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Thats alright JL. I am actually studying Estate Planning now as part of my course in Financial Planning. Have a week long course to start in 2 weeks so this is good research. I find this stuff really interesting. Should have an answer for your tonight
OSS
Paul,
I know that death does not necessarily constitute a Capital Gain/Loss event. I believe that when a natural person receives an asset from an estate the beneficiary is recorded to have acquired that asset on the date of death of the nominated person. No tax will be payable until the beneficiary sells it later, which that person will pay at their nominated tax rate.
In the case of passing the property to a trust upon death (ie a Testamentory trust) i am not so sure but believe it may be similar to the situation above.
Stamp duty i am not sure of.
i will check my Estate Planning manuals and get back to on these.
I think a rise in oil prices will have a huge impact on property prices for the following reason:
It will make filling the lawnmower up with fuel so much more expensive[biggrin]
People will want to move out of houses into units so there is no need to pay for fuel [idea]Ok so i am not serious here but just could not resist throwing that in there.
Question re hybrid trust. If you set up a hybrid trust and buy units – aren’t the units then an asset of yours and open for attack from bankruptcy, litigation etc Where does this leave your asset protection?
Terry,
if I (individual) was to borrow say $30K at 7% from a bank for a deposit and loan that money to your trust to buy a property, i understand that the interest on your loan ($3OK) is not tax deductible. However what if the trust paid you interest on your deposit eg at 1%. As you are now receiving income from your borrowed funds – could you now claim the interest as per neg gearing.
ie borrow 30K at 7% = $2100
Trust pays 1% on 30K pa = 300
Loss = $1800Dale GG refers to it in his Trust Magic book but uses a higher interest rate being paid from the trust to the individual and states the interest is deductible(ie borrow at 6% and receive 7%). In this instance – would there be a need to set up a hybrid trust just to claim the neg gearing benefits?
O.S.S
Peter,
I went to your money magic seminar in Brisbane in 1999 i think and you were talking then about your dream to get into acting and going to NIDA. Being a wannabe actor myself, just curious what happened to that? Do you still wish to go or did you not make the cut like so many others?
Kay Henry – “bigben, ya funny thing
There are some cheap Mounts in Queensland- Mount Isa and Mount Garnet and Mount Mount. Well, I made that last one up.”There used to be some cheap mounts in the Fortitude Valley but all have upped their prices recently
There are a number of private providers who can deliver the DFP course and some that are only accredited to deliver selected modules (eg 1, 3. 4. 5 etc). Get in touch with the FPA and they can supply you with a list of organisations who can deliver which subjects. I have worked in the industry and have used FPA (through Deakin Uni) and Integratec now known as Tribecca. It is really a mix and match job as for who you use for different modules. Some let you fast track, others will deliver the each module over 6 months.
To be complient in the financial planning industry now you must be PS146 complient or something like that. Basically this means you need to have done modules 1 – 5 to work as a planner, but to work as an adviser i think it is only the first 2…not sure on this.
I used to work as a planner for one of the big 4 banks but got out as the job was selling products and not providing unbiased advice. As for becoming a planner in 8 days – what a load of hogwash. You may be able to sit through a theory lecture in 8 full days but you will still need to study it know it, do assignments and exams etc. My advice to you would be – if you can sell then join a big 4 because that is what you will do..if you want to give advice go to a specialist accounting/planning practice.
kp,
I saw something that may answer your questions on the ATO website. Do a search under either vendor finance, instalment sales, instalment contracts. This should produce a list of test cases etc and i know one of them will address you question. I think it mentioned CG is assessable once the title is handed over or you are cashed out of the deal. For the record i don’t wrap, no time for that at the moment. But wish i did 3 years ago
My thoughts on this come down to one word…Balance
Chasing both..not exclusively one or the other but go after both depending on the market conditions. When property is hot, i will be chasing prop that has a good likelihood of increasing in value (as long as any neg cashflow can be absorbed) – hold, not to sell and continue to refinance, draw down equity for more property.
When not so hot or stable, look for pos geared property to assist with servicing and allow greater borrowing capacity in future.I see this as increasing my asset base, increasing my income, allowing further divestment into other areas, shares, business, art, etc.
