Forum Replies Created
Nothing beats getting out there and going for a walk..Sounds like you've really done your home work. I'm thinking of heading up there over Easter.
I'm talking to an agent in Ingham of all places re a block of units offering good returns ( remember i'm after cash flows )…But i'm struggling to find any comfort in the research i'm doing so far…Although i'm being told this particular place has historically had a great vacancy rate, i'm still not convinced its a sound choice..A small town with one industry is a scary proposition…if i end up in TV for Easter, i may aswell make the 1.5 hr trip North to check it out i guess !!
Thanks for your advice.
Good topic !
Although i agree with Rob that the agents fee is capital in nature and therefore forms part of the cost base of a future purchase, you are not trying to claim the actual fee as a deduction right ?, only the interest expenses on the funds used to pay the expense..Eg – If the agents fee is $5K, then you can claim the interest on the $5K.. I'm pretty sure thats correct. Althought i must admit i've never seen it in practise ! Again, if the funds are used to gain assessable income, then the interest is generally deductible. As mentioned, if you are trying to claim deductions for an assets that is purchased in subsequent years, the nexus begins to fade and i dare say the commissioner would raise that arguement. However, given your circumstances, if you engage the agent in March and purchase before 30 June, i'd be claiming the interest incurred in paying the agents fee..
The advice your agent give you about drawing the $95K out of an investment loan, putting the funds against your personal mortgage and then climing the interest as a deduction is totally WRONG…Ofcourse you can do it and you may not get caught…but its WRONG…Its the use of the funds that determine its deductibility not the source…It may be called an investment loan and one day the funds will be used to purchase a house etc…but until they actually are used in that manner, the interest isn;t deductible !
Hi GJ
Thanks for your thoughts.
I never thought i'd fall into this category but cash flow is now my main aim these days. I was lucky enough to have invested in property back in the 90's. Back then, i lived on the the edge as far as buying as many negatively geared properties as possible. Even paying mortgage insurance to get one over the line one time.."luckily"the property boom was going well and so i doubled my investments very quickly.
I always remembered people saying to me, "one day, equity won't be the issue, it will be serviceability"…I never thought i'd reach that point, but they were right.
I've got more than enough equity now to buy a bag full of properties ( or one or two very expensive one's)…But i'm still working 9 – 5. So i'm building a passive income to reduce my burden on working full time.
Townsville seems like another one of those towns that is on the brink of +ve cash flow properties. Growth in that area went crazy up until 2008 and now rents are starting to catch up..Maybe in another 12 months i'll be in luck.
For what my thoughts are worth on your Stockland idea, i'd can't say that i totally agree, if capital growth is what you are chasing. I believe these large developers are there to service a growth area, rather than generate capital growth. Take Townsville for example. Properties closer to town have now become too expensive for most first home buyers. Therefore Stockland come in and develop new land further away from town to service this growing group. Their main aim is not to deliver capital growth to investors but to provide affordable housing. Infact, the increase in supply of properties out there will only stiffle growth in that area as supply is keeping up with demand.. Just my thoughts..
i wish you well on your endavours
The tax act uses the word 'Nexus". There must be sufficient nexus ( or connection) between the use of the funds and earning assessable income, to claim a deduction. Therefore in your case, if you were to use some of the funds to pay for a buyers advocate to find you a property, to maintain that nexus, you would hope to have purchased a property within a reasonable time frame. If too much time has passed between incurring the expense and earning income ( or future capital gains), then the nexus make be broken….
So, lets assume you spend $5K on a advocate ( i have no idea if thats market value), the interest on that $5K may be deductible, taking into account what i just said. However, the interest on the balance would still not be. I would suggest going with what Jamie said above with regards to an offset account…
Good luck with your future purchase
As i'm sure you're aware, to claim interest as a tax deduction, the funds must be used for or towards income producing pruposes, be it capital or revenue in nature. Therefore, in your above senario, until the funds are used as such, you will not be able to claim a tax deduction…
I presume from the information you provided, you are having to draw down on the funds when the loan is establised. Otherwise, you wouldnt be paying interest. Therefore, what will you be doing with the funds until they are needed for a property purchase ?'. This will determine the interests tax deductibility.
If you have to draw the funds upon the loans establishment, then repay the funds back in to the $95K loan ( minus a small amount to keep the facility open). Then redraw as required. This eliminates most of the non deductible interest expense !
Paul
Hi Guys
First post !
I think i'm in a very similar position to most of you guys, spending most of my spare time on the net trying to find that right property. I've stumbled across a few properties in the Townsville area that has certainly suprised me. Particularly a nfew places in Hermit Park. Can anyone provide any feedback on that area ? I've recently returned from a trip to Cairns which also appeared to have a few + ve cash flow opportunties around but after speaking with several agents, picking the wrong superb within Cairns appears to be quite easy to do !
Appreciate any feedback
Cheers
