Forum Replies Created
Hi Wilko & Ballerina,
I am buying 2 blocks of land side by side and they will be combined to fit the 6 Townhouses. Land Registration will be in approx 2-3 months and the plans are already in council. Construction should commence around the same time as registration.
This project is not a typical one where i am project managing. I am purely financing the deal while a building company looks after the rest. I have a solicitor to looks over the contracts and i have friends who have done the same with this building company who are also local.
I have made one enquiry with Westpac who said they could finance 70% of the deal with an IO term of 18-24 months with a rate in the high 5’s. I have a few other contacts in the banking world so i will touch base with them and see what they could offer.
I will let you know how i go.Thanks again for your comments.
Thanks Richard.
Just to clarify. Is the LVR based on valuation or land + tender?
If valuation stacks up at say $2m but we only require $1.7m to complete could we borrow against the $2m value?Hi Corey,
They will be sold off the plan but wont’t settle until after completion.
Yes this will be the first development. I will be doing this with a friend and we both own properties and are in a good financial position.Thanks for your feedback.
Hi Dave,
I’m sure some of the finance guru’s on here will provide some insight. As you mentioned you are self employed. Generally what the bank will require is 2 years financials (on the rare occasion 1 years financials) and by financials they will want company tax returns and individual tax returns. In this day and age it is too easy for someone to do up a payslip or group certificate and say hey i’m self employed and on x amount of dollars. It is my understanding self employed income is assessed on taxable income verified by tax returns. If there is a large variance in the last 2 years then the lower amount is generally used towards servicing unless there is an exception to policy and a genuine explanation. If the company retains a profit and your are 50% shareholder then you should be able to use 50% of the company profit towards servicing and some banks will allow depreciation to be added back for servicing. On the flip side you are liable for any loss the company makes and this would be deducted from your income declared on your individual tax return.
It doesn’t sound like your lender was very helpful in explaining what is required and why. I would definitely try and source an experienced lender or broker and hopefully they will be able to help you out or at least give you some options.
All the Best.
Shane.http://www.realestate.com.au/property-house-nsw-condobolin-112625043
Asking price: $125,000
Currently rented: $200pwHi Carl,
If the income (rent) you receive from the invetment property is greater then the deductible expenses such as interest, rates, etc then yes you will pay tax on the difference.
A quick calculation seems to indicate that the rent could possibly be higher then your expenses.
Rent: $560f/n x 26f/n = $14,560pa
Interest: $120k x 6% = $7,200 (will be higher this year since it was at 8.09% for a period)I don't know how much you will be deducting for rates, insurance, etc but unless it adds up to be more then $14,560pa you would pay tax on the difference because it will be added to your taxable income.
If you have a loan against your PPOR i would have been making P&I repayments on this loan all along and kept your IP at IO.
It is not too late to switch to IO repaymenys on the IP if you speak to your bank.6% on the new loan seems to be a pretty good deal.
Be careful that you are not being placed on a discounted rate which only lasts for 12months and then reverts to the standard variable rate which will be much higher.
Shane.
Hi Fig,
If your intentions are to keep the property as an investment once the tenants have left then i believe you can still claim the interest and costs even if there is no rental income.
If your intentions were to fix up the property and then move into it then you would not be able to claim as a deduction.
It all comes down to the purpose and what your intentions are.
If you want peace of mind that you are doing the right thing then you could always give the ATO a quick call to verify.
Shane.
Thanks for your feedback.
I was thinking the off-set account would be best.
Cheers,
Shane.Hi Kong,
That does make sense to me. At the moment my IP is negatively geared so using your example above would that change your calculations?
Even though I would be getting taxed on the interest earnt wouldn’t I also get a higher tax refund from the interest charged on my loan as it would be reducing my taxable income?
