Forum Replies Created
Q: Can I write-off the stamp duty on transferring the title on purchasing a rental property as borrowing costs?
A: NO! The costs associated with the transfer of title are “acquisition†costs that are payable regardless of whether or not money was borrowed to fund the purchase. Stamp duty on title transfer forms part of the cost base for Capital Gains Tax purposes.
HI Amanda
just in relation to stamp duty on the transfer – perhaps it should state this relates only to freehold property. I would argue you should be able write off stamp duty that relates to leasehold property – as you can claim lease costs as a deduction – I believe this can be claimed in the ACT where all property is leasehold.Hi there
practical completion occurs when a certificate of occupancy – or equivalent for your state – has been issued
I note that we have been in dispute with our neighbour about a dividing fence – but in the ACT.
Under that legislation – written quotes have to be submitted before an owner can utilise the legal options under the legislation. There has to be agreement on the quotes – but if there is no agreement – then you can go to the Magistrates Court and get an order for a contribution to 1/2 the normal adjoining fence. There is actually a mediation process involved.
Fortunately we have recently have reached resolution – after 16 months – and we won’t need to utilise the legal options. But in your case – I don’t believe your neighbour has any grounds to insist on a contribution from you for the fence.HI there
it depends what state you are in what a Council search will showfor example, in Queensland, to find out if plumbing etc final inspections were done – you would have to do a building compliance search that is normally separate from the normal Council search which shows what rates are paid till when and has some general zoning details.
It may be possible to backtrack from the fees you paid to find out what searches were done – but if you weren’t trying to find out if the carport was ok etc – it is likely just the bare minimum was done. There should have been a general report on what the searches showed and if there were problems – they should have been brough to your attention.
Unfortunately – you may have to wear the problem – because I think you may be outside the limitation period (6 years for a contract) to take it up with your solicitor
Just out of interest QLD now has a conveyancing protocol which sets out the bare minimum that a solicitor must do and advise the client about – it also sets out what searches should be done.
If you are in another state, you may need to check to see if there is something equivalent
Hi again
just check your agreement that you don’t have to pay a commission – sometimes even open agreements can have some nasty tricks – but yes it is usual for the sole/exclusive agencies to have the commission requirementit is definately possible to nominate a different buyer if the contract permits it – even an agent could source a buyer who wanted to enter an option contract with you. I believe all the agent needs to do is comply with his disclosure requirements – to let you know about any commissions payable etc.
It may be a call option where the buyer has a right (but not the obligation) to buy the land from the seller, or a put option where the seller has a right (but not the obligation) to sell the land to the
buyer. So, in a call option the buyer has a choice whether to exercise the right and compel the seller to sell, or not. The reverse operates in a put option: the seller has a choice whether to exercise
the right and compel the buyer to buy, or not.Call options over land are the more common. They are often used in development contracts where a developer is seeing if the Council will allow his development and the developer won’t actually buy the land unless he knows that he will get approval for what he wants to do. I have seen a ‘put’ option in a contract by a seller who was an elderley chap and wanted to be able to push the sale along if he planned to leave his home (which was the subject of the development application) and move into a retirement villa. The developer then would have to make a choice if he was going to buy the land regardless.
HI there
in relation to your first question – whilst you can source a buyer from anywhere – you will still be liable to pay the Agent’s commission, particularly whilst the sign is out the front – you need to check the agency agreement you signed.
As to your second question – it is possible for a buyer to nominate another party as the buyer – provided it is in the option contract – your solicitor can organise that for you.
As to your third question – the only possible problem is if you have a boom in property where you are and you are stuck with the option – you have to sell at the nominated price. It sounds as if that is not likely to happen in the foreseeable future – so up to you – when you talk to your solicitor about the option contract – talk to them about a put and call option – so it is not only this chap who calls the shots – you can also “put” to him that he buys the property.Hi there
I once got some details from the agent concerning a property which on its face looked cash flow positive.
There tended to be a lot of costs involved and given the limits on who could use the property – that is you couldn’t use it yourself – or anyone else under 55 – the limitations would mean growth would be limited.
You would really have to be careful about the legal side of things too – as there are a lot of different title arrangements with retirment villages.
I have tended to stear clear of them.HI there RP Brown
I am not really a local girl – but we have been posted here twice now – husband works at the Oakey Air base.
As for Strata Title Management – I do know one of the manager’s via playing Volleyball with her. I was also very impressed with how they keep their records when undertaking a body corporate search for one of the properties we purchased. I was also pleasantly surprised how much information could be accessed via their website without having to pay a fee. They actually have quite detailed information about the steps involved in preparing your property for strata titling and can help you through the process if you so desire. Up to you if you want to do it yourself – Jan at the DNRW office in Clopton Street is particularly helpful when lodging documents for registration.
Start by talking to Council re whether the property can be strata titled.
Also talk to your surveyor for an estimate of timeframe and costs.
