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There is an interesting rule that may apply to your situation (not clear from your question) that says that if your PPOR becomes an IP and you don’t own another PPOR (say you rent for a while) then the IP (your old home) can be sold without any CGT within a six year period.

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Do you have to be overseas for the 6 year rule to apply, or can you be living in Aus?
J

QUICK SOMEONE ADOPT ME TOO!!!

No I’m serious! [] Any thoughts would be greatly appreciated.

Here’s my story…

The Story
Young fella started working for the first time in his life and found that the more you start making the more you can borrow. I was given approval for a $4000 Visa card while I was at uni with no income except Austudy. Eventually I got a couple more CC’s and did my best to rack up quite a hefty total. GROAN! I got into a decent job and am now making $38K before tax. I was finished uni now so I consolidated my $10500 CC debt into a new personal loan at 10.65% Much better.

With the job came the new car and the dealer finance to go with it. 14.25% I can hear you all groaning disapprovingly at me but hey.

So now I am at the stage where I want to get into this positive gearing thing, read the book in one day. I actually spent two hours on the seat outside the bookshop and ploughed through the first half of the book right then and there.

I have a major goal now. To work because I want to, not because I have to.

Here’s the big question…How do I get started? Sure I could ask a financial planner but how many did you guys know when you were 24? Who’s the real deal and who’s the slimey commission maker?

I figured the best people to ask would be the ones out there doing it. You guys (guys being a generic term only, sorry ladies no offence) have got the ball rolling already. Anyone who could glean me some pearls of wisdom??

Enough from me. Below is my rough finanial picture. I thank you all in advance and look forward to become a valuble part of this group.

The Facts

Assets:
$17000 – 2001 Nissan Pulsar
$1000 – 1985 Ford Laser
$1500 – Computer

Liabilities:
$17500 – Car Loan @ 14.25%
$8000 – Debt Consolidation Loan @ 10.65%
$25000 – HECS Debt Indexed Annually
$6000 – Supplement Loan (Through Centrelink)

Income
$38000 – Gross Wages

Expenditure
$452/month – Car Loan Repayments
$336/month – Debt Consolidation Repayments
$100/month – Mobile Phone Bill

Remaining income is quickly spent.

I have included some detail in the hope someone might want to stick their teeth into my case and help me out.

Look forward to hearing from anyone and working towards my goal.

is it just me or is anyone else over the fact that in the last few weeks (ie since steves book’s been out) this forum has been pumped with “show me where these +cashflow properties are”. practically asking for you to put the piece of property in front of them and just say sign here to become rich in PI, you dont have to do any work yourself.

i know there are obviously a lot of newbies who are all excited and ‘gungho’ since reading steves book, but guys youve got to realise it aint gunna be handed to you on a platter….

over it

That’s all very correct Snow. I was just assuming you may still have some mortgage on your PPoR, which would become deductable. As Terry wrote, you need to sell your PPoR if you really wish to move to your new property, and can’t afford the non deductable loan. You could then buy a new IP of course, it all depends on how much you want to move, ie if the extra cost (Stamp Duty, RE commission etc) is worth it.
J

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little bit of money as long as i can get a lower interest ( maybe less than 6%) remember i have a 300k loan, 7.40% interest, do you think a certain bank will refinance me in this situation? But i have to do reasearch first and do the figures if

REGARDS, LUCKY40

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Lucky40, My bank loan is at 5.97%, which is at a 0.7% discount to their normal rate. To qualify for this package I have to have loans greater than $250,000, plus have an income > $60,000 (which I believe includes rent). I don’t know your situation, but your loan certainly qualifies.
I’m probably in trouble for quoting an individual lender, so perhaps I shouldn’t mention their name in public forum. Not sure of the rules.
J

It’s probably much the same as my wife having to go guarantor with her half of our PPoR for IPs in my name. She had to get independent legal and financial advice as part of the guarantor process. I believe these steps are now legally required before the bank can accept her as a guarantor.

Capital gains tax is calculated on the relative time you held it as an IP. eg if it was your PPoR for 7 years, and then an IP for 3 years before you sold it, you would pay tax on 30% of the gain (further discounted by 50% because you held it longer than 12 months). This example comes straight out of the Tax Guide 2001.
J

Just one other thing snow, don’t forget that you wll need to inform the Office of State Revenue of your change in PPoR, (if you are above the threshold for land tax that is) as it will affect your land tax (your PPoR is exempt).
J

Hi UmpteenOne, One of the very first things a bank will require will be copies of your lease agreements. One bank even asked me for them when I was trying to go guarantoor for a lousy $5,000 student loan for my daughter!
Banks will typically only count about 80% of your rental income as well (I guess to allow for vacancies etc).
J

I too have reservations about the maintenance cost of older properties and the investment in time required to find them and manage them. I guess I’m a very passive landlord, but I’ve got a good manager, so my investment in time is very little for my 4 properties (except maybe for the termites in one). I’m sure I could have 10 times as many like these (or maybe more termite proof ones!) without taxing my time too much. They were all purchased new, so maintenance has been fairly minimal. The agent arranges all that anyway. My aim is to just purchase one or two new properties per year, so that hopefully rents inflate enough to keep the equations balanced when the depreciation peters out. It helps that I enjoy my job so much, so I’m in no hurry. The aim is to help fund my retirement.