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As Shape said – also – if you have never rented it since owning it, you won't be able to claim the costs as tax deductions but you may be able to add a fair chunk of them to your Capital Cost Base, which will help reduce your CGT liability. Even if you did rent it – you still may not be able to claim all your reno costs as straight deductions. You can only claim deductions for "repairs", NOT "improvements". "Improvements" may be able to be added to your depreciations schedule and reduce your tax in that way.
In any case – get specific advice from your accountant.
JacM wrote:Not to rub salt into the wound, but it's been said for some time that investing in the tourism sector is dangerous. Perhaps don't buy another one in the area!"They" say don't invest in Tourism towns, don't invest in mining towns, don't invest in regional towns, don't invest in inner city apartments……and the list goes on……..at the end of the day – do as much research as you can, try to make the most informed decision you can, and then back your decision. If you feel the risk is higher in a location but still want to invest there, make sure you've diversified so if it does hit the fan there, you don't lose your whole cart.
Back on topic though – it's definitely the services portion of the rates bill that is causing the increase in Cairns. Many areas of Cairns are suffering reductions in the unimproved land values over the last few years – so if the rates were based on that alone we should see rates reducing, and that definitely aint happening.
You must have done reasonably well from it Richard, you would have been buying back when places were in the sub $50k range?
What are your thoughts on the place at the moment?
Have you heard anything recent or concrete regarding the mine reopening? We bought a place there in 2004 and still own it. The mine was supposed to be re opening "soon" back then, and nothing seems to have changed yet. I know the company looking to reopen it had gotten a fair way into the process when the GFC hit and it seemed to get put on the backburner from then.
That being said – it has been a great IP for us – more than doubled in value and the rent has increased by 60%. I initially went there to buy 2 places, but chickened out and only bought one…………………..always regretted not sticking to my guns.
I live in Gladstone, having moved here a bit over a year ago. We bought a house at the time and indicators then were that a massive boom in house prices and rents had just peaked and was starting to ease back. As mentioned above by other posters, there had been a major shortage of housing for some time and the old supply/ demand laws were very evident in the high prices and rents.
Over the last year there has been a massive amount of construction going on. I don't think i have ever lived in a place where there are so many housing estates and unit blocks going up at once. Seems like everywhere you look there is another housing estate being built. A year ago, when we moved here everything was selling and renting really quickly, but now you see a lot more empty houses than there used to be and there are a lot more places available for rent. The fact that there are even more housing estates still under construction, combined withthe fact that more workers are going to be moved to the camps on their completion indicates to me that the supply/demand scale is going to lean more heavily towards an oversupply fairly soon = reduction in prices/rents and higher vacancy rates.
From talking to long term locals it would seem the ideal time to buy would have been 2-3 years ago. There is no denying that there is a massive and diverse industry base here that is far from reliant on any one particular industry and that should underpin a strong base for many years to come, however there are probably beter options around the country at the moment.
We have bought several properties in this manner in the past. I never even mention to the agents that it is a trust involved, just go about business as usual and then make sure you get the name and wording right on the contract. Have never had any problems or issues with agents and it is certainly great when you sell and can distribute the profits in a manner you chose.
I read a book a while back which was the biography of one of the richest men in Japan. His start happened when he hunkered down in his underground bunker as Hiroshima was being bombed. As soon as he could he started buying land and then held it and waited for stability which eventually came and he made squillions…….There is always the nervousness that accompanies having the balls to buy when everyone else is selling……….but i think his story absolutely demonstrates what can be achieved if you do your research then back yourself. It doesn't get more dire for the outlook of a property market than to have your country being bombed by atomic bombs and about to lose a world war. This is pretty much Warren Buffett's strategy too and look where it got him.
If you do nothing you definitely gain nothing, if you do something and it fails, well you're no worse off…….but if it doesn't fail…..who knows….
Sorry Nepash,
Just read back through you're 1st post and saw you are in Adelaide – not sure about costs there, but 1 way to find out is to ring several different planners or surveyors and compare prices for what they do.
Not sure if you've got access to council websites but some councils post planning documents for various current developments. You can find some that are similar to what you are doing and see who they used as a planner / surveyor and give them a ring and get some reccomendations that way.
G'day Nepash,
Sounds like you're already well on your way to getting things happening.
Something to bear in mind (and you have probably already done this), but have you put together a feasibility on what you want to do?
Certainly worth doing so you can work out what sort of profit, if any you are going to make out of it at the end. Before you spend too much with the planners or surveyors they should be able to give you a good idea of all the costs involved on the actual subdivision (including council fees, engineering works, driveway construction, services connection, surveying costs, council contributions etc…). Then add in your holding costs – interest on any loans for the property, R/E agent fees for sale, legal fees etc..
Not sure where you are but basic '1 lot into 2' residential subdivisions in parts of SE QLD at the moment are at least $30,000 to $50,000 to get it to the selling point. One good thing, as MichelleandColin said, it is mostly broken up into various costs which you can pay along the way over a 1 to 2 year period.
Whatever you end up doing, you are obviously keen – good luck with it
A good start would be to get in touch with a couple of local town planners (can be found in the phone book). Give a couple of these a ring and outline what you want to do and ask them about their service / fees. Often there is a fee to do an initial appraisal on the place and then they can outline a cost structure and plan for managing the process from start to finish.
I've just started doing something similar and found this a good place to start.
Hi all,
Great info all round on this site…
We are currently looking into Ipswich area subd's (1 lot into 2) and have done quite a bit of research on the area and into council guidelines etc…
Just wondering if any one else has any tips / experience in this location, as the subdivision angle is fairly new to us (have always followed the buy and hold strategy so far).
Milly – if you're still out there, how did you go with yours in that area??
Incidentally – all the feasos i've put together seem to concur with the above figures as well.
Cheers
Rhino
