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newbi2
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April 16, 2008 - 11:49 pm
You will find as soon as you mention your plans, you will be bombarded with well intentioned though unsolicitored advice. It goes with the territory. It will be a matter of tuning out or just not starting the conversation inthe first place. If there is a sound basis for the comments then ask them to explain further but if it is an armchair investor that heard over the back fence that his neighbours brothers uncles bus driver lost money then change the subject.
There may be logic in what they say (after all land appreciates, buildings depreciate), but alot of opinions on investment properties (especially those that dont invest) is based on emotion ie what they would like, rather than what is often a better investment. Be confidant in your own research and logic, and if you are not, find someone who can support what you are trying to do and perhaps help give perspective (preferably someone who is currently investing). Gee that sounds like those on this forum!!!!!!
Happy hunting
Mick
newbi2
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April 15, 2008 - 11:25 pm
Give the ATO a call and ask them to send out the latest CGT booklet. it has a lot of examples init and will help you see al the different scenarios. It is free. You can search it also on line, but the booklet is easy to flick trough.
Tammy
newbi2
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April 15, 2008 - 10:52 am
Hi Cam,
This will certainly require a visit to the accountant, but in a very similar scenario, my accountant advised us that if the intent is to sell and make a profit, then you are not eligible for the PPOR exemption even if you live in it for a period of time, so I suggest you find everything that would indicate your intention to stay in a while. Although, it sounds like you now dont intend to live in it, so it may prove fruitless.
I have heard of reinvesting in trees to defer/avoid paying CGT but my understanding is it still is not in your pocket.
Goodluck and if you find a solution that doesnt involve guest accomodation in the big house, please share.
Cheers tammy
newbi2
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April 14, 2008 - 10:20 pm
I would seek the advice of your solicitor and have anything the agent says in writing. A few years I allowed a contract to fall over due to the severe health prognosis of one of the buyers as advised by the agent only to find later that it wasnt actually true. Whilst the agent may also have been caught unawares, I would now say "prove it". Experiece does tend to make one cynical.
mick
newbi2
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April 14, 2008 - 2:39 am
Thanks for the review, work stopped me going and I was sorry to miss out. Any idea when next year?
Mick
newbi2
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April 14, 2008 - 2:36 am
If you use your top up to pay off your CCs AND CONTINUE TO PAY the credit card payment but onto your home loan, you will be better off. Dont forget though, if you only pay the minimum you may end up paying more in total as it is over a much longer time frame, althougth it will be easier week to week.
PS pay it off then cut it up (or at least reduce the limit ot the minimum)
All the best , Mick
newbi2
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April 13, 2008 - 12:50 pm
Hi Chivy,
1. reno – I agree, if you are not a handy person and not comfortable with the possible risk attached, then give the renos a miss. That said, dont lump all renos in together. It is very easy to replace carpet, the guys in the shop do it for you. Use your current living arrangement as an example. Get a few measure and quotes (no cost to you) and get a feel for carpet costs (types and prices) and overall room/house estimates. If the place you consider has old capret, use it as the drop mat whilst painting. Trust me, unless you have a very bad wall (cracks, holes that need repair etc) then it is a very straight forward, although for me personally monotenous job. But I know others that enjoy that side of it as they plug in the ipod a chill out. If you start small, you will get a feel for it. And besides, it will be your place, you can always paint over it!!!!!! As for the garden, again, look at your current place, visit a garden centre, think basic maths – lawn size x cost metre square, plants + mulch. Keep it simple, treated pine edges (already straight!), mulch and a few hardy plants come up looking great and easy to maintain.
2. Student accomodation – can be very worthwhile, but check with the regulations in your state. There are alot of these for sale that I am sure dont meet the requirements for fire etc and as such insurance. It never hurts to run it past you insurance agent. I am sure there are prevuios postings on this forum about this so try a search.
Mick
newbi2
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April 13, 2008 - 10:50 am
I got the SD exemption along with the FHOG when it came out in July 1 2000, so it has been around at least that long.
newbi2
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April 12, 2008 - 10:01 am
Not that I live or invest there, but I thought Adelaide had "taken off"?
newbi2
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April 12, 2008 - 10:00 am
Its all about the numbers. When you run all the numbers for each proposal, compare what return for what timeframe. Yes, as TC says, you may be better off financially with the townhouses, but if the loan puts you into the commercial lending arena rather than residential it may be a different story.
There is no wrong choice, only a less informed choice, so determine all your costs for each proposal and compare.
Mick
newbi2
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April 12, 2008 - 9:55 am
I agree with the start small. For both the IP and the PPOR. If you are willing to get to the "dream PPOR" by going through a few steps, you may find you end up with a nice portfolio of IPs AND a PPOR rather than just struggle with the interest on a dream PPOR with no rental to offset it.
Also you may like to consider your first purchase being one you can value add to. Even if it is as small as a paint and re-carpet and garden redo. These can be done over a period of time and will assist in increasing your equity faster then the average where nothing needs to be done.
