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I for one would be getting your friends Solicitors to challenge this one and fax the Selling Agent to advise him that the Deposit is not to be released from the Trust Account.
Certainly in Qld close of Business would mean 5pm but i am not au fait with WA Contracts.
Really to be on the safe side he should have terminated at 3.59pm and then applied for a 48 hour finance extension at the same time.
Richard Taylor | Australia's leading private lender
Good luck with the NAB in negotiating a better rate and reduced fees.
Whilst i do a fair amount of business with the Bank (for a variety of reasons) I have found that they will not negotiate and as Jonrob has mentioned it is take it or leave it.
I have a portfolio with the Bank just under $8 Million of lending and whilst I am happy with what they have done that had to go to Specialised Lending to get the rate and fees discounted.
For your average client they do not bargain.
Richard Taylor | Australia's leading private lender
But you then lose the CGT exemption – Yes only after 6 years from the date you vacate.
Richard Taylor | Australia's leading private lender
Tony
The margin scheme is a method of calculating the GST payable on the following supplies of real property:
- the sale of a freehold interest in land
- the sale of a stratum unit, and
- granting or selling a long-term lease.
Normally GST is one-eleventh of the price of the supply. However, if you choose to use the margin scheme for your supplies of real property, then the GST payable is one-eleventh of the margin for the supply.
Eg:
Bill is a property developer who is registered for GST. On 20 September 2005 he bought land for $80 000. The supply of the land to him was not a taxable supply. He sold the land two months later for $102,000. He chose to apply the margin scheme to his sale of the land. Under the margin scheme, the margin for the supply of the land is $22,000 ($102,000 – $80,000). The GST payable on the margin is $2,000 (one-eleventh of $22,000).
Andy – Yes GCT is payable when purchasing in a Trust structure however if you are developing then as previously mentioned no CGT will be payable although the profit will be treated as trading income.
Richard Taylor | Australia's leading private lender
Mike
Notice how the promise always comes in the Summer or peak seasons.
Believe it or not we do have Winters in Qld (abeit they aint half bad) as well as off peak time and my experience is the rental figures drop substantially.
I have financed many a holiday home and suggest you work on around 55% of the rental assessment to allow for changeovers and vacancies.
Richard Taylor | Australia's leading private lender
Andrew
As a fellow Financial Adviser i am concerned with the information you appear to be getting and the idea of purchasing a property at that level of borrowing appears riduclous.
No wonder they are pressuring you to sign the commission will probably be around $15,000.
If you do find a strong capital growth property and are keen to secure something then you can always look at a cash flow mortgage but my priority would be to structure your loans in such a way that your home loan came down to a manageable level first.
With no or little non tax deductible debt you will be fine but caution always to someone who pushes you into something especially with the old line that "the Builder will sell it to someone else" or "this one is too good to miss".
Trust me i have heard them all.
Richard Taylor | Australia's leading private lender
If the property you are looking at is in an area where you believe you will see good capital growth you could always consider a cash flow mortgage.
This is a type of loan where the payable interest rate is less than the chargeable rate and the difference in interest is capitilised to the loan balance which will obviously increase.
Richard Taylor | Australia's leading private lender
Tony
Sorry i posted my answer before finishing.
4) Can I sell one unit with GST (while keeping the other) and claim all the GST from the TOTAL building cost against this single unit sale to minimise GST payable?
No costs would need to be apportioned on the floor area of each unit. If they are identical size then 50% of the costs would be claimable.
5) After 5 years GST is no longer payable as the units are no longer considered new. Is this correct?
A) GST is only payable on new items so therefore if you tenant the property and then resell it down the track no GST would not be payable.
Richard Taylor | Australia's leading private lender
Hi Tony
I have a separate Company with my Builder Partner so might be able to answer a few of these for you.
1) Capital Gains Tax is not payable? – any profit is treated as income and taxed at company rate ie 30%. Is this correct?
This is correct if you are in the business of buying and selling / developing. If this is a one off project then CGT will be payable.
2) Is GST payable?
This will depend on the answer to Qu 1) above.
If you wanting to clasify this as Trading income and intend to do it continually then GST will be payable upon the end sale price.
You will however have claimed the input credits long the way for the expenses.
If the properties are hold indefinately then GST will not be payable.
3) What GST costs can I claim to balance this:
Can I claim GST charged in the building cost by the builders? A) Yes
Can I claim GST in the cost of the land? A) Depends if the land was purchased + GST.
Can I claim any loan expenses? A) You can claim the GST applied to any good or services such as application /valuation / solicitors fees etc. Any other non GST fees are merely an expense and added to the Cost Base of the project.
Can I claim Council/Government charges? A) As per loan costs. Most Council contributions etc are GST free. Such costs as survey / architects costs can be claimed.
If you do this again you are better of purchasing the property under the Margin Scheme however this will need to be reflected on your purchase contract.
Richard Taylor | Australia's leading private lender
Banks have no problems in financing Builders under the Development Financing arm subject to the usual checks and balances.
I hate to disagree with Terry but most lenders I am aware of dont consider registered Builders as Owner Builders so the matter of numbers per annum is not a problem.
Richard Taylor | Australia's leading private lender
Better late than never.
I hate to tell you are wrong Russ but you are when you say:
By the way, I'm able to borrow another $200,000, which means that with a LVR of 80% I could get a $1M property if I wanted. How can I borrow so much? It's because some lenders will look at the value and type of property owned and count a percentage of capital growth as income. That's how confident the lenders are that property is a good investment.
A lot of the TIC brokers spin this yearn when they tell you to apply for a lodoc loan and put down your capital growth as income.
It is blantanly not true.
Richard Taylor | Australia's leading private lender
Strawberry
There is no Tax benefit in using the equity to fund a non tax deductible loan.
Marc has run the figures for you if you sell the property so probably not a consideration.
If you transferred the property to a Trust structure you would incur CGT and stamp duty but would then be able to access 100% of the equity as deposit.
This will cost and you would want to be on the highest marginal Tax rate and wanting to stay in the new place for a while to make it worthwhile.
Richard Taylor | Australia's leading private lender
Whilst you are living in the the property you can pay as much into the offset account as possible and reduce the non tax deductible interest being charged.
When you move out and rent out the property if you need the funds accrued in the offset account you can take this out and use it and the amount of deductible interest goes back to the original loan amount.
Richard Taylor | Australia's leading private lender
If you want to email me details I am always happy to crunch some numbers for you on serviceability.
Richard Taylor | Australia's leading private lender
Pat
No dramas in doing the loan as a lodoc however if you intend to try and make it a IP after a while i would suggest that you go for an interest only loan with an 100% offset account attached to it.
Richard Taylor | Australia's leading private lender
Hi Max
Merely make satisifactory finance a condition of the contract or alternatively get your mortgage broker to have a proper pre-approval in place for you and then proceed.
In todays market i would not be listening to an agent you said "She will me right mate".
Richard Taylor | Australia's leading private lender
With what as security ?
Richard Taylor | Australia's leading private lender
Yes definately Jeremy.
Richard Taylor | Australia's leading private lender
Hi Keo
You are absolutely correct but unfortunately organisations like Destiny dont necessarily understand or agree with you.
Certainly for clients looking to structure their investments for both asset protection and income distribution a Trust structure is the norm however i would need more specific details from you before i could give you any advice.
Feel free to email me a line and I can look at your position further.
Richard Taylor | Australia's leading private lender
Gary
I replied to your email with a couple of other questions but havent heard from you yet.
Richard Taylor | Australia's leading private lender