Forum Replies Created
DD concluded .. and, we've passed on buying one of these.
We understand that the State Government portion of the 'rebate' is treated differently to the Federal Government component, this is called non-assessible non-exempt (NANE) income.
Its covered it seems by Section 8-1 (2) of the ITAA.
That sections says one cant deduct losses for NANE income.
Sooooo .. in our case .. the allowable deductions would have needed to be apportioned between the assessable income and the NANE income ( a small percentage – but another small percentage amongst many – and it seemed to be a small percentage of a big chunk).
When we looked at those numbers in terms of percentage hit on costs and depreciation claims – and considered the way in which the rental movement for NRAS bounces from market to CPI then market then CPI again, stacking up the real world rental market movement against the NRAS discount rental, extra percentage in management costs (because its an NRAS) – it just didnt get there in terms of everything else available on the market at present.
(Which may be why we're seeing a few popping up for sale as folk stack up the CPI moving rental with market – those we've seen back on the market have generally only been 12 to 18 months old).
Ah well .. now we know at least
Many thanks to all for the comments. The tree and olive investors thought some of the same things
Of our two trusted accountants, both raised the same concern in precisely the same way.
Our DD is almost concluded and we are hoping very much that the assumption a lot of folk appear to have is correct. Conversations we have been having with the relevant folk have been interesting and helpful, though none have confirmed tax treatment either way.
We'll have our DD resolved shortly though.
Again, many thanks to all.
Many thanks guys … have passed on the info and web site/s
Hi bacon et al …
I be in Perth too .. though u aren't accepting privates there bacon … happy to yak etc off line … not an expert, and dont have anythin to sell .. but always interesed to yak – and eat over yakkin … the odd drink even .. in respect of property .. be it bacon, flowers or sals
R
Yo CB57
Richard can be a grumpy bugger .. BUT .. he is generally right on the money (though ya might find interesting arguments between Richard and Marc on occasion about Xcollats etc) … Richard and many others appear to focus on paying down debt whenever possible and minimising costs wherever practicable. A good thing, particularly in the prevailing climate.
The jury is always out on finance structures and the best way to go about it … however, Marg also does focus strongly on the research et al – and not withstanding the finance bits 'n pieces (always important) .. the research, the figures and your personal circumstances and risk tolerance will, and should be, at the heart of your decision making.
Jan Somers also talks about folk 'doin dopey stuff' (this is my 'translation' .. additions, sink money in IPs for no reason 'cause buy and hold can be bloody boring) … but there is also a focus on reducing debt in the lulls where you've reached your (personally comfortable) LVR & DSR .. and it be a good thing.
Steve McK talks about a lot of stuff readily possible at a cyclic point .. and he did very very well at it .. right now (I reckon even Steve would say) his approach (and exquisite timing) would now be like watchin a snail slither over a razor blade. One could do it .. but one slip could be severe.
Richard, Marc and others will see you rightin amongst the 'static' .. how many doesn't matter, nor does when .. what matters is having your own strategy, continue the readin and asking questions .. and maintain your own piece of mind in focussing on your goals – and those for your family.
Be well .. have fun … and mitigate any risks
(this is where, generally, Richard says he doesn't understand I word I say
.. but have a dialogue with him … he and a few others are among the more informed, among the fruitbats, you'll find on these sites )R
Scamp ..
am sorry mate, am not Dutch ..
and you go on doin ya thing – ya evidently enjoy it .. good for you
Unfortunately, I deal with journos (many good folk among em), who do what you do here .. pick out the only word or a single passage that allows a 'hook' to peddle a message .. again good for you
.. and you're very good at it … we see it on all the sites .. well done So I tell ya what … I and other will continue havin the Fun … and you can have the rest
Enjoy.
