Forum Replies Created
- Originally posted by adl_cat:
Note – I am seeking other expert advice (expat specialists this time), as the ATO web-site contradicts the accountants advice. In addition, I have received other advice which suggests I should keep renting the property. It certainly is not clear to me yet!
http://www.ato.gov.au/individuals/content.asp?doc=/content/57252.htm&page=24&H6_7
As a result, the Sydney house is not exempt for the period it was used to produce income that exceeds the six-year period – that is, one year.
If the capital gain on the disposal of the Sydney home is $250,000, he calculates the amount of the gain that is taxable as follows:
Period of ownership of the Sydney home:
1 July 1990 to 28 February 2005
5,357 days
Periods the Sydney home was used to produce income after Ian stopped living in it:
1 January 1992 to 31 December 1996
1,827 days
1 March 1997 to 28 February 1999
730 days
2,557 days
First six years the Sydney home was
used to produce income:1 January 1992 to 31 December 1996
1,827 days
1 March 1997 to 28 February 1998
365 days
2,192 days
Income producing for more than six years after Ian stopped living in it:
365 days
Proportion of capital gain taxable in 2004–05
$250,000
x
365
5,357=
$17,033
I suspect that your accountant is not correct. I believe that the tax will only be payable on the period after the 6 years is finished.
You can always write to the ATO and request a private ruling which will lay it down in black and white as it applies in your case.
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Yes.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by servant: most managed funds have an entry fee of 4%. so if you put $10,000 in a fund they’d take 4% of that ($400) straight off the bat.That is true, however a discount broker will allow you entry with a 0% upfront fee. No catches.
Mine has been doing it for years.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by pipelinebuilder:simon a mix of income streams
That is facinating – thanks mate.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Glennw:You may not have to pay CGT as you could elect to have the Australia Property as your Principal Place of Residence. This depends on your circumstances whilst overseas.
Glenn,
This is what we have been discussing. Can you add anything else to the posts above?
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Can you give us an idea of how he sources his passive income?
I am sure it will be a great example for us all.
Thanks
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Whatever you like.
I would certainly have your name prominent – they are calling you not the trust, perhaps the company name in a corner if you feel it should be included?
Not forget to use the back of the card? Maybe specify what you are after or what you can offer? Is valuable space and should be used!
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by KERNAGHAN:Are Westpac useing this tactic to try to get a leg in on Defence Loans for housing which are currently done in part by National Bank?
No
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I believe yo ustill get the 6 years grace even if you overstep it but I have been wrong before. If you lose the 6 yr concession then it would be worth doing nearly anything to get them out early!
Additionally you need to remember CGT is halved if the asset is held more than a year.
According to your figures it really doesn’t seem much at all.
Contact an accountant as a matter of urgency.
I recommend Nick at http://www.strategicwealthmanagement.com.au who will prob give you an answer via email quite quickly.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If you can get your tenants out before the 8th May you can conceivably pay no CGT as it is within the 6 year threshold allowed under the CGT exemption provisions. Unless of course you have had another home in the meantime.
I suggest you seek independent advice and speak to your PM about ways you can have it vacated so as to have rented for under 6 years.
The tenant may even be happy to move early – it never hurts to ask. Even make it worthwhile them leaving that bit early…
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Owning an IP will not stop you getting the FHOG when you buy a home. Unless you occupy the IP.
I do not think this sort of investment is suitable for long term wealth generation. With the large depsoit needed you will tie up more equity than you need to.
Historically they are also hard to sell.
I prefer to see people stick to well performing middle class residential real estate or similar.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by SteveMcKnight:Hi Simon,
Thanks for your input. I hadn’t thought of the resale problems (i.e. you limit your market to only investors – and even on that, those investors may choose another DHA property first), so that is an excellent point.
So, would you recommend this kind of property as an investment?
Also, do you think that DHA manages the property well enough to justify their large commissions?
And finally, if you were thinking about buying such a property, what are some practical traps you have seen to avoid?
hat success comes from doing things differently.
**********I would recommend this type of investment to a person who was very very concerned about the perceived pitfalls of property investing. Someone who watches ACA and feels that all the horror tenants are lined up waiting for them to invest. Someone who needs a lot of security. At the end of the day they are well built brick homes in desirable areas built to a standard above most spec homes. They will go up with the market.
