Forum Replies Created
You twice referred to reliance on Rolf's Somersoft comments relating to somebody else's incomplete information and different circumstances.
You also refer to finding a BANTACS article.
You also got some quick, free (but frequently unreliable) advice from the ATO phone line based on anecdotal facts you provide to them.
These are brief and limited context opinions of what might be possible theoretically.
Even if it was possible, would it be appropriate and what are the unintended consequences ?
When do you intend to actually take all your details to a professional adviser to get an opinion taking into account all your relevant facts ?
This is a major reason why I dislike responding to posts.
No amount of disclaimers in footnotes seems to count.
Cheers,
Rob
Was this also the year in which the structures were set up ?
If you cart everything to a new accountant, the initial due diligence checking deeds, constitutions, etc. will cost.
Ongoing fees should be a lot lower, depending on your record keeping.
Cheers,
Rob
Hi Terry,
The 'notional estate' provisions of NSW FLA must be bordering on constitutional issues unless judges start to elaborate on their reasoning more specifically.
The Michael Hutchinson scenario is a prime example of the warning about advisers and promoters who are willing to structure your affairs for a fee.
The prime example is a person seeking an estate plan who is referred to a trustee company. All that company is interested in is the basic writing of a will with that company as the executor and ascertaining the fees it can charge for this service.
You think that all the financial information you are providing is for them to work out the best way to protect your assets but all they are doing is working out how much you are worth for charging fees by service or by asset value.
Cheers,
Rob
jasonlheath wrote:Terryw wrote:There are very little ways in which you can protect assets in family law situations. Transferring assets won't help.Thanks Terry, although that is really disappointing that there is no way to protect myself.
Before you START a relationship, you need to put your assets outside your effective control.
That is very difficult to do in practical circumstances (especially in NSW). How do you find trusted individuals to act as trustee, appointor etc. ? Will your superannuation trustees 'cave in' to unworthy relatives' demands against your binding nominations ?
However, so many people plan for wealth accumulation but neglect the asset protection and family succession planning.
It is surprising the number of people whose life's frugal hard work gets squandered on other undeserving individuals when they either die or become incapacitated.
You should start the long process of self education now because there are plenty of people who will offer inappropriate structures, wills, insurance etc. to get commissions out of you.
A good start would be an estate planning publication by the Taxation Institute Australia or similar professional body.
Cheers,
Rob
The hot water tank assembly with its heating element etc. is an asset by itself.
You have replaced the entire asset.
i.e. you have scrapped the old one, which is a balancing event. The cost of removal of the old one is part of the old asset cost.
You start to depreciate the the cost of the new one over its effective life.
So … immediate deduction for the residual write-off of the old system.
But no deduction except via capital allowances for the new one.
Cheers,
Rob
Terryw wrote:Look into adverse possession too. He may be able to make a claim for that part of the land if in continuous occupation for 12 years or so.Agree with Terry.
The first thing I do is get a copy of certificate of title with boundaries, easements etc. plus street block subdivision from council & utility companies if necessary (even google maps to verify).
Then I get a large tape measure and measure actual dimensions right up to street coners to make sure everything is more than just the right "size", but also in the right place.
If it has been a long time since you acquired, you may not even have a claim against your conveyancer because you failed to look after your own interests.
The whole approach to property law is that it only protects landholders who stand up for their own rights.
Cheers,
Rob
This whole thread neglects to caution against sexually transmitted debt.
Get some legal advice regarding asset protection before optimising your tax position.
Cheers,
Rob
amsaini15 wrote:Rob G. wrote:Provided the recoupments from the tenants go directly into the LOC, otherwise you contaminate the loan.Cheers,
Rob
Rob G, you mean to say if rent from tenants is going in the LOC, we can continue to pay rental exoenses like council, water, insurance,etc and interest payment of the loan from LOC. ATO does not see this as a problem? It may still be capitalizing interest if property is negatively geared. Whereas if Rent is going in your personal offset but property expenses coming out of LOC, we need a orivate ruling to prove why we want topayoff our PPOR Loan faster? Is that right? I would really appreciate if a accountant or broker can clarify all these scenerios? Thanks
I didn't say anything about capitalising interest. The senior courts are quite happy with this concept based on the facts of numerous cases. Its up to you and your competent adviser to decide on your facts.
I was referring to borrowing from your LOC to pay an expense for which you will receive an amount back later. Whether by reimbursement or recoupment. This amount is deemed to have reduced your deductible borrowing when received even if you don't pay it back into your LOC (see TR 2000/2 examples).