When we got our first, we thought – well there's a landlords insurance thing .. must be there for a reason .. so we took it out (after a few quotes) … got a prop manager – as one does … tenant – yup need them, got some …. and they always paid on time .. the odd glitch .. but up to date …
BUT … we had a prob with the prop manager .. all the great reports and so on .. check the statements and .. we'd been ripped off (jugglin of rates and water compsumption) … Soooooooooooooooo .. get our bucks, ping the prop company .. and then the new prop mnger say … we've gotta do somethin about the tenants in this one …
when we'd elected no to renew the lease … well … something had been cooked in the loungeroom (might have been a goat for all we knew) … UNFORTUNATELY, there was no chimney in that room … sooooo .. it got sort of … well .. black … and ya know, smoke travels, down hallways and so on .. through window treatments and so on … and the burnie bits didn't help the carpet at all
LL insurance saved us a fortune … check the wrinkles in the policy (and make certain ya tenants are up to date with rent at the time you sign) … its a given, tax deductable .. and one sleeps better ..
AND .. it can protect ya from awful prop managers as well when ya left with their mess
Ummmmmmmmmmmmmmmmmmmmmm .. actually, yes, I do see Woolworths closing out the independants they knocked over in the last couple of years … in the wee patch in my State at least, and yup, they have sold the premises
the 3 to 4 times wages rule … mmmmm .. was that before or after the shift from margins to total wage? … or before or after the Structural Efficiency Principal took hold? … before or after the JPEG deal? .. or the Accord? .. or WPA impacts (and normalisation)? … or was it when we measured AWE? .. or AAWE? … or WPI?
was it before salary sacrifice moved into the award system, or before. Is sal sac even considered in the returns to higher earners – does it skew stuff .. I have no idea …
maybe t'was before GST? .. or after? … or the changes to the CPI basket? ..or before? and WHICH change might it have been?!
mebbe the folk that compare the current with the rest of the world .. mmmm .. all them other countires with a regulated award system? .. the US? .. no- cant be, they have a $6Bill industry devoted to union busting … mmmm .. perhaps holland, or mebbe another scandinavian country .. but no, they have a system almost as different as the canadians … who knows the impacts …
do we measure these things (such as we can) against a cave? .. a gress hut? … a simple weatherboard in the 'burbs'? .. or a package with land, house, appliances, landscaping, alarm systems and security patrols, networked for the nougties and beyond, complete with driveway (or crossover depending on where ya is), floor coverings, window treatments, motgage insurance and a lovely water feature?
No disrespect to any intended – its just that we so often get caught up in that we see as the 'rules' or 'lore' (and no, its not a spelling mistake) … just 10 years ago if a child had a question, they asked a parent or a teacher … today google picks up some 35Mill hits a day .. who did folk ask before?
10 years ago folk lived in a world their parents could only dream of … 20 years earlier, the same, 30 years the same …
I imagine, if the internet existed in the 60s, we'd have heard and read all the same commentary with the credit crunch then … or maybe later in the 70s, the bulls and bull of the eighties, in the nineties – jeepers – we'd be jumpin off the buildings we invested in
…well he we are in the nougties (LOL)
Is it all new? … YES – and probably not … Is it all real? … YES – and probably not … does it really matter? .. to the folk in 30 years reflecting on the credit crunch of the noughties … YES – and probably not
Wont quote the source (or validate the quote for that matter) … after some 98 years, folk still argue
… but I've always thought it useful to recall .."It aint what ya know that gets you into trouble; its what ya know for sure, that just aint so" (there be many derivations) …
The variables is our instant world are astonishing … folks can be wrong (or right) with more absolute conviction, than any other time in our history (discounting crusades, witch burning and so on) …. t'is simply sometimes, in our search for an edge (and we ALL do it folks
) .. methinks we confuse the variables (and a few of em are above) with the fundamentals.Fundamentals remain sound … the be no greater 'lore' than the need of folks for a home – and or somewhere to live.