Just a thought
Mick
newbi2
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April 12, 2008 - 9:19 am
Once you have paid down an IP you are not able to reborrow and claim the interest on this new loan as a tax deduction, unfortunately. Only the interest on the lowest amount ever owing is claimable, but as always, confirm this with your accountant as I am not professing to be one.
newbi2
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April 11, 2008 - 1:47 pm
Opps, sorry, I have just reread and see that it started off as an IP. So that will mean not all of your gain is tax free if you sell. Again, have a go at running the numbers for each scenario, see with each where you will be in now, 1 year and 3 years and then it will be more clear which strategy suits your family's goals
Mick
newbi2
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April 11, 2008 - 1:43 pm
Hi Pickle,
Firstly, Congratulations on being in such a great position. I am sure you will get some excellent opinions off this forum, but remember, as only you know what your goals for the future it wont all be suitable.
So I will have a go and offer my opinion.
As I prefer to have a lower LVR, I do sell when I feel an asset is no longer performing as I would like (dont worry guys that advocate holding, we are only takling singles!!!). As this is your PPOR and no CGT is payable, if you feel there is no significant gain to be had in the forseeable future, would you consider selling it to fund your new PPOR (a non deductible debt) and purchasing an IP elsewhere with greater growth potential (deductible debt)?
If you evaluate the existing property on its rental yield compared to its value (not what you owe) does it stack up as a good investment (remember you get about 7% or better in the bank now).
If it does look like there will be further capital growth, and it stakes up as a viable investment, there may be some merit in putting it into a trust so the debt is deductible (it will trigger stamp duty so you will need to consult an accountant)
You also have the option of renting your PPOR, retaining its PPOR status for up to 6 years, all expenses become dedutible and renting yourself elsewhere.
Which path?? It depends on what your goals for the future are, and running some numbers to check out your prefered scenarios.
All the best, you are in the box seat.
Mick
newbi2
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April 11, 2008 - 1:31 pm
Also ask about headworks charges (water, sewer etc), Look about for stormwater pit, how close are you. Any power poles in front? Bus Stops? All these can cost money if they need to be moved. Any easements etc on the land? But as Scott suggests, a good place to start is with the council.
Also, do a thread search on this site as this has come up previously and you may be able to make a list of questions to take.
Mick
newbi2
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April 11, 2008 - 7:52 am
Just dont forget if the intention is to build for a profit, you are not entitled to the CGT reduction even if you hold the land for more than 12 months and you are also liable for GST as it is the sale of a new premises. So when you work out your profit margin, dont forget to factor this in. It was mentioned in one of the API magazines that it is possible not to make a profit on a new building but still have to pay GST. It should go without saying that you should check with your accountant to verify this.
I dont want to dissuade you, but I have witnessed another who made a decision without factoring this in – and it came back to bite him in the bum so to speak.
Mick
newbi2
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April 11, 2008 - 6:51 am
Out of curiosity, are they strata titled? If so, I thought it was the stratas responsibility to repair the buildings from the internal paint out (ie the cracked wall). In the last strata unit I woned, it was the stratas reaponsibilty to repair/replace a window that no longer closed properly, a cracked shower screen, reseal/waterproof the shower and repair the carport. Maybe it would pay to ask, and maybe a call into the Dept of Fair Trading (they handle all strat stuff – in NSW at least) to check where you stand.
Mick
newbi2
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April 10, 2008 - 1:07 pm
Hi Scott,
Thank you for your comments. However, I feel I may have explained the situation a little poorly.
Let me have another go.
At this point I have 2 homes, one almost ready for occupancy(Block , the other, also built new, we have lived in for the past 3 years(Block A). We are moving into the new home as soon as the fencing is complete (but house is already completed hence my query on "as soon as practical"). It also will eventually be sold as our appointment in this region only goes for a further 12 months. These homes are more suited to owner occupier and there is little market for rental of executive style homes here at a reasonable return hence the sale. Block A is currently in the process of being sold, so there is not able to be turned into an IP as you mention above.
I understand the concept of renting out the PPOR and in turn renting elsewhere – it is not applicable in this instance.
I had no income on another vacant block of land that I sold, but at the realisation of profit, I was able to claim all expenses, would this not also apply to the above situation?
SO…….
If I choose to nominate Block B (almost ready for us to move into) as our PPOR, we are able to back date it for up to 4 years according to the above ruling, BUT how do I classify Block A when it is sold? I feel it will be classified as a CGT event (I am OK with this – it has the less growth), so do I then claim all expenses retrospectively as I did for the previously mentioned vacent land?
I hope that is a little clearer. Sorry, this is why I posted, to get it all clearer before going to the accontant. Scott, you have probably saved me the cost of a good dinner by making me explain myself better, so cheers mate.
Mick
newbi2
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April 10, 2008 - 12:37 pm
What about the idea of a family working bee weekend where your parents supply the food. Yes it sounds old fashioned but it may be a good way to do some basic gardening/landscaping to at least tidy everything up and make what really needs to be done more apparent.
Mick
newbi2
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April 10, 2008 - 11:16 am
Precisely my point. I would prefer to call the land cum construction the PPOR as it has shown the greatest capital growth. As such, I am understanding that I must declare the current house for the purposes of CGT (never intended to try and claim two at once). Just trying to clarify things prior to going to the accountant. What my biggest question would be given the above, are the expenses of the property that would be subject to the CGT event deductible if I am living in it (I know they are if it is rented, but what if it is not rented)??
Cheers
Mick