Forum Replies Created
Hi Guys,
As Vic say, make sure that you have a plan. It would be a shame to see such enthusiasm squashed by poor planning. To the end, have a little patience. I realise that it probably seems if you dont get started ASAP you will miss out completely. For as long as there are people in houses there will be a real estate market, albeit a changing one. It would be better to wait and save for a while than overextend and end up worse than when you started. As a suggestion, can you find someone who is renovating and offer to labour? It may hep with your income, be more enjoyable than what you currently do and I am sure you would learn heaps that would be relevant to you when you do your own.
Best of luck
TammyMy understanding was that CGT was applied to all property. However, a 100 % exemption applies for PPOR and a 50 % exemption for non PPOR properties if held greater than 12months from the date the contract was signed. Given your property is not your PPOR, I would have thought you were subject to CGT upon the sale. Perhaps if you held the property greater than 12months you would be entitled to the reduction. I dont see how giving a tenant a rent free period would negate CGT but then again, I am not an accountant and the above is only what I have learned from experiance with my own properties.
All the best
Tammy
Hi Jessica,
I am putting my PPOR on the market at the moment. I contacted 3 REAS in my local area for an appraisal. My prerequisites before coming were:
– REA that has been in the industry longer than 6 years (experience selling in tougher times).
– area sales data going back 6-12 months.
I showed each of them my property, advised them I had contacted other REA (not that big of a town), and requested they give me a mock up of marketing add. Of the 3, one never called back, two gaave me a marketing add. Of those 2 only one called back to ask my thoughts. All 3 advised me with how it most likely wouldnt sell over the Dec/Jan period and how bad the market was at the moment. SOOoooo……..It goes on the market next week under private sale. If it hasnt sold by Feb then we will reconsider the agents.
What can I say, they actually talked me out of listing with tem over that time period. It would seem that I have nothing to lose (only the advertising) and potentially a lot to gain (savinngs on REA fees).I will let you know how it goes.
Cheers
TAmmyHi Hemma
What a wonderful thing to do. I hope that it returns 100fold for you. If the two impressions have not been claimed, I have plans being drawn now and am very interested. please let me know
Cheers
TammyWANC?? Dazzling, your wit makes me smile[biggrin][biggrin]
If they are battlers (ie just getting by) make sure you factor in significant interest rate rises. I know of a case where in order to get into the market, IO was chossen as it was cheaper on a monthly basis. The problem occurs when rates rise and those that are close to the mark cant cope. The other way to look at PI is as forced savings. If things get tough in the future, the loan may be able to revert to IO and the extra payed with drawn. As always this is dependant on circumstance.
Tell them good luck, and remember it is OK to use stepping stones to the dream home rather than have the dream home turn into a nigtmare first up.
Cheers
TammyIs this your place that you are selling?
Hi Joel,
It sounds like you are planing to live in the place you buy. It also sounds like you have looked at the interest you would be paying and broke out in a cold sweat [biggrin], dont worry, that probably what we all did the first time we looked at our first purchase. What helped us at the time to overcome this mindset was to take into consideration what you would be comfortable paying in rent. Lets say you would be happy to pay $200 a week rent, or you were happy to share a house and pay $150 each. Yes, it can be argued that interest is dead money, but then so to can rent money.
At the end of the day, only you know the figures and you need to be comfortable with the repayments. The other piece of advice, if I can offer it, is remember, it is your FIRST place, not your ONLY place. I have seen friends buy their first place with romantic notions of being there forever, and getting caught up in the McMansion brigade and now getting into trouble making repayments. Property investment is not about keeping up with the Jones but being smart.
Goodluck with it all, and dont be afraid to test the waters.
All the best
TammySlow draining water may indicate tree root invasion or other blockages/problems. Condition of water leaving taps may give an indication of condition of pipes (ie rusted pipes – reddish water), although if it has been recently lived in one would hope these were not too bad….but nothng replaces the checking you do yourself. These should be picked up in a building report, particularly if you point out your concerns prior.
Out of curiosity, I wonder what the average age of an investment property actually is!!
