Forum Replies Created
If you already have the two properties with loans, there is no point in trying to save separately for a deposit (and paying tax on the interest) – use an offset account as outlined above – you can still get access to your money & 'reduce' the amount of interest that you are paying simultaneously.
As noted above, find out what it is, then control it. Ie work out how much of the land will be affected, can you work with it? If you can work with it, can you design around it – eg leave it in the ground, undisturbed – a minimal cost option. You can then work up an advantage on your competitors in the market by seeing something that they don't.
With regard to determining current market value (or what your sister & +1 should pay), engage a valuer (not a real estate agent) to prepare a fully documented valuation. This will serve to protect all parties with regard to certainty for the price, certainty for the value for CGT etc. How he then decides to dispose of half will depend on him, does he sell to them at no increase (no cgt but no profit for hiim and upsets you by not giving you the same benefits) or transfer at the current rate (some cgt liability but he should have sufficient funds to pay it when the bill arrives, this leaves you in no better or worse situation than the present).
What are your father's plans for the other half? Keep & will to yourself/other siblings, transfer his share to yourself etc? This will assist in how to transfer to your sister ie tenants in common (between your father & sister/partner) allows your father to pass his share on to others (like yourself) when he dies, if he goes about it as joint tenants then the other parties will inherit the property on the death of the other ie it might come back to him if your sister & partner are killed before his passing. The family solicitor should be able to work this out (and get the wills done at the same time).
As ZJ said, batten out the ceiling and install plasterboard and paint that. You will lose about 35-50 mm in height. Replace the existing light with a ceiling oyster unless you have enough height to install downlights. Remember that the ceiling height in most rooms (except halls, baths, laundry, storerooms or garages) must be 2400 mm minimum.
In NSW works below $12k don't require home warranty insurance – for piece of mind building, contractor risk, public liability and contractors/accident insurance etc should be bought for piece of mind.
If doing the work yourself, then progressive reno you may escape not having to get an owner builders licence ie you don't need one if you are going to patch and paint a few rooms, replace carpets, doors or fix up a few taps.
Check that the work you are going to undertake doesn't require a DA (council application).
Most tradies HAVE insurances – dodgy ones don't (as they don't meet the low standards set by dept of fair trading).
Cash is great, gets the job done cheap (today) but when you come to sell YOU are the one who has to pay the CGT on all of that extra profit generated by the 'cheap' work. Some saving huh? You might save gst on the labour but the tradie is paying gst on his purchase and you will be wearing that as well (he can't buy without paying it).
If margins are so tight that you have to take big risks, are the risks worth it?
A couple of things to consider – what are your personal circumstances? ie can you continue to afford the repayments with the increase in the interest rate? Why do you want to get out (is it becoming unaffordable)?
How many more rate rises can you bear?
Will there be any rental upside in the near future – is the unit already at market rent vs risk of vacancy and lost rent?
If you do decide to sell, will it be with vacant possession or with tenant in place?
As you have held the property for a number of years you will have to pay CGT albeit at a lower rate – so not all of the profit will go back into your pocket & off the mortgage.
What are you going to do with the net proceeds from the sale?I don't believe that there is a limit regarding the age at which you can acquire a property (it may be that it goes in your parent's name as Trustee for ……. but your solicitor can advise the best approach).
A couple of things against this: you will lose your first home buyer's grant if you don't have it as your principal place of residence for a certain period of time (you will need to check out the timeframe).
A minor pays an exhorbitant rate of tax on 'unearned income' ie rent, dividends etc. So it may be better to wait until you are of the legal age to start collecting rent – refer to the Aust Tax Office for details.
If you can get a local builder great – at least you only have one person to manage. Unless you are prepared to spend a lot of time at the place getting the work done/supervising & running around after tradies — forget it.
An building & pest inspection are generally quite cheap <$1000 but well worth it if it convinces you one way or the other.
From the scope of the works you will probably pay more for the repairs than for the place itself (might be cheaper to flick a match and get a new one built/relocated).
If it is yielding 11% what is the catch? Low growth area, nett or gross, is it about to fall down/be resumed for roadworks?
Unless there is a major defect with the property, why not use the income generated for further purchases – $90k cashflow will buy a reasonable investment portfolio
The best reason to contact the water authority (ie Sydney Water, Gosford Council etc) is to get the old meter read so that you aren't billed for the incoming person's water consumption (just like electricity). Sure the solicitor may have done this however it pays to be sure.
Generally speaking, if it is a wall it is a defined element and needs council approval (load bearing or not). Due to the small scale of the wall it may get an exemption from a DA. If it creates a 'habitable room' it will need ventilation (5% of floor area) and natural light (10% of floor area) – a doorway does not count! As you are doing work in a garage – was the garage conversion approved? Are the walls single brick with piers or brick veneer/clad? Single skin brick walls are not approved for habitable rooms.
Check these out then call council.
This relates to the stamp duty on your mortgage (not on your property transfer) – I keep my loans rolling over for as long as possible and shift the asset/security to the new property.
If you have a concern about the builder – first check them out with VCat or licensing authority. Secondly, ask them for reference check – if they let you select any one of their clients going back over the last year or two not just the few that they offer you. Guaranteed to get a different response if they have something to hide.
To make life a little bit easier, request that the first home buyer's bonus is given to yourself (reducing your exposure). Work out how much it will cost you to finance the deposit & weigh this against a lower selling price.
You will have to place a caveat over the property as well to ensure that you will get your money at the end of the day.
Lastly, get your solicitor's advice asap to make sure that you go down the right path.
Jim, has the LEP allowing subdivision changed (now allowing greater subdivision than previously)? ie the advice at the time may have been correct but changed due to new planning legislation. The council isn't obliged to tell you what is on the cards only what they can currently approve (the rest is pie in the sky).
Probably most relevant if the investment is a new property (developer should be able to provide this for you). If it is relatively new ie less than 10 years a QS could help. If older, try a valuer and use your 2.5% of the building value.
Go to an 'el cheapo' conveyancer – still have all the necessary qualifications and professional indemnity insurances.
If doing it yourself, you need to ensure that any mortgage over the property has been cancelled by the bank (and transferred to any other property if you want to keep the prepaid stamp duty).
Any work that you do to the property before you have leased it out for the first time must be capitalised ie added to your purchase cost base – this work is then depreciated not an instant tax deduction. Take the do nothing scenario, lease it out at the higher value for 6 months and if the new tenant decided to vacate carry out works at that time (not sooner).
Sounds all too good to be true Jim. 8800 + 7600 = 16400 m2, allowing 35% for roadways, footpaths, services etc it will leave you approx 10,660 m2 of useable land for the combined blocks (or 21 x 500 m2 avg blocks).
There are quite a few good town planners, surveyors & consultants in the market to get the maximum number of lots or maximum value out of the combined lots
Sitting on your current DA & going for a new one with the combined blocks may be an option – selling it off to a developer and not enduring the development and sales process.
Why have you only achieved 3 lots on your 7600 m2 if next door can achieve 20?
A tenant will very rarely be liable for the lessor’s management fee – why should they pay for your decision to have a property externally managed?
You will still be up for your building insurance & public liability (tenant pays plate glass and contents).
Tenant also is liable for consumption of water (not the sewer connection/standing charge), rates & taxes (above a base figure).
Alternatively you could get a gross lease where the rent is higher but is all inclusive of outgoings.
