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Hi Guys, first time posting but have enjoyed viewing the forum posts for a couple of weeks now. I’m also in IT (for a large law firm in Melb.)

Like some of the other IT people here, I’m bored!!! and I want to live an extraordinary life.

Haven’t purchased any IP’s as yet, but I have just finished Steve’s book.

Look forward to chatting with you guys in the future.

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Hi Mini, I know what you are saying. I can only respond by saying that obviously we negative gearers are taking a bit of a punt. The punt is that the properties we control will achieve enough capital gain to make it all worthwhile. The depreciation is crucial to making it work. We have to be able to be able to keep our head above water until the rent goes up a enough to take up the slack when the depreciation runs out, and the depreciated stuff needs replacing.
Obviously it will be less effective if you are not operating in at least the 43.5% tax bracket, so it becomes an interesting balance of when you buy and how often you buy new properties, eg one per year. It’s also possible to be a bit creative with timing of buying and selling. Eg I bought 4 properties when I had to sell my shares in my company which resulted in a big CG event, so all my initial depreciation was offset at the max tax bracket. Similarly I would consider selling one of my properties that has a reasonable capital gain, and buying more properties in the same F/Year. The initial depreciation can be quite substantial eg $9,000 due to all the items less than $300 being depreciated 100%, and the effect of the diminishing value method for the rest. It’s mathematically much better to get as much depreciation as you can, as early as you can, working in the max tax bracket if possible. The tax man is refunding me todays precious dollars (only half of) which I will have to pay back in 25 years or so, with crummy little dollars that will barely be worth picking up off the ground!
It’s all a bit of a game!
Jim.

Just a digression, but in relation to buying interstate, do any of you buy interstate to avoid the land tax threshold, ie by effectively combining the thresholds from each state?
Jim.

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It was not clear to me if the yield % is before you pay tax or after.

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Maggie your question hasn’t really been explicitly answered properly. I know Richmond has effectively answered you by his example, but the simple answer is that yield is just the gross yield, or “Gross Rental Return”, ie simply the rent per year divided by the purchase price. Steve quotes a figure of 10.4% being roughly what is necessary to achieve positive cash flow, after all the rates, interest and maintenance have been taken out. I, as a negative gearer (well that’s how I’ve started anyway) will usually strive for a gross rental return of 6 to 7 % on a new property, which together with the tax benefit of claiming for depreciaiton is just enough to keep me cash flow positive after tax.
Jim.

I suppose the obvious thought that springs to mind is that people will leave the country and so prices will fall – less demand for the properties in the area. This could happen at the same time as people who are unemployed – recently laid off, on the DPB, for whatever reason – in the city moving to the country so that they can get a decent quality house and lifestyle given their limited incomes. I know of a number of people who have done this over the years, and not so far from Melbourne, e.g. to Daylesford, Castlemaine, Woodend, as well as to places much further away like Port Fairy.

Boy that ATO website is frustrating to find info in! It explains how a balancing adjustment on a car works, but how do we work out how much of our sale price of a house is due to the carpets?!
Waiting with bated breath for enlightenment, mensch. Thanks I.A.

mencsh, hi, I’ve just been trolling through the ATO guides about deprecitation & CGT. They state that your cost base is reduced by the amount you claim for capital works, (eg 2.5% of the cost to build the property), but I can’t find any mention of whether depreciation of your carpets, curtains etc affects the cost base or not. Can you clarify this. Please don’t quote numbers like div 43 or div 40!
Thanks, Jim.

Hey guys,
I have been sort of monitoring Wagga for about 6 months (since I have a block there) and it seems that a 2 br unit can range from about 70k for a really older crappy one to over 300k for a nice new one. You can easily get indications from websites such as realestate.com.au Apparently according to the real estate agents out there, the prices didn’t move for like 10 years.. until like the end of last year when (my ones at least) doubled.. some are skeptical that it will rise anymore.. more likely plateau.

That isn’t really much info, however I hope it helps.[]

Cheers,
Angie

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Tomorrow, you might wish you started today.
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Well Bruce, based on the facts as you presented them it really looks to me as if you are going to lose this one.

You have already won two court cases so I would guess that two out of three isn’t bad.

The amount you received is irrelevant as you agreed to the arrangement on that basis and you are now the one who chose to break it.

The emotional upheaval and trauma you have caused this dear old lady, who knows at what rate the judge will assess this ?

Your mother in law may well finish up owning your house after suitable damages have been awarded to her. []

$ 16 K eighteen years ago, in todays’ terms that would be more like $ 170 K.

The interest alone at the rate of say 7% would be some $ 200 per week +, besides that, you have laid your hands on the capital as well.

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Pisces133