TammyYes, Sorry for not explaining that a little better.
The original intent was to build and sell current PPOR and move to the one now being built, (with view to repeat 12 months later). Thus taking advantage of any equity without being CGT penalised. Add children to the mix and current build property no longer is suitable. So short story is how to minimise tax that will be payable. Hence the visits to find an accountant, and the 3 opiniions given.
Again any clarity is appreciated.
THow about selling PPOR to trust and then leasing it back? Then transferring PPOR status to buy build sell projects (1per annum). I have asked 3 accountants about this and have recieved 3 different opinions, yes, no and yes but dont use a trust, just do it in your own name.
If any one has a learned opinion I would be interested. I am in muddy waters at the moment.
TammyHi Munno,
With regards to your 3rd option, buying land and building on it.This is going to sound very obvious but you would be surprised how many people get caught out. If you choose the build option and choose a project home builder (you know 4 bedroms etc etc only 120K or thereabouts), look closely at the inclusion, I mean really closely. Every variation has a cost, even the ones that seem basic, eg TV points in a media room, clothes line, cement (or tiles) at the front door, fan in the bathroom, extra powerpoints etc. Alot of these costs are not made available at the start and only come out after contracts have been signed. Given you are looking closely at costs, just make sure if you chose this option you have factored EVERYTHING in AND get it in writing.
All the best
Tammy[biggrin]Hi Simon,
Sorry I dont think I was very clear. I was particularly refering to a buy reno sell situation or a buy build sell situation.
Lets say you own and live in A whilst reno and sell B. If you plan not to use PPOR status on A (not predicting as much growth if sold, or future hold and rent), can you claim the PPOR CGT exemption on B? If so can this be reproduced with subsequent properties, understanding only one exemption at a time. ie sell B, buy C repeat reno or build and sell, buy D etc.
Is this possible?
Lets assume you move out of your PPOR, and later buy another property to live in. Do you HAVE to change PPOR status to the recently purchased property or can you leave it with the original one for the 6 years? Following on from this, can you live in a property you own without calling it you PPOR and move your PPOR status from one reno property to the next as they are bought and sold?
Clarity would be great.
ThanksI strongly suggest you speak to your accountant. In the meantime do a search for off shore trusts on the ATO website. You will find various rulings relating to this citing penalties for knowingly setting up trusts/companies for the purposes of tax avoidance. You mat get away with it……and then you may not!!!!!!
Hi Dylano,
Congrats on your new home.
With regards to the revaluation, why do you want it, general interest or to borrow against? If general interest, you should get a fair idea from the REAs. If getting the bank to value, first check how long they will give between valuations. My lender will only revalue once every 12mths, this can be either a plus or a minus (market gain or loss). You may not want to get it valued now, plan to buy in 6 months, have the property increase but not be able to revalue at the new price.
If you get an independant valuation you may pay up to $500 or thereabouts.Hope that helps some
TammyDont forget, REA usually list the GROSS rental return. That is prior to all costs (strata, management, rates etc). 7% can often come back alot lower wher you factor all these in.
Hi Terry
Thanks for those links, great info.
cheers
THi Dv,
I Have just got a copy of PI.com’s Wealth Guardian. Given your questions and interest, I think you would find it very interesting. I think they are out of stock at the moment,but I am sure they would have a waiting list.
TI recall when we bought our first PPOR it coinsided with a lot of publicity from the big banks about this method (ie pay all on a CC then pay CC off). It doesnt take alot of commen sense to realise that if you pay more off your loan (or spend less – ie account for you spending) then you will pay off you loan sooner. When I asked the loan officer to compare the traditional structure to this one where all your $$ go in and use CC, BUT leaving the same amount paying off the loan each month, they were unable to. I was told it ran on the assumption that you would leave more in the home loan account than required – hence a faster repayment.
Now to all those brokers, I am not disregarding these types of products, they have their place (not if you spend too much[exhappy]), but at the end of the day, everything else being equal, it is a formula. If you put more $$ in, the quicker you reduce your loan.Or am I just being too simplistic?