We saw the same sort of peaks in all commodities and consumables … and when these things reach critical mass .. a cheaper way of producing them is found .. fortunately, unlike PCs, phones, televisions, clothes, even kids ….. it is still too expensive (though who knows for how long) to produce land
I (and for all I know, I could just be a fruitbat in these things) only see a lot of variables movin about the place .. yes, we monitor em, but the fundamentals remain unchanged.
hehehe .. as you said .. to each their own
Ta Richard .. is OK, the accountant, financier and tax folk do … that such an arrangement is available within an LOC suggests that some folk do actually find it useful – or it wouldn't be a part of the product … understand your comment re 'within' and LOC, however, the effect is the same inside or out (and you may labour under the notion that all offset funds are in fact ours – different folks different structures) ..
in any event, the thread was whether an offset can be utilised against an IP.. and the answer is that there are apparently 2 different ways of achieving that ..
TerryW outlines one way which is also sound – which provides for 'paying down' the LOC once offset $ reach a point of comfort .. we just dont like the mucking about.
T'was just a contribution
… and it save us .. well, a lot We guess we dont follow the crowd much – even in finance
.. the three brokers we yakked to scratched their heads too until they saw the resulting composite interest rate on the portfolio …As we said .. depends on individuals circumstances, earnings, savings regime, risk profile and so on
be well
.. Ralso keep an eye on Iluka and the work 20ks outside Ouyen (though we've left Ouyen alone – is probably a magazine or two away
) …. Ouyen (or Manangatang – where there development is occuring) is commutable from Mildura …. Ouyen has jumped a big % of a low base in recent months, though we'd suspect (though do your own research), that a town with such a tiny population (though bigger than Managatang ) is likely to leak – particularly families seeking amenities – to Mildura.The Iluka development is more than just mineral sands – and appears to have strong markets o/seas – it will also take over as leading extraction (if our research be correct – though do your own
as always) from the mid west and Capel.Drought aside, Mildura does have a good diversity of industry – a couple of cheap suburbs on the vic side and (quasi) suburbs on the NSW side.
enjoy
R
interesting thread … One of the big four does actually have an offset within an LOC (portfolio) … [though they generally do not use brokers and where they do is with a minimal return] .. it is useful if one has the savings, and multiple positive balance accounts can be offset against a single nominated portfolio account (which cannot be fixed – and should not be nominated investment) .. it can work well where high cash flow contributes to cash savings against funds initially split off an investment loan (forming 2 accounts, one of which is the account being offset) .. the account being offset remains variable (which, if savings remain a constant, it doesnt matter) .. which also means, within the LOC portfolio arrangement .. as there is no interest on the variable component (if you structure it right), there is no ATO concern as a) no interest on the account being fully offset is paid (there being none where savings levels are maintained), and specific investment accounts (which does not include your initial split)within the portfolio are clear (with no personal income washing through them).
Yes, one can also use a drawdown for 'other stuff' – like a timely buy and sell of B&B for a 26% return for example .. so long as the nominated offsets do not include ones 'living' account .. all is well (for us
)An offset should not be against a specific investment account within an LOC arrangement – for clarity if nothing else – but, I understand it MAY be if 'outside' an LOC arrangement (but then I always wonder if the prime purpose of the arrangement would negate its value if challenged as there would potentially be variable in the interest claimed.).
We manage to reduce average impost of interest (as a chunk of money becomes 'interest free' in effect) and use the CF+ to knock down the balance in the offset (no longer investment split) account – as reduced (depending on the timing of loan rollovers) we can a) split a further chunk off an investment account and repeat the process or b) draw down more into the account being offset and make a lump sum payment on a investment portfolio account with the same effect.
We have continued to 'cash up' as some say here – so there is no redraw from the accounts being offset (our 'living acount is not a nominated offset account) – and hence, no transferal of investment to personal debt. In that context it is critical that the amount being offset and paid down does not exceed the cash at hand.
Yes Terry – we be very much Somers/Lomas converts
.. despite the screwed up noses – it works wells for us Might sound complicated LOL … we explained to the bank how we thought the structure of their product could work – and after a fortnight of thinking they agreed – as the arrangement cannot impact the overall level of the LOC .. simliarly, accountant ticked it off (though wondered why we prefer to retire debt) and the folk without humour had no major challenge as the representation of offset is paid debt (IF, no 'living' funds are washing through it).