Cheers,
Rob
amsaini15 wrote:Thanks Terry.
Just one last quick Question. Tenants pay the Water Usage charges of the Water Bill. If I am paying full Water Bill from LOC but getting Usage charges paid back by Tenants later, will that be still fine with ATO?Provided the recoupments from the tenants go directly into the LOC, otherwise you contaminate the loan.
Cheers,
Rob
Hi Terry,
Division 114 is for indexation.
Cheers,
Rob
Joint tenants are treated for CGT purposes as if they are tenants in common in equal shares (s.108-7).
s.128-50 gives deemed transfer and cost base rules.
s.115-30(1) item 7 extends the general discount deemed acquisition rules as well.
Cheers,
Rob
Interest expense would form part of the cost base of a CGT asset, however the cost base is reduced to the extent that the expense is deductible.
Costs of searching for a property do not form part of the cost base of a CGT asset. They are also a capital expense and therefore are not deductible.
The cost of agent fees are specifically mentioned as included in the second element of cost.
However, if no asset is acquired then you do not get to capitalise that cost.
Given that rent is income from property, and that you have not yet even located the property to derive that income, then there is a strong argument that these interest expenses are merely preliminary to an income producing activity.
This will be one argument that the Commissioner will use to distinguish your scenario from Steele's case.
If you choose not to deposit your funds in a 100% offset account against the original loan, and if you choose to claim anything prior to entering into a contract then you had better get some good legal advice.
The cost of competent advice may or may not be deductible, given that it revolves around an issue of capital acquisition.
Cheers,
Rob
So your Accountant does not want you to claim a dollar deduction because you will have to pay back 50c in 10-20 years time ?
Cheers,
Rob
Any other property as main residence in another country ?
Cheers,
Rob
Naremburn123 wrote:Hi guys,I've just purchased a house in Sydney's west with a granny flat. The property will be cashflow positive. The property is in my name.
can I claim the cost of fuel I use driving out there for renovations, rent inspections etc??
Cheers
Naremburn
" … just purchased … "
" … WILL be cf+ … "
Sounds like a lot of capital expenditure on travel to make initial repairs and improvements in order to get it ready for rental. Of course you would have gone through all this with your accountant when you were getting advice about depreciation etc.
Cheers,
Rob
Assets do not have to be sold off as such.
Check whether the house has been transferred to a testamentary trust as part of the will. Such a trust can operate for many years.
Two things bother me:
1) The property is not being rented … the trustee has a duty to maintain and invest the assets to maximise benefits for beneficiaries.
2) The trustee's relatives staying there … a trustee is not permitted to use trust assets for their own benefit (although they could also be a beneficiary under the trust).
I would take up Terry's offer to look into this because it is a messy area.
Cheers,
Rob
Sorry to hear of your brother's sad passing.
There are many missing facts, so we could end up speculating which would not help you much.
A power of attorney ceases on death.
There must have been some formal will or court order to appoint an administrator.
It is quite possible that the 'friend' is out of their legal depth rather than fraudulent. However, this is still no excuse for a trustee.
Legal action could quickly use up what is left of your brother's estate (the administrator is usually entitled to use the funds to defend challenges to a will !!).
Split families and non-resident beneficiaries add to the complexity.
Best get some legal advice asap on what options you have.
Good luck,
Rob
Last time I looked, it was gross income – not taxable income.
Only business deductions, or statutory partnership deductions (e.g. share of joint investment property deductions) allowed.
Neither individual investment deductions, nor employee deductions allowed !!
Better check on this one to see if anything has changed.
Cheers,
Rob
Figc wrote:Does this answer my question. Taken from ATO website. Expenses prior to property being available for rent. You can claim expenditure such as interest on loans, local council, water and sewage rates, land taxes and emergency services levy on land on which you have purchased to build a rental property or incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example if you decide to use the property for private purposes.The website you reference is discussing ongoing holding costs which are usually on the revenue account.
Your original post refers to a property in a state of disrepair.
Expenses of a restorative nature would be deductible even though the property is vacant to effect these 'repairs'.
Exceptions are where you 'improve' your capital assets, replace them in an entirety or they are an 'initial repair' in that the defects were present when you originally acquired the property.
These issues are discussed in the abovementioned ATO tax ruling. go to http://www.ato.gov.au and access the legal database and type in the ruling number.
Regards,
Rob
What is a 'repair', ATO TR 97/23
Cheers,
Rob
