Forum Replies Created
Hi Redwing,
Thanks for your reply – vendor states that there are 5000 students currently with the uni gaining more students in the future – however that may just be the vendors estimate ??
I’ll check out the uni on the web and see if I can find out more that way.
By the way the apartments are a/c so maybe that would account for the higher rent.
What did you think of the figures – am I right in that it is positively geared (if fully tenanted)
– I have bought ID so will load this and see what the position is with occupancy rates etc…
Is anyone aware whether lenders will still lend up to 80% lvr on this type of investment…MIKALA
Hi,
Thanks for your responseAre you obliged to use these guys as your builder?
Yes the builder has hold on landIs the $2k refundable?
As they have not performed any of the tasks the $2000 is for, I would say it is refundable at this stageDo you only have a verbal that the $2k will be creditted towards the total price?
No, on the preliminary contract it says that it will be credited towards the contract priceIs there a committed completion date with penalties?
We have not got a contract so No at this stageWhat have you signed?
Have opnly signed the preliminary contract whiich covers only soil testing , wind speed assement , finishing choice etcCan you contact other buyers in the same situation as you?
Probably not – I would have no idea how to find out who else has signed with them – I do not think Glenwood homes would offer any namesThe main reason we have held in there this long is that the land is a good deal in good location and the house is great – the whole package will really appeal to tenants and as we have another IP not far away (built by someone else) we know that we will easily get tenants paying the rent we want – positive cashflow if we can purchase house at the originally quoted cost.
My concern is that I really do not know whether the Sales Rep has ulterior motives or whether her actions have been with the full knowledge of the builder and why this would be the case !!
Anyone have any ideas on why this could be so ??
MIKALA
Hi Philip and Mr. H.E.C.B.,
Thanks for your replies and the book sounds like a good read…
MIKALA
Under periodic lease it is at least 21 days notice to vacate from landlords side…so I think they are just trying it on…
MIKALA
HiYobab,
I pay 7.5% plus GST for mine so 8.5% plus GST is in the ball park – did you negotiate ?
I just signed recently agreement for IP in Qld – they usually charge 8.5% plus but I just told them what I was willing to pay as this is what I pay in NSW….MIKALA
A bit off the track but it may help others – I could not get finance by myself (single mum with 3 kids) for my POPR so my sister went on the loan and title of property. We had a trust agreement drawn up at the time to outline that my sister had no actual claim on the property (I was paying all of the loan repayments). When I started investing I needed the title cleared in my name only and was able to get it changed over in Titles office without paying stamp duty again for something like $10 – this is in NSW.
MIKALA
Hi Ausprop,
I’m still confused –
1st secnario – Not registered for GST
If I bought a block of land for say $99,000 and included in that cost was $9000 GST then build a house for $99,000 and there is $9000 GST in that cost can I then claim back $18,000 ?
If not, can I then claim $18,000 as a tax deduction?2nd scenario – After purchasing the above I register for GST (having not claimed the $18,000 as tax deduction) can you respectively claim back the $18,000 paid in GST ?
3rd scenario – I am registerd for GST then purchase as above can I then claim back the $18,000 ?
In all of the above the investment is held and rented after the purchase.
MIKALA
Hi Tools,
Thanks for the reply – the following is straight out of the WealthGuardian workbook –
The GST is generally not applicable to residential property, so any GST paid in relation to residential property investing cannot be claimed back. However while not refundable, a tax deduction is allowed for GST amounts paid.
The exception to the rule is where a new property has been constructed, or a property has been substantially changed through renovation. In this case GST is applicable on the sales price, and any GST paid in the construction or renovation process can be reclaimed.
I have paid GST on both my IP’s and I am wondering why tax agents or accountant have not advised that GST paid on new properties can be claimed back or claimed as a deduction.
What are you thoughts on the excerpts from WealthGuardian…
MIKALA
Hi Adam,
Recently went through the whole question of whether loan interest payments were tax deductable before earning any income and ended up talking to the ATO – they confirmed that yes you can and that is what I have done for the last tax year – no problem….
MIKALA
Hi there Ausprop,
Thanks for your reply but the more I read on it seems that the situation of new building purchase or major renovation means that you could claim the GST back or at the very least claim the GST component of your purchase cost as a tax deduction – if this is the case then I’ll be organising some tax return amendments pretty quickly….can any other forumites assist here?
Steve , it’s your book – have I understood correctly ?…..MIKALA
Hi Simon,
Sounds good – I will take you up on that next purchase!!! I hope I didn’t upset you – I know it is important to have a great team when investing and brokers can form a extremely important part of that team – I just felt that it is important when someone is starting off that they know all the facts (even though I don’t know most of them myself!! – just trying to assist and I’m still learning….