Your solicitor can assist when it is time to lodge documents (the plans and the body corporate forms required) and if you want to have the property managed by a strata title manager, the biggest in Toowoomba are still Strata Title Management with Elliot & Co – they have a website where you can check the strata details of each of their managed body corporates. You can actually see examples of the sort of documents that need to be lodged with Department of Natural Resources and Water.HI there
can’t say from personal experience what the property managers are like – as the property we have in Brisbane is subject to a management rights arrangement – but Tricity realty advertise quite a lot of CBD properties and their property managers charge 6%thanks everyone for your posts – the positive vibes have had some effect – or maybe the property manager finally got it that we were getting p…off
the builder is finally speaking to us again – and has some proposals to remedy concreting problems
our neighbour – who has been disputing the proposed fencing quotes for the last 16 months – has finally agreed to resolve issues so the fence can be built
hopefully we will have an electrician out to the property soon (or I will take up your offers to PM you for your recommendations) and also a plumber/drainer to sort out problems which resulted from that big hail storm the other week
and yes – I would have to agree – the rental market in Canberra is definately good for investorsThanks Jenny
just out of interest – when you have a changeover of tenants – how do you normally advertise? do you use the website allhomes? or do you use any agents at that stage to vett tenants for you.
Also where do you normally source your tradesmen? yellow pages or word of mouth?Hi there
I think you may find it is more possible to delay capital gains by rollover into a similar investment in the US.
It is also possible to do in Australia – but in fairly limited situations for example, if you lose an investment property in a bushfire and receive a payout from your insurer – strictly speaking you have disposed of an asset – which attracts capital gains tax. You can delay the payment of tax by rebuilding the property – and claim rollover relief – and only pay capital gains when you do actually sell the property.Your friend needs to speak to a solicitor who can discuss with her how the property is held – whether jointly – or as a tenant in common – and how this will affect the mortgage liability. This situation is somewhat similar to what happens in family law situations. Either the property is sold – each party is paid out – or the property is refinanced – with one party taking over the responsibility for the mortgage – and the other being paid out of the arrangement.
As for the involvement of the Council – you would really have to find out more about the planning restrictions and what can and can’t be done on the property. There can sometimes be dire consequences like demolition of the property – so it is best to get informed and property advice.There seems to be a common theme in a lot of the posts – how do I start?
The first step is always to plan – you can’t have a successful business without a plan – and it should be no different in the investment field.
A good financial planner should help to identify the client’s goals – the purchase of the first home – when is a good time to have children – how do you fund their education etc. – what steps to take to protect those significant people in your life.
As for quality of life – I would think that is dependant on the ability to budget – to allow you to pay yourself first, your commitments and still have something for the occasional doodads.
As for a definition of a good investment property – this is relative to your goals – and what you want to achieve by owning property. Growth was very important to us when we were younger – but as we are getting older – we are looking to ways to replace our salary so we also have cashflow so we can look forward to a self funded retirement.
May be it is time just to do it – make some mistakes – learn from the mistakes and move on.Hi there
I happen to know the area you are speaking about being posted to the area around 1999 – we ended up in DHA accommodation at Tanilba Bayyou may like to read the following article
http://hotspotting.com.au/index.php?act=viewArticle&productId=66I happen to agree with the article that DHA leasebacks are not a good investment – I think you are now finding this out with your Medowie property
Hi there Marc
I don’t like having things drag on either and have moved accountants when we don’t get the expected service.
I particularly do not like lump sum bills and always get the accountant to itemise what they do for the money they are claiming.
Is it worth talking to your Accountant and expressing your dissatisfaction? If you don’t get a satisfactory response, perhaps it is time to move on.Hi there
why not have a look what is available for the particular property you are buying – the actual premium depends upon whether it is a strata title arrangement or home, the postcode of the area, the type of locks on doors, windows etc, the size of the home, the nature of the fittings – it is also cheaper to purchase online
for example
http://www.aami.com.au/insurance_quotes_australia/insurance_quote_terms.asp
is worth a look.
I note that we spent about $165.00 on the last property we purchased.Hi there Richard
could I just get you to clarify your concerns with respect to a line of credit over an investment propertyHi there
I can’t comment upon the particular insurer that you are looking at – but I can say that I have made claims on my landlord’s insurance.
The first instance was as a result of the Canberra bushfires where we lost 2 properties and also more recently when there was accidental damage to one of our properties in Toowoomba. The particular insurer was Wesfarmers and we did not have to exhaust all legal options before our claim was paid. We just provided the evidence required to the insurer.
By the way – we are now insuring some of our properties with AAMI as they seem to have a better replacement provision – and once again we have had no problems making claims with them with respect to damage to our vehicle caused by a kangaroo.Hi there
each state has slightly different lease provisions but in QLD they are as follows7 Costs may apply to early ending of fixed term
agreement – s 96(1A)
(1) This clause applies if –
(a) this agreement is a fixed term agreement; and
(b) the tenant terminates it before the term ends in a way not
permitted under the Act.
(2) The tenant must pay the reasonable costs incurred by the lessor in
reletting the premises.
Note: For when the tenant may terminate early under the Act, see
clause 36 and the information statement. Under section
230, the lessor has a general duty to mitigate (avoid or
reduce) the costs.Basically this means you need to take steps to relet your premises and try to recover reasonable costs for the breaking of the lease from the tenant. At that stage you may need to weigh up the costs of chasing the tenant for funds – it may not be cost effective. If you have landlord’s insurance – you may be able to recover some of those costs from your insurer.
