Forum Replies Created
Hi Paul,
So when do you have to pay the CGT?
Surely you dont have to include the ‘on paper’ capital gain on your tax return that year???
Pete
Hello,
I looked into this and my feeling is that you can rent out your ppor, and RENT somewhere else, and still claim a CGT exemption. However if you BUY another ppor, then you can still only claim one property as your exempt proprty (you can choose to nominate which property gives you the best tax position). It looks like you bought another place to live in (ppor) and are trying to claim CGT exemption on both, which you cant do. I could be wrong as I am not an accountant. We are about to move back in to our ppor after renting it out for 2 years while we rented another house. Our place is in sydney and has gone backwards by about 80k in those 2 years, and we paid a small fortune in rent so in the end you made a nice profit so dont let it chew you up to bad.
cheers
Pete
OK so far we’ve got:
1.debt free residential property
2.income via private lending
3.commercial property
4.buy pporAnyone done any of the following and would like to share their experience with:
1.Listed property trusts
2.Joint venture projects
3.Buy a block of units, strata and then wrap to the tenants
4.Developing vacant industrial land in to sheds or a ministorage
5.Property syndicates
6.Something else entirelyBy the way, how much debt do you feel comfortable with? i.e. an amount that you can still sleep at night, and that if the mud hits that fan you are still in a position to cope.
(P.S. car is a 1990 corolla, and is becoming a liability, dont need a ‘new’ car just a ‘newer’ method of a>b. most recent holiday was honeymoon, 7 years ago, HAPPY WIFE = HAPPY LIFE, must look after this aspect of life, still take the point that these are the things that investing provides, it is one thing to spend the cashflow, just dont spend the capital.)
Hello,
Any experienced wrapper can correct me if I’m wrong but I thought that the settlement date was 25 years or so in the future, or when they refinance whichever is sooner, therefore you dont have to pay the CGT liability until you have received a either 25 years of payments or settlement cheque from the refinance, either way you will have made more than the potential liability.
Pete
what do you mean by mortgage backed private funding? 2% per month sound pretty good, where can these be found?
Hello Cutegirl,
You can get 90% and 95%lvr low doc loans, but watch out for higher interest rates…
Pete
Hi Aussie,
I definatley agree, I dont feel like a 7% return, nor do I feel like using heaps of cash to get a tiny return, but I also dont feel confident enough to develop a storage complex, but hey it might not be as hard as you might think…
I’ll have to think it through
I thought there was some speculation at some point as to whether the ATO was going to put a cap on the amount of points that could be gained through business/investing activities (including credit cards and mortgages) where the points are used for personal use.
For example a frequent business traveller who clocks up 100,000 points pa from business travel, paid for by the employer, or a business owner who pays all his business accounts on a personal cc and then reimburses himself (I had a client who did this with a medium sized company and was getting around 500,000 points pa. and the ATO were quite interested in him) or in your case points earned from a tax deductable source, ie your IP mortgage.
The link in my last post confirms that a recent ATO draft ruling indicates that this is not the case.
By the way what is the interest rate/fees/ comparison rate on your loan?
If you are happy to pay more in interest to get the points, good luck to you. I would hazard a guess and say that you are paying more than 6.5%, if you are paying around this amount, let me know what product you have and I might look at a refinancing.
Personally, for an IP I wouldnt pay more than 6.5%, no fees.
Pete
OK, I just went to the ATO website
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr9739.htm
and it looks like the rumor I heard about points being subject to FBT (past a certain number of points pa) may not be the case. However, I think that at the end of the day, what you are really after is the best deal, and I think that revolves more around the interest rate, fees, and features of the loan, moreso than getting points that you may oneday convert into somthing of value.Pete
Appologies to those offended, I was merely talking about my experience with the Ansett frequent flyer linked mortgage, which then got onto the point (pun) that the points are rarely worth getting if you have to part with any extra cash, be they from a credit card or from a mortgage.
Whatever…
Pete
I am still of the opinion that dollars are better than points.
I would never trade dollars for points (by paying more than I need to)
The way I see points is that they are last thing to consider. ie all things being equal I will buy from the retailer who has points on offer, over the retailer who is not offering points, and ultimately this is what the retailer is trying to get customers to do.
I collect any points that are on offer when I need to spend, and then change them into free petrol vouchers, myer vouchers, or cash if I can or to just waive the annual fee on the card.
