Forum Replies Created
Hi Jsy,
Same here. And I am still and always will be a student.
I just noticed techhowse was ONLY a student. Maybe he/she just did not tell us all the information.
Robert Bou-Hamdan
Mortgage AdviserWhat I meant by my comment is that if you are a “student” (ie: no job and no property), you do not pay any tax so who cares if it is deductible or not? There is nothing to deduct it against. Maybe in a few years though!
Robert Bou-Hamdan
Mortgage AdviserIt will also be called tax evasion punishable by a potential jail term.
Robert Bou-Hamdan
Mortgage AdviserHas anyone asked what the business is so they can give the proper advice yet???
I find that new business ideas are not legislated and do not require licensing or compliance.
Robert Bou-Hamdan
Mortgage AdviserHow does the depreciation work after 25 years?
How about after 50 years?
Does it keep going back up to the higher purchase price and start again from 100% each time a property is transferred?
Robert Bou-Hamdan
Mortgage AdviserI have never seen anyone paying up front or building a ‘PART’ of a building before.
Robert Bou-Hamdan
Mortgage AdviserThose 2am posts should be clearer!!! Sorry.
))Robert Bou-Hamdan
Mortgage AdviserCan’t you stick all these threads in another section? I think opinionated would be more suitable.
Robert Bou-Hamdan
Mortgage AdviserI have been audited three times without a problem. My company pays because the seminars I attend are in my chosen field – property and finance. They never even question any ‘education’ deductions.
Personally, I only attend seminars to check out what is out there.
Robert Bou-Hamdan
Mortgage AdviserSorry, not my area.
In NSW, once the exchange takes place and the cooling off period expires (if any), the law is on the purchaser’s side. Any work you do prior to settlement should not be lost if the vendor tries to pull out as the Court will enforce the sale.
If you cannot go through with the purchase, things become unclear. You would definately need a solicitor for this to determine whether you still acquire an interest in the land.
Sorry I could not help more. Where are the Mexicans???
Robert Bou-Hamdan
Mortgage AdviserThe location of the property is important.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by Terryw:By ‘retired’ I don’t mean living on a pension.
Either do I. Retired means no income from paid employment. You are now reliant solely on rental income.
Having a large property portfolio would mean one would be a professional investor.This is a huge assumption that anyone would have a ‘large’ (however you define large) portfolio. It is certainly required to live off equity. You still have not clearly answered how much would be owing on this ‘large’ portfolio. I cannot see a professional investor, and I certainly don’t know any, having zero debt or low LVRs at any time.
There are various loans that would suit an investor. Including the many No Doc loans. A person self employed for one day could also qualify.I knew you would throw this one out. I won’t respond to this as you should know better and it is why I said the following…
Originally posted by The Mortgage Adviser:I always say (excluding reverse mortgages when over 60 years old or lying on your loan application) – “You can have a 10 million dollar property portfolio and not be able to borrow one cent if you have no income!”.
Hopefully the overall LVR would not be that high, so getting loans should not be a problem.It is interesting that anyone would base their overall investment strategy on “hopefully” and “should not be a problem”. I know I would never do this. There is way too much doubt in that ‘strategy’ and there is absolutely NO CERTAINTY that:
1. You could ‘legitimately’ get a loan.
2. You would have sufficient equity based on LVR available.
3. Low (Lie) Doc and No Doc loans will still even be around or they will be as easy to obtain with increasing industry regulation and ATO scrutiny.Tell me something else – why would someone with a $10,000,000 portfolio at a Low LVR need to live off equity when their rental income would be at least $200,000 per annum assuming they invested terribly and only return 2% per annum net.
If the bigger investors don’t need it and the smaller investors can’t use it, where does this ‘strategy’ fit in?
I would much rather hear from someone who actually uses this strategy!
In my opinion, this ‘living off equity’ idea is NOT a strategy but a ‘hope for the best’ get out of trouble plan!!!
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by Dazzling:The key to it all is big numbers.
Rob – you need to pop a zero or two onto the end of your thinking and all of your issues will disappear with this concept.
If you have big numbers, you do not need this strategy. The rental return would be significant. You will still have to pay tax on it anyway.
Dazzling, I am not a stupid guy. I have done the numbers. I just wish you guys would address the numbered points I presented earlier one by one and I think the “mud” will clear up.
For example;Port. of say $ 10 MM.
Conservative rise of say 5%….better years are obviously much better – think of them as a bonus to bank for the not so good years if you are feeling squeamish.
Asset rises by 500K p.a.So what is the outstanding loan amount on this $10,000,000 portfolio when you want to tap into equity and what is your income from work (zero if retired) and rental income?
Living expenses 100K p.a. Tax of 7, nett 93.How will you get this loan when you are retired?
Clear as mud ??Crystal to me!!!
I always say (excluding reverse mortgages when over 60 years old or lying on your loan application) – “You can have a 10 million dollar property portfolio and not be able to borrow one cent if you have no income!”.
Back to you guys.
Robert Bou-Hamdan
Mortgage AdviserTerry, did you read my points above?
How do you expect to tap into your equity when you retire excluding reverse mortgages which only allow minimum LVRs (maximum 50%) at the lower end of retirement age and your loans would already be more than this???
It is great to say it sounds good, but please explain how it is viable?
Robert Bou-Hamdan
Mortgage AdviserSome of the wrappers are very sensitive. You can’t blame them though – they do cop a hiding in the media.
I don’t know much about Pelican Boy but there are a few wrappers who operate extremely professionaly, transparently and very fairly. They regularly post here. I am sure they will pop up in a post or two.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by surreyhughes19905:… my income (from all sources) covers it easily with enough to spare for more investment.
This is the main point against the living off equity strategy. This is what investors aim for. If your income easily covers with enough spare, why tap into equity?
A few other things people forget…
1. The interest rates can quickly go up eating into your equity much quicker.
2. An ongoing tax liability can be reduced much quicker and easier than a large debt.
3. Your borrowing capacity diminishes as you borrow more and more.
4. Any pension benefits are lost with large amounts of cash available also eating into more equity.
5. When you retire, you can only use reverse mortgages as you can not service any debt without an income.Considering the above, is there anyone that really still thinks that living off equity is a better strategy to aim for than achieving a higher income and paying more tax?
Robert Bou-Hamdan
Mortgage AdviserThere are no deductions for those who do not pay tax.
Robert Bou-Hamdan
Mortgage AdviserIt may even be cheaper to refinance your existing land loan into a construction loan. Check out the various options through your broker.
Robert Bou-Hamdan
Mortgage AdviserThat is what I thought. How funny is it that in an effort to not confuse others, you confused me! Maybe it is the brain freeze from all the slurpees.
Thanks for clearing it up though.
Robert Bou-Hamdan
Mortgage AdviserHi Star,
Just a quick comment regarding tax…
If people invest to avoid paying more tax, I think they are destined for disaster. The more tax you pay, the more you are earning. This is a very good thing.
There are various strategies available that can decrease the tax you pay while not increasing your liabilities. I think paying out $1 (which increases over time) and losing equity to get nothing back (or 48 cents if this expense is deductible) is not the best idea.
Accountants opinions would be very much appreciated!
Robert Bou-Hamdan
Mortgage Adviser
))