Just my perspective. Each to their own
Cornel,
Try the tax office website. They have a number of infomation booklets you can download for free and give you details on what you can claim, what documentation is required, depreciation guides etc. I would download these read them, gather the information you have already and or look for more receipts etc. Then take these to an accountant and look at what else you can claim.
The website is http://www.ato.gov.au and enter property investment into the search box.
Good luck
Thanks Jeff. I do not have the necessary cash or equity to purchase myself, I believe i could service a loan that is why i am looking for other alternatives. I am not sure about buying it and reselling as a block – not alot of capital growth in its present location but there is a very strong rental market – actually rentals are not done by filling out application forms – done by an auction process on who is willing to pay the most per week to rent it…
Just not sure what approach to use – rather inexperienced at this sort of thing
Scott
Can you purchase on option on the land? Eg pay $xxxx for the option to buy the land in 12 months at a set amount. This will free up your finances but you will still have control over the land. I guess you will need to seek advice from a solicitor on this and negotiate an option fee with the seller.
I am trying to work a deal using an option at the moment – have never done it before but only one way to learn ie give it a go.
Devil,
I would consider the following:
Does the tenant wish to move? Is s/he a good tenant? What is the current market like for property and units in your area – are they still rising and do you believe the value to futher increase in the area?
If i was happy with the area and tenant, i would use the $5K to go towards another property in the area, then in x months or expiry of the lease then renovate the unit. Then if property values rise further up til April, your $5K reno may result in a greater increase and you may have double that result with the other property? Keeping the tenant there will also assist wtih cashflow to service debts and allow additional purchases. Can you do some work while the tenant is still there (may need to compensate for the inconvenience caused – weekend away at freemantle for the tenant so this may allow you to get in and do the work etc)
Hey like i said, this would be my action plan if i was content with tenant, general property market. If you do not expect it to further appreciate in 10 months then, do the reno now as long as there is demand for that unit from tenants. When it comes to claiming repairs or doing capital improvements and the associated tax implications, this is icing on the cake and would not be the decider in my decision. Do whatever you think will return the most for you now.
Old School Skata[cap]
Devil – the cost for the schedule is $770 inc GST. What confuses me is that they have worked out the land component, building component etc based on my purchase amount ($130K). I would have thought it should be done on the actual costs …..I have so much to learn…
Don’t know too much about the current status of the market there, but i am aware of the need to check how your property may be affected by floods. You should be able to gather this information from the City Council.
It is important to note the comments from ziz – funds used to purchase income-producing assets. The investment you purchase must produce income for you to claim the interest costs as a tax deduction. eg You cannot claim the interest costs on funds used to purchase a block of land, unless it generates you an income.
Dear All,
Wow – what a response. I was expecting only a couple of messeges. Thank you very much for your advice, your experience and suggestions.
I like the suggestions about detailing all my fears about each investment decision. Would people mind if i posted back some questions i may have on overcoming some of the risks? I guess i can only answer my fears within my own mindframe and may need someone elses perspective on these to add to what i dont know.
I guess starting with a simply buy and hold strategy or buy/reno/sell or rent out are the areas i should start to introduce myself to the property investment world rather than start with a wrap. This would give me experience with property and start in wraps after a few deals.
I am keeping in mind the whole positive cashflow mindset and have had some luck recently with some properties that provide positive cashflow but they do not provide a large surplus ie $50 month over loan repayments, rates, insurances etc. I guess this is better than having to pay $50 a month to keep a property.
Have been asking property managers about rent buy deals with tenants, lease-options, etc. These seem like the way to go. If anyone else here is a beginner and wants someone to share ides with drop me a line.
Hope to see you all at the top of your mountain soon.
Northy
[email protected]Isnt there a 6 year rule from the tax office where you can still claim the house as your principal place of residence? I am pretty sure i read that in some info from the tax office
Northy
Ok so i may be a newbie to posting on this site, but is the purchase of a product the way to answer this original question?
I am sure i read somewhere that the purpose of this site is to promote discussion of positive cashflow producing property investments…or something like that
So come on, could someone with a little knowledge on this share what they know and not refer us newbies to having to purchase products to answer our questions.
There are some cheap Mounts in Queensland- Mount Isa and Mount Garnet and Mount Mount. Well, I made that last one up.”