DHA do take care of a fair bit of minor maintenance with their in house repair team. Things like flyscreens, tap washers etc are generally replaced quickly and at no cost to the landlord (at least this was the case when I was a tenant). Major repairs are attended to promptly and to a decent standard. Tenant damages are repaired at the tenants expense and they can simply garnish the salary if they need to via normal ADF Pay avenues.
As a trade off for the high management fee you are assured of 52 weeks rent PA even if the place is empty. You will get it back in a fair wear and tear condition as you would expect of a 6 or 9 year old home. You will get a repaint and new carpets depending upon the lease length.
It is a hands free property investment.
You are also assured of a decent standard of tenant. These homes are provided to married couples only and so, even if you get a junior sailor, soldier or airman you can be assured he or she will be married and not simply sharing with a bunch of mates.
Personally I wouldn’t buy one unless I was convinced of growth in the particular area. I would prefer something I could add value to myself. This is simply not possible with DHA. They seek new finished properties and have a standard set of specs.
But on the other hand I would never suggest it a bad investment for the right investor.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by cataldop:As you have pointed out Steve, the prices are over inflated and the fees are high. This would represent a safe investment for someone starting their investment portfolio, however the returns are low (Not close to positive cashflow) and I believe you can only sell the property back to the DHA at the price they agree too. There is no room for someone to add value to these properties to increase the rent, so I see them as a long term investment that is built on the hope of capital gains. There is no easy money to be made here in the short term.
You own the property just the same as any other property. You may sell when and to whom you wish but the lease must be honoured by the new owner.
Whilst some owners feel that the long lease should command a premium price on sale the reverse is usually true. As you cannot sell to a homebuyer you never get the same prices as you might should you be able to sell to a starry eyed young couple looking for a home. Instead you get a hard nosed investor pointing out al lthe faults and offering via a calculator…
Clients of mine believe this devalues the property by as much as 10%.
As an Army Officer I had a lot to do with DHA and the housing for my troops and I also lived in several for some years. Happy to answer any questions if I can. I know the inspection regimes, the maintenance plans etc
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Warren,
There have been changes recently that makes it difficult to back date a tax return to the four years that we used to be able to amend them.
Scott from Depreciator knows all the ins and outs if you need advice.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I agree with the too good to be true feeling.
you need a bigger deposit, get a higher rate and the demand isn’t there for resale.
Same with studio apartments under 50sqm, purpose built student accm and retirement homes.
Stick with normal residential dwellings or straight commercial and you wont go wrong.
These things sell on a higher yeild for a reason…
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
You would be looking at around the 7% mnark for this sort of lending.
Some loans have application fees of about $800, others have monthly fees. Best to get a broker to present you with a range of options.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Are they similar to a standard three bedroom townhouse in which case you may get a residential loan. Or are they more like a college setup which requires commercial finance.
be aware that you can have an extended vacancy over the summer in mosy places.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by teedee:Hi Everyone,
Thank you for all your wonderful words of wisdom that I will defintely take on board. Yesterday someone wanted the property deperately & they offered the asking price which we accepted. Fingers crossed his finances hold up to conclude the sale. This price is a new benchmark for the complex.
Cheers, [biggrin]
TeedeeCongratulations – setting a benchmark price in todays market is no mean feat!
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
It is a shame that I am meeting less and less of my clients. I genuinely enjoy getting to know people over a cup of tea and a chat.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Derek:Originally posted by mja:The goal is to reduce non-deductable debt.
My wife and I currently live in our apartment, which has a mortgage of 72.8% LVR and is our primary place of residence. We’re building a house that should be ready in the May-June time period this year, that we will be moving into. Thus, our apartment will then be rented out and become an income producing asset.
It is for this sort of reason that a good broker will recommend an interest only loan with offset account.
This way should an individual ever move out of ‘home’ and turn it into an IP then they can either take their cash into the deal or change the offset link so the interest savings are transferred over to their new home.
Not a broker so take what I say with a grain of salt.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113I am a broker and Derek is spot on.
Pay down principle in offset only if you think your PPOR will ever be an IP.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
