Forum Replies Created
- blogs wrote:
Hmmmmmm and we still have a booming economy and 'proprty shortage'…..
The property shortage is well documented and the economy is still booming if you take economic growth figures in to account. This article doesn't refer to either of these things. The article states it's interest rates and the falling stockmarket that have driven prices down.
I have just purchased a couple of bargain properties in Perth and are looking for others and are very optomistic about the next few years. Interest rates have just about peaked and will come down quickly in the next 12 months as the fear of recession becomes greater than the fear of inflation. Rents are increasing at a great rate, due to the huge shortage of rental properties. A lot of newer immigrants to Perth are keeping their funds overseas until exchange rates improve. This will happen when Aussie interest rates fall. Then these people will be looking for properties to buy. The stock markets will fall even further and people will be looking for other investments. Term deposits won't be that attractive for these people as interest rates will have fallen, so property will again be attractive due to the better yields. When you combine all the above factors (it's like the property cycle on steroids!) I am very excited about what lies ahead.
Firstly in the interests of disclosure I am an accountant so perhaps have a biased point of view.
IMHO people who complete there own rental tax returns are a lot more likely to have an ATO audit. If you think you have completed it correctly then perhaps you are not to worried about this. However the simple fact is you cannot rely on ATO phone advice (sad but true!!). Also if you read the various booklets and documents relating to rental properties issued by the ATO it doesn’t mean you know how to complete a return as they can sometimes be misleading (as case law has often superseded what is in the guide). Also the fact is they are the ATO’s interpretation of the law and often are very conservative especially in relation to what tax deductions can be claimed.
Most accountants go on courses at least once a year (I have just been on a 2 day course operated by the National Tax & Accountants Association Ltd (NTAA)) and learn the latest tax updates and planning opportunities regarding investment properties.
As an example the latest developments covered in the latest NTAA course were:
-CGT cost base and building write off. ATO’s backflip a major victory for landlords.
-CGT cost base and non deductable interest. A double whammy for landlords.
-Landlord allowed deduction for replacing an item attached to the building.
-Deduction allowed for holding costs on rental property that never derived rent.
-Maximising depreciation claims for jointly held rental properties. Planning opportunities for landlords.
-Maximising deductions for landlords in the 2006 tax year taking advantage of future tax cuts.This sort of information is not available to the general public in such a format. Therefore even if you prepare your tax return yourself with the best of intentions, you are probably getting it wrong and in a lot of cases you will be paying more tax than you need to.
ned kelly
I have been a tax accountant in Australia & NZ.
What people should realise is the two countries have completely different tax laws relating to trusts, companies and property. Overseas (Australian) ownership of NZ trusts and companies can create a lot of headaches for the NZ non residents. Higher NZ taxes can be imposed and financial accounts can require being audited every year.
I would recommend anyone thinking of going down this track to go to one of the international accounting firms that has offices in NZ & Oz. Sure you will pay top dollar for the advice but at least there should be no suprises further down the track.
ned kelly
Just getting some tiling done in Perth. Cost $34 per square metre for 50 sqmetres. Tiler booked through tile shop. I thought that was expensive!!!
ned kelly
Celebration homes are under the same ownership as Dale Alcock homes and The Homebuyers Centre. Basically they use the same tradespeople it’s just the building standard specifications are higher for Alcock and less for Homebuyers in relation to Celebration. So if you are comparing apples with apples you would have to compare Ventura with Dale Alcock not Celebration.
ned kelly
I’ve lived in NZ and have seen how the small towns are hit hard when there is an economic downturn. Things get very tough and people migrate to the big cities or Australia. Any Australians who have invested in places like Tokoroa in the last 12-18 months must seriously look at reviewing their NZ portfolio. You’ve probably lost 20% already on the exchange rate changes over the last 4 months plus you would IMHO be looking at losing at least another 20% when the market turns. Just my opinion. I was in NZ in 1997 when exactly this happened and back then the market was not nearly as overheated in the smaller NZ towns as it is now.
ned kelly
IMHO there is still money to be made in Perth buying blocks of land and building. Did some research on the weekend. Estimated if I bought a certain block, built on it, accounted for all other costs (incl interest) then there is a 60k profit based on todays prices. If values go up 20% in next year add another 70k to that. [biggrin]
ned kelly
Purchased 360 square metre cottage block in Butler (36km north of Perth) May 2005 for 100k. House just been completed on cottage block 100k (incl site costs). Other costs stamp duty fees etc, 10k. So total cost 210k. Current value 400k. Thats approx $3650.00 a week increase in value.
ned kelly
If for example you had an investment property in NZ you would file a NZ non resident tax return and include all income and expenses and then file an Australian tax return and again claim all income and expenses. The main difference between the two returns will be depreciation. NZ has a lot more generous depreciation regime than Australia. As already sated you get a credit on your aussie tax return for any tax paid in NZ.
ned kelly
I posted the following on 9/11/05. Did not receive any replies to the posting.