MIKALA
Hi Jenny,
Just after reading Simon’s reply – no offense intended Simon – however be careful of broker’s advice – they do receive commisions after all so make sure they declare to you what they are getting out of their advice to you regarding which loan to go for….personally I check out the information from the horses mouth so to speak – takes a bit of time and a few calls however I do not need to worry that I am being undully influenced to go with a particular lender and base my decision on the best deal I can get – doing this you can sometimes get something better by playing off the lenders against each other..eg no fees etc …they all want your business
MIKALA
My partner and myself only started property investing 2 years ago and we are in your age bracket also – I found it bit hard at first taking the first steps however we are now purchasing our 3rd one so it does get simpler.
When we started out I just looked for property initially, went to seminars and read everything I could lay my hands on as far as IP’s go.
We ended up finding a property first and then applied for the finance however there is nothing stopping you from approaching a few banks initially however they may want to charge you for a valuation if you have not got a definite property you want to borrow for (this charge should only be approx $150).I would not pay any application or valuation fees if you find a property and then apply for finance – most banks can offer finance without charging you for these items but be careful they can hit you afterwards with ongoing account keeping fees which are too high – take this into account when looking at your overall profitability.
The equity in your home depends on the value of your property and any remaining finance you have on it.
Remember that the structure you have in place before purchasing may be an important point to look at if your intention is to buy mutiple properties for both asset protection and tax minimisation purposes – doing it over again I would have looked at this more closely in the beginning.
The traditional banks will lend you up to 100% plus costs of your purchase using your home as equity.
Your strategy is important also – what is your plan – do you want to purchase based on the growth you may get (this can limit your number of purchases) or outright positive cashflow – this is something else I would have considered more carefully in the beginning – if for positive cashflow then try to save the deposit and costs amount then use the equity in your home to finance the rest – this will give you the best outcome.
We bought for growth and we have been fortunate in that we have attained $115k in extra equity for just the 2 properties in the last 2 years however on the downside they are negatively geared but positive cashflow because of the depreciation claims.
You mentioned you have a LOC – you can use whatever credit balance you have for the deposit and costs(you do not have to justify to anyone what you are using this for)and then approach the bank (once you find a IP to purchase) to add the new IP as security against your LOC and raise your LOC limit.
Hope I have been able to assist – there is so much information around and so much to learn – I have just brushed the surface.
But remember you have to take action and there is no time like the present – you should be able to get some good deals at the moment – it just takes a lot of time in looking around to find them.MIKALA
Hi,
The whole essence of claiming deductions is the purpose for which the expense was incurred. If the purpose was for investment then it is a claimable deduction – I have claimed books/seminars etc filing cabinet workstation – as the sole purpose I paid for these items was for investment.
As I buy under individual name I cannot answer for the same deductions under Company or trust – maybe someone else can answer this one ??……MIKALA
Thanks for the links and great advice – looks like I have some reading to do….
MIKALA
Thanks,Redwing…will send a PM
MIKALA
Hi Redwing,
Is the property new ? If so then you can add in the tax benefits (depreciation included) as other income in your calcs – in figures would make your cashflow a bit better. I recently bought the ID and was advised that this is where you add the benefit.
Also if new you wouldn’t really need to allow $650 pa for maintenance costs for at least first five years..
Are you planning on managing it yourself ? If so do you have other properties you have done this with ? I would imagine this could be a headache
If you don’t mind my asking where is this property? It is just that the return of only %250pw sounds awfully low for purchase price of 290,000 – is this in a city suburb ?…MIKALA
Thanks for your reply Michael,
Would really appreciate getting more info on the clauses referred to, if not for this time, then for the future – I’m a fast learner.
The actual markup on the last invoice he gave us as compared to the agreed prices actually works out at 55% more in total – he charged more for the original prices before adding the 12% plus 10% on top of that.Further developments today – he has agreed to come halfway between his invoice amount and the counter offer I made to him last Friday, so we have agreed to pay. We really cannot afford to have the tenants out on the street- they had already given notice where they were before. However I asked for a statement from the builder saying that this payment would be in full settlement of both the variations and the contract but he said he would just send an adjusted invoice.
We do not seem to have a choice at this late stage unless you can find something in the clauses of the information statement which would make a difference to our approach.Thanks again…
MIKALA
Thanks Redwing,
Have done as you suggested and will see what Michael has to say…Regards,
MIKALA
Thanks for your reply Redwing – at the risk of appearing ignorant, would you tell me who REBA and DOCEP are ? Would they be familiar with Queensland situations ? Although the contract we signed is one issued nationally I believe…
MIKALA