But of course, our arrangements and/or rulings and such, are not others
… so …………………Understand that none of the above in financial advice – and you should sus out your own arrangements in the context of your own personal circumstances.
I generally try to stay out of the chicken little discussions …
Marc – you be spot on as usual .. Ormeau, you really need to have a look at western world fertility rates and the balance/approach/future of (past) NATO countries (all old news).
All we hear is the 'credit crunch' and US woes etc etc .. some may be well placed (although we have – in terms of credit, relatively, homogenised and adjusted and so on) been here before. For those really interested in the background – look at the US tax ammendments in 1997 .. examine the white paper proposing them .. look at the rationale (and be glad that Aus didn't do the very same thing – we came so very close in 1999/2000).
You'll also notice that the rhetoric has moved from a wholesale crash in prices .. to a wholesale crash in housing value .. ya dont need to be a Rhodes Scholar to discern why the rhetoric has shifted.
2010/2011 .. yes, potentially a 'watershed' year … though there are now blurring signs – though if it is a watershed fin year .. do you really think there would be anywhere to hide ya assets?! .. if only Jack Lang had a PC in his current place
158,000 native births in Oz last year .. a 27% spike in WA alone .. immigration pops past 120,000 this year – highest since the years following the second world war (welcome Scamp LOL) … the UN reports that, for the first time in human history, the majority of world peoples live in (that we term) Cities (with obvious impacts) … Germany reports that 30% of its current population base was born overseas … in contrast Poland reports that 80% of its native born workforce lives and works outside the country …. the IMF releases information of its intention to examine the US financial system (countries such as – yes, China and the the US are clearly proping up share markets).
Most westernised world working populations will not grow until after 2050.
Oil does its thing, as it will, because YES – it is a finite resource – at the same time we grizzle about OIL (and war prospects) *gasp* along come a bunch of scientists saying that for the first time in human history (yes, that saying again) all ice at the north pole will melt (will greenland making similar mumurs) … of course none of us (aside from the polar bears) perhaps note the timing or the irony.
Curiously, a recent US report said very much the same thing (not a conspiracy theory – merely an observation).
Gold continues to rocket toward $1000US .. as it does in all times of ecomonic uncertainty … though Scamp and co have yet to tell us of the woes and history of the gold standard – all is not what it used to be since international economic deregulation (along with the exchange statements being removed from all currencies some years ago).
A crash? .. 40% 60% … possibly .. who knows? .. and who, aside from those betting 'short' who really cares?
Am sure we all dont mind hearing the discussion – yes, cash up, sacrifice a chook, whatever is ya thing. If folk don't want to invest in property – that be cool – if those who might might say 'we're waitin for the day ex-property investors are begging outside what used to be their PPOR calling "alms for the poor" before we'd consider buying anything .. well cool – whatever does it for you …. really
Perhaps we should just ask Steve to put a general disclaimer along the lines …
"If ya invest in property right now, or if ya wait till 2011, or 12 or 20 and so … ya might be out of ya scone (or writing the next bestselling book)" .. then can we get on with some discussion that isnt appearing to be the imposition of a view as opposed to the articulation of events and possible outcomes?
All good advice W4 .. at the heart of it though is you must do that which YOU feel fits YOUR approach .. dont just go out and grab something – have a plan .. an approach .. and DO crunch the numbers (so YOU understand em) … the stayers about the place have their own way – yes read the books – dont blow ya dough on all the seminars necessarily (if ya like that stuff .. AMWAY is safer LOL) … and dont give in to those who have the deal of a lifetime .. it'll usually take that long to recover
Believe none or what you hear, half of what you see, and a third of what you read .. distill it .. and get out there.
Understand all is as long term as life .. 35 is a long way a way at 20 .. and 40 is a long way a way at 25 … it matters not .. if ya young, take a breath, take ya time .. dont cripple ya life in building … but build ya protfolio over a realistic time frame .. and trust YOU.