“What about the exchange rate worries in relation to owning overseas properties?.
NZ for example averages an exchange rate with Australia of $1A equaly 75cents NZ. At the moment it is around 90cents NZ and many commentators are saying the NZ dollar is overvalued.
I see Australian investors in NZ losing 10%-15% on the value of there investments purely in exchange rate losses in the next couple of years.
To me it is hard enough finding great investment properties without trying to guess what exchange rates are doing aswell.”I agree with Westan any Australians investing in NZ property needs to take stock of there investments there taking in to account exchange rate forecasts.
ned kelly
“a suburb 40km north of Perth slightly inland of a rather desolate coast that blows like the clappers in Summer and is a demographically challenged area (streets at night stuff).”
Yep you can tell from the following link it’s the last place you would want to live or buy an investment property. Would you walk these streets at night!!! or want to live near a desolate coast like this!!!.
http://www.movetoperth.com/info/suburbs/suburb_pages/butler.html
ned kelly
“Just take a look at Sydney pricing….its simply better value than Perth.”
JVT I agree with AUSPROP, show us some Sydney properties of comparable value to our examples. Is there any???.
ned kelly
[biggrin]
Please tell me where I can buy a 4×2 800m from the beach in Perth for $350k?
Here’s three properties to the north of Perth for a start!!!!.
Like I wrote previously Perth still offers good value and lifestyle!!![biggrin]
ned kelly
IMHO Perth is still good value for money. You can still buy a large near new 4×2 home 800 metres from the beach within the Perth metropolitan area for $350,000.00. Can you do that in Sydney & Melbourne?. With the lifestyle Perth has to offer I think a median price of $400,000 is not out of the question in the next 2-3 years.
ned kelly
Terry, thanks for your reply, doesn’t he have to have been self employed in Australia for 2 years to get the no doc loan?.
What would be the position re getting a 90-95% loan.
Thanks
ned kelly
What about the exchange rate worries in relation to owning overseas properties?.
NZ for example averages an exchange rate with Australia of $1A equaly 75cents NZ. At the moment it is around 90cents NZ and many commentators are saying the NZ dollar is overvalued.
I see Australian investors in NZ losing 10%-15% on the value of there investments purely in exchange rate losses in the next couple of years.
To me it is hard enough finding great investment properties without trying to guess what exchange rates are doing aswell.ned kelly
Well that’s news to the NZ Inland Revenue Department!!!!. Refer below extracted from NZ IRD website.
New Zealand
New Zealand does not have capital gains tax.The link is:
http://www.ird.govt.nz/yoursituation-bus/australian/comparison/#cgtned kelly
The commission’s report in November 2003 published details of overseas tax arrangements on home ownership that would indicate that the Australian system is both unique and generous.
New Zealand landlords are allowed to gear their properties negatively but the capital gains tax discount is limited to a clawback on depreciation. New Zealanders do not pay stamp duty on property.
I wonder about the accuracy of this report. There is no capital gains tax in NZ!!!!.
ned kelly
I would suggest based on the article below you are very careful investing in Invercargill which is in Southland. You may get positive cashflow but it appears there will be no capital gains in the foreseeable future. Good luck.
Property slump – where it will strike
23 October 2005
By IRENE CHAPPLEA property slump will hit the South Island over the next three years, but the North Island’s cities will weather the downturn, says a report due out next month.
The Infometrics/PMI Residential Overview shows Auckland and Wellington will hold strong against property price falls, but values in Otago and Southland will slump by 2008.
The report, published every six months, gives detailed forecasts of construction activity, house sales and expected prices rises in each region.
While the cities keep their noses in front of inflation, Canterbury/Westland and Otago/Southland are forecast to fall 3 per cent and 4 per cent respectively.
Infometrics also says property prices will flatten nationally over the next 10 years.
Many in the residential market who had made profits were getting out now.
“If they have been in the market five years they are doing well,” he said. “It’s the ones who got in six months ago who are not necessarily going to get capital gains.”
ned kelly
ned kelly
