Forum Replies Created
Yes, the prior year loss is carried forward and can offset future years income
Just an idea, if the terms of the contract allow it may be possible to sell your interest in the contract to another party such that someone else is responsible for settling the contract at its execution price.
Say the contract is due to settle in 6 months for $500K and you have paid your 5% deposit being $25K, meaning there is still $475K due. You may be able to sell your interest in the contract for say $50K to a buyer who is still required to settle the balance of the purchase price being $475K in 6 months time.
I’m not sure about stamp duty implications, but CGT would be determined on your sale price of $50K less your deposit of $25K if you don’t settle the contract yourself.
You should get some legal and tax advice before doing anything.
If you have a commercial property you could consider moving that via in-specie super contributions into your superfund (if you have a SMSF). If you have a switched on accountant they should be able to come up with a strategy to move it in a tax effective way. Once in a SMSF, if you are in pension phase, the income on the property will be tax free. Depending on your age, pension withdrawals will also be tax free if you’re over 60.
Else, depending on your current business/ tax structures, you could consider making super contributions to offset the rental income.
There are a few options when it comes to buying new properties, but you need someone who has a knowledge of your affairs to advise you if you are unsure.
Cheers
JDL,
In terms of investing in anything, whether it be property, shares, term deposits etc, whether it’s inside or outside of super, you need to evaluate each invest on its merits, i.e. is what you are investing in going to give you a suitable return compared to your initial investment.
The next thing you need to ask yourself, is does the person who is telling you to invest your money in a certain asset have a vested interest? i.e. Is there advice influenced by what they may receive by you investing your money in a particular asset. As Terry alludes to, the financial adviser may receive a commission/ fee for getting you to buy a particular property, hence their advice is biased. Are they pushing you to buy a certain property? If they are, that would set off alarm bells in my mind.
If you are unsure, i would definitely seek a second opinion.
Hi Eric,
If you choose to treat your 3 bedroom apartment as your main residence, as you have owned the property for less then 6 years, I would have thought that there wouldn’t be any CGT issues. I haven’t found any examples of when it is partially rented, however I don’t see how this would make a difference. You can claim the 6 year exemption when its fully rented, so I don’t see how CGT issues would arise if its only partially rented. There is probably people on the forum who may be able to clarify, but its just the vibe of what I have read.
With your other house purchased in 2007, I assume that you lived in this property up until you purchased the 3 bedroom apartment, and you still own the house presently. As such you can claim this property as your main residence up until April 2010. If you will still own both properties at February 2016, it may be worthwhile comparing the increase in value of both properties from 2010 to 2016. If the house has increased more than the apartment, it may be worthwhile continuing to treat the house as your main residence rather than the apartment.
Hope this helps
Cheers
Hi Ananth,
What is it that you are planning to do? Are you building a house/ units and then looking to sell shortly after? GST only generally applies to the sale of new residential properties or commercial properties. Your accountant would be best suited to talk to you about this one. It best to spend a bit of time getting this right, as any errors can end up costly a lot of money down the track.
However, to answer your question, in general, if you are selling a property using the margin scheme, yes you can claim the GST on the construction costs. However you should be aware that if you purchase property where the margin scheme was applied to the sale, you cannot claim a GST credit for the GST included in the purchase price of the property.
Further, the margin scheme cannot be used on the sale of your property if you originally purchased the property as fully taxable and the margin scheme was not used.
You should be aware that when it comes to buying or selling a property using the margin scheme, both parties must agree in writing at the time when the property is sold (goes to contract) that the margin scheme will apply to the sale of the property.
Cheers
Blocka,
As I read it above, White House Financial Services is not actually your real estate agent, is this correct? What role do they play in managing your property if you have a real estate agent?
If you want to try track them down for the $ you can do an ASIC or ABR register search if you have the company ACN or ABN. If the company has gone broke, then a administrator/ liquidator may have been appointed. If that is the case you can contact the administrator/ liquidator and they could provide you with further info in relation to getting your $ back. However, the chances of getting all your money back in these circumstances are never that great.
In terms of claiming a deduction, when it comes to rent, you would normally declare the income on your tax return when you or your real estate agent receives the money. In the event that you haven’t received your money, then there is no need to declare the income. Basically, instead of claiming a loss, you don’t declare the rent which you never received.
Hi Fudge,
The reason that I suggested the offset account was if you choose to buy another property in the future i.e. when your current PPOR becomes an investment, if you have an offset account in place, you can use the excess funds in that offset account to purchase your new PPOR, thus maximising the deductible interest that’s left behind on the investment loan. This way the funds don’t become tainted with any non-deductible debts. The offset account just adds that flexibility.
A lot of homes which start out as PPOR’s often become investment properties when the owners choose to move houses. If there is no offset in place, people get caught out when they redraw on their existing loan to purchase the new property. Because the redraw funds from the existing loan have been used to buy their new PPOR they become non-deductible.
Hi Fudge
As Jamie suggests your accountant is the best person to talk to as there are plenty of variables. However a couple of things to consider from a tax point of view are:
– Do you and your wife have different taxable incomes or are they similar?
– When you PPOR eventually becomes an investment, do you plan to rent it out or perhaps develop/ subdivide the property. The income from these different scenarios can be quite different
– Will it be positively or negatively geared? From a tax point of view, you would want to have a positively geared prepared in the name of the spouse with the lowest taxable income and vice versa for a negatively geared property, you would want to have that in the name of the spouse with the highest income so they can take advantage of the losses to reduce their income. If your incomes are similar, it might be best to have the property in joint names. Hindsight is a wonderful thing in this regard
– An interest offset account may give you a bit of flexibility in terms of interest deductions that you can claim on the property in the futureHope this helps