The annual fee is waived by about 8000 points, and the rest usually goes on petrol vouchers at 3600 points = $25.
Points accumulate at a rate of one point per dollar (upto 200,000pa)
As Marsden said, I also like the way that I get a complete transaction record for the month, on the statement.
Pete
Right, so I was half way there, it’s just the building depreciation that you have to pay back. Hmmm… at the end of the day any advantage you can get from the ATO I guess is a good one.
Thanks Scott.
Pete
I went to see one of Margarets franchises and was very disappointed. They seemed eager to get some money off me for their program (which was basically using an offset account and a credit card) and then they monitor it and tell you that you’re “doin’ great!”
We never got onto the buying property side of things as they couldnt give satisfactory answers to my earlier questions.The other MAJOR thing that I have managed to pick up that is not well covered in her books and others may have missed with the whole depreciation thing is “Depreciation recovered Tax”
Which I think is payable when you sell the property. ie you buy a brand new unit for 100k, and then depreciate it over 5 years to say 60k, then sell it for 180k, you then pay CGT on the difference between the depreciated value and the sale price, in this example the market value went from 100 to 180, but you end up paying CGT on 120k, which is the gain + the depreceiated amount.
If you happened to depreciate the property at say 30c/$ and then have to pay tax on it at more than this, you are actually losing money.I would love to hear from an accountant if this is the case or if I have mis-interpreted somewhere.
Thanks all
Pete
As I said, it is not income.
My question for you is why would you want to try and use interest earnt (or avoided) on cash in the bank, as extra assessable income in order to borrow more money, wouldnt you be better off to use the cash that you have?
This makes no sense at all…
Pete
Unfortunately Spanky, casual earnings are assessed pretty much across the board in the following way:
0-12 months =0% of your regular earnings.
12-24 months = 50% of your regular earnings.
24months+ = average of last 2 years of earnings.The sort of lenders that would consider casual earnings are generally the non-conformers like Liberty/GE/Pepper/Bluestone, and even then with clear credit you are still looking at loaded interest rates of probably 8% and over. There may be a few others, but they will probably sting you on the LVR and required deposit.
If you want to borrow as much as you can, as cheap as you can, with a high LVR, as soon as you can, my suggestion is that you negotiate with your boss and become a permenant employee, with no probabtion period. Or get another job that is permanent. Then you should be able to get a regular loan at a decent interest rate.
I have seen a few posts from brokers saying that casual employment is no problem, but in my experience the better your employment situation the easier and cheaper it is to borrow money.
Pete
Offset savings cant be regarded as earnings, because they aren’t earnings.
Pete
Talking Credit Cards for a sec, I love my CC, it costs $49pa and I reckon I’ll get about $200 worth of petrol and vouchers this year.
The only time it is worth getting points is when you have to buy whatever it is anyway and you have found the lowest price. eg I would rather pay 95c/L for petrol with no points than 96c/L with points.
The interest rate has absolutly no bearing on which card I would use, as I have never paid any interest on the card anyway. What I look for is a long interest free period, in my case it is 62 days. I put ALL my expenses on the card and pay it off before the interest is due. I rack up about 30,000 points pa. Last year I got a letter from the bank asking if I wanted to change my points into a cash rebate off the next bill. Yehaa – I got I think about $580 for about 70,000 points. That really was money for nothing…
Pete
I have been wondering, when the wrapees eventually refinance, is it a refinance, or is it really that they bring forward the settlement of the loan that they have with you. Dont you as the wrapper actually own the property? ie it is your name on the rates notice.
So when they “refinance” and pay you out, they are really getting a loan through another bank for the pp that you agreed to in the wrap, and you get your money and title to the property transfers into their name.
Is that right?
Pete
Hi Matt,
I am in a similar situation, and thinking of wrapping. I live in Brissy and would like to share ideas. I can probably help you with your mortgage strategy as well.
If there is anyone else who would like to meet up, we could organise a bit of a gathering one weekend…
Pete
I like the Coles Myer Source Mastercard.
Interest rate – dont care, as I have never paid any interest on a CC.[biggrin]
Application fee – $49 if you want it linked to fly buys, $1 = 1 point (13000 points = $100 gift voucher)[biggrin]. OR nil app fee if you dont want fly buys.
The bit I like is 62 days interest free.[biggrin]Pete
