full using money from my offset account and then redrew the money to use towards a deposit on a property). But I think you should always keep your money in as offset account in case you decide to use the money to buy a different PPOR, or car, or holiday in the future instead of a new IP.

Luke.

I would say an offset account is ALWAYS better than a redraw.

Water penetration and cracking issues are very difficult to fix. If there are warping doors and cracked ceilings then this could mean bigger underlying problems. Fixing waterproofing issues can be extremely expensive, and you sometimes don't really know how much of a problem it is untill a contractor startes digging up planter boxes and removing sections of walls to look at the flashing. If the structure is reinforced concrete (which it sounds like it is), then fixing warping/jamming doors is very expensive to fix, and may be an ongoing problem for the enture life of the building. It also indicates really poor standards of construction so I would be very concerned with the quality of the building- warping and jamming doors should never be a problem in this type of structure. The cracking problem really depends on what type of cracking it is- minor cracking of concrete is not unusual, however cracking of render or brick walls is a big problem expecially seeing as the building is relatively new.

It sounds like a nightmare of a building, and not one that I would buy into. If it is still within the cooling off period, I thought you could get a full refund on the deposit??

Cheers,
Luke

Your accountant will be able to help.

Cheers,
Luke

My understanding is that you can do it, but only under certain circumstances.

For example, you could be the bookeeper for your husband, so he pays you an hourly rate to arrange invoices, do the banking, and other miscellaneous items. However you must be paid at a market rate and for a reasonable amount of hours worked. So I don't think that it is possible to stream $100k of that income to yourself in return for these services as the ATO would most likely consider this to be unreasonable for the amount of work involved on your part.

I have heard of schemes where a person purchases a PPOR in a trust structure and also earns income in another trust structure through a contracting arrangement. He then furnishes the house and rents the house to himself making it a negatively geared investment. He distributes money from the employment trust into the property trust to offset the negative gearing losses and to reduce his tax. I would like to hear an accountants view on this scheme and whether it would be disallowed under the alienation of personal services income ruling, as it sounds pretty dodgy to me, but his accountant seems to think it is perfectly fine so maybe that is one way to do it.

Cheers,
Luke

Yep I agree with the above comments. A $400k unit in the inner west (Dulwich Hill, Ashfield, Marrickville) would be a way better buy IMO.

One other thing to consider is that you mentioned that there are a lot of apartment buildings being built or just having been completed in Liverpool at the moment. This means that there is no shortage of apartments that will be up for sale in the coming years, and so with no shortage of demand, prices are unlikely to rise much.

I would definitely not buy an OTP apartment in Liverpool.

Cheers,
Luke

The term the ATO uses for this is 'alienation of personal services income' if you would like to search for it o the ATO website.

Luke

From what I understand, you can not get a retrospective valuation done. The home will be CGT exempt for the time you lived in it as your PPOR. You will have to do the calcs yourself as your post doesnt really make sense (you said you purchase the property in November 2009, lived in it for 14 months and then rented it out on January 2010).

If your husband purchased the property from you, then he will pay stamp duty on the market value of the property as well as yourself paying the CGT.

Cheers,
Luke

As the building industry is a major part of the economy and provides thousands of jobs, any decision that would adversely impact this industry would be very unpopular. Given the construction unions relationship with Labor, I doubt this will happen under the current government, and also doubt this will hapen under a Liberal government. Also with the current shortage of housing in middle ring suburbs, any legistation that would discourage urban infill development projects (which are usually bought by investors as negatively geared properties) would be a disaster.

Cheers,
Luke