Best wishes W4 .. go get 'em kid
R
yes .. lots of good info .. despite the tenor of some posts
like workforce, demographics and DISTRIBUTION will be crucial going forward (NSW for example experience it – but dont appear to understand it) ..
a good report from the fed dept of whatchamacallit .. used to be DEWR or something like that note that immigration .. while high .. isn't in the age groups we expected ..
Access Economics .. their march report (I do love economists that can write entertaining analysis – actually had me gigglin in parts) … note the impact of immigration on their past projections – it aint flash ..
most public sectors reckon that around 35-45% of their folk will retire in the next three years …. if ya extrapolate that .. one would figure that in time (unless they all be Geo Burns) .. they … ummm .. well …. die
is a big chunk of demand and investment holdings …
on the flip side, if immigration continues at same or increased levels … that means we go to countries we wouldn't normally consider in terms of quality workforce .. a lot of govt and other folk would need to sort out qual recog and so on .. afterall – think about it – most countries we recognise quals from were NATO allies (or repatriated nations) we ignore the rest – hence the sayin 'anglosaxon arrogance'
birth rates in that patch very very high (all of western world – past poor fertility rates are killin us now) ..
most of what one reads is the narrative of the symtoms
.. not the cause … I think Nicholson described it once in a clever script .. "I'm drownin, and your describin the water!" …a balanced policy, quality, commmunity expectation approach .. could mean the naysayers didn't read the play ..
if no change .. mayhaps they have ..
comparative points in the evolution of society and economic structures … WW2 (though we've soaked up all but very few of the female workforce) .. (and) .. 1300 – 1360 …(europe) .. check out the old 'eastern block' if ya can get past the politics – no 'baby boom' there .. some would argue, but for the policy makers of the day, our future (the correction) ..
All things have corrections … stock markets, housing, species .. and … us (western world) … not the first .. not the last …
am not a greenie in all things – but to think such cycles only impact 'other' stuff .. man (or is that person?) made or other .. is well .. sorta dumb …
I've yet to see the lovely graphs and so on that go back quite THAT far (1300s) .. but the population correction in europe around that time (no am not a historian) ended the feudal system in europe … that was them landholders (us) makin a shiteload from the 'tenants' (them) … and .. well .. history can, alas repeat itself
on the flip side, some states in Oz have had a huge jump in births last year (talkin 20% + here) ..
will the "*ss" fall out of it? … jury is still outlong term ..
next few years .. too shorta timeframe for me, I dont consider it
but the others here are right – there are strong statements, some even cogent, on either side .. but in the end .. to each their own
Or .. you could take the Scamp chicken little "the sky is falling, the sky is falling" approach.
Go to the bank .. tell em that one of their clients owes them more than they'd take from you for their house (which in the absence of any inspections, could be a termite ridden shell held together by paint; in the absence of a title search, may not actually belong to them – and YOU are actually being scammed; or is in the circumstances outlined above – for all you know, they got a Babcock and Brown margin call and figure the long term for B&B is better than holding the house).
Going down that route – you'de best be 101% certain you know all there is to know of your prospective vendor – or perhaps he'll have the two houses, and you'll be renting.
Ask the guy. In a game of smoke and mirror – dont be the one with the glass cuts.
A chinese puzzle
(nothing in that comment aside from the general title ascribed to complexity )You wont get a title transfer with the bank caveat (tis wot it is) in place – and so no settlement in any event (for the doubter – am going through an identical process – since August 07 – and we're only JUST settling this one now).
The crucial bit in this – is it not – is the assumption that the mortagage discharge on the part of the seller resides only in the funds arising from the sale itself.
One might sell ones car, furnishings, or even borrow from the family and so on to fund the gap – and BEFORE the usual crowd say something like "we'll they'd just bring the mortgage up to date" … consider that in doing so the potential to escape debt free disappears if that simple move was made.
The short term wipeout may be better than the last gasp before certain destruction.
The solution may well be in the mind of the vendor. Yes, yes, cant trust the info and so on … hehehe .. yes been there too with this one. Suprising just how many $ can be about when they need to be.
Ask 'em. Or move on. There will be many many more
