Forum Replies Created
Hi Andrew
Further to my comment above, i just went to send you a PM and I had a reply from Jaffasoft. The user mum123 was investigated the other day and they have been blocked. So all good. Thanks to you both for the feedback.
Angela
Hi Andrew
Thanks for the reply. It was mum123 and the message was sent to me on 30 April 2010, so they may have been blocked after this date. I have sent you a PM with all the details. I also received a PM from Jaffasoft in response to this post and have provided full details of the message and he was going to look into it. Hopefully this person is already long gone from the forum. Thanks for your help.
Angela
Thanks for the replies. Would anyone be able to help with me how best to search for PBRs or determinations on this topic? I have been on the ATO website (including the legal database) and haven't managed to find much on point.
I did manage to find PBR 83291 (thanks terryw). In this case the applicant was a beneficiary & trustee of a trust that owned an IP. However, the IP was purchased years earlier and had been used as a rental to unrelated parties already. In our case we would be the first tenants whilst also retaining our NSW PPOR. Plus the company would be on the lease.
crj wrote:…there is a determination or ruling (possibly a PBR) that states that in these circumstances the employer would lose the exemption on Fringe Benefits Tax. The isue possibly is that you the employee are an associated person with the landlord (the trust).crj – thanks for raising this point, I will definitely need to check on the FBT implications. I haven't been able to find this ruling so far, but will keep searching. Do you know any other details that might help my search?
crj wrote:If your trust will make losses why do this anyway?We are still crunching the numbers, but essentially it means that the company would be paying ~$20K+ (rent) towards a property that we owned, rather than towards another landlords IP. Also we are in the market for an IP and it gives us somewhere to live with the likelihood of benefitting from future capital growth, guaranteed nil vacancy rate and excellent tenants.
Any IP we buy will be negatively geared regardless (at least for the first few years), hence the loss. We are also considering whether investing interstate (say Sydney or Melb) might still be more beneficial overall
crj wrote:Since your husband is getting a presumably tax-free LAFHA which is subsidising most of your accommodation costs….This is correct.
crj wrote:…it may make better financial sense if you are interested in property investing to look to purchase somewhere else rather than in your particular location in WA.Actually this is the decision we are trying to make:
– Do we keep renting and receiving a LAFHA, and invest interstate due to better current prospects than WA market (say in Syd or Melb);
– or do we buy an IP in WA via a trust, thus converting the LAFHA dollars into company paid rent on an IP that we would control?
Angela Hi Coogee
I have also bought the same book a while ago and found it very interesting. I still refer to it regularly. The copy I bought had a white sticker/label inside the front cover with a '2008 Budget Update'. As mentioned by others above, it advised that in the May 2008 budget the Government had effectively announced that it would change the law regarding the otherwise deductible rule in relation to jointly owned assets. This in turn stopped people utilising the 'salary sacrifice strategy' outlined in the book effective from 13 May 2008 (or if you were already using this strategy you had until 31 March 2009 to rearrange your affairs).
The strategy would have been perfect for us as hubby is a high income earner whilst I am very low income and stay home mum. We have since considered using a DT, but the lack of negative gearing gving rise to losses being trapped in the trust is a sticking point. Asset protection is an issue for us though, so trusts are preferred. A few people lately have suggested using a unit trust with a corporate trustee with hubby borrowing funds to purchase all units. This would enable negative gearing but I can't see how asset protection is any better than using hubby's own name. Sounds like asset protection comes via the person suing you being given the run around until they give up! Apparently you simply keep establishing a new corporate trustee to control the trust each time the current corporate trustee is named in the action. Is this just when the action has come from the tenants – meaning they would be suing the trust as owner of the property? If hubby is sued however he could be forced to redeem his units – would this force the sale of the underlying asset to realise the capital component (as the forced sale of income units would simply pay back the loan)? I think I have just confused myself further!
Angela
Hi Richard
Thanks for the reply. It certainly seems that HDT's are falling out of favour and in particular with lenders. We have started to re-examine using a DT and are crunching some numbers on potential deals to see just what the financial implications would be regarding any losses being quarantined and for how long we would even have such losses.
I was wondering what BWO is?
As both you and Terry have mentioned DT's, I am assuming that using our own name(s) is the least preferable option in all the circumstances?
Cheers
AngelaTerryw wrote:I would look again at using a DT. These days any losses will be small and future gains in income and capital should make up for this.Using a HDT would be only slightly better than using your husbands name. It won't allow can tax savings later on, but I guess it would allow the trust to redeem units later on and convert to a DT without stamp duty – unless stamp duty would be payable on the unit redemption. But this would crystalise a capital gain in to your husband, who is on a high rate of tax.
Hi Terry. We have looked a fair bit at DT. Our main hurdle is that we are considered to be income rich but equity poor. This means that even in a climate of CF+ properties we are looking at financing 100%+ of our next IP (using equity in LOC + new loan of likely 90% LVR) thus giving rise to likely losses in the early years. Given my husband's high income, we have struggled with these losses being trapped in a DT and thus limiting our cashflow during that time period. It seems to be a no-win situation whichever way we go, so I guess we are trying to select the lesser of all evils. I am also unsure whether a unit redemption would trigger stamp duty – I thought it triggered CGT but not sure about stamp duty??
Any other comments people wish to make on the appropriateness of the various structures would be greatly appreciated.
Thanks
AngelaDean & Elise wrote:…In relation to our product the Renovation Toolbox, we had 72 copies of it available when I spoke at Steve’s 3 day mega conference earlier this year. We sold out during the event and there ended up being some people who missed out on their copy. To my knowledge everyone that missed out has at least been sent a copy of the Renovation Control Spreadsheet (which forms the main basis behind the detailed budget we perform on our projects) and is getting the new version of the product at the same price. PropertyInvesting.com stopped taking orders for the product after the weekend. Elise and I are still putting the finishing touches on the new version which will be even more comprehensive and hope to have it released not long after the first seminar in Melbourne.Hi Dean
I was just wondering if it is possible to pre-order (or pre-register) for a copy of the new version of your Renovation Toolbox due out in August?
Angela
Hi HJ
I actually replied to your post yesterday but for some reason my reply has not shown up on the Forum despite appearing in my Account details…strange. I have cut and paste my reply below: (hope it is of some help for you)
Hi HJ72
I noticed that you haven't received any replies to your post, but as I posted almost the identical question on another forum recently I thought I could give you some feedback. The following accountant was recommended by about 3 different people who have actually utilised their services (I have not as yet):
R.M.G. ACCOUNTING
Cnr Harbourne St & Salvaldo Rd SUBIACO
PHN 9380 9533
WEB http://www.rmgaccounting.com.auFrom my own searches on various forums I have also come across a few posts that mention Chan & Naylor as having a Perth office, but I don't have actual feedback from people who have used their services in Perth.
The other main referral I have come across (from many happy clients) is for Gatherum-Goss & Associates who are actually based in Melbourne. It appears that a lot of serious investors choose their accountants based on the best person for the job rather than geographical proximity. GGA's website certainly presents well in terms of them having a proactive focus in relation to property investing.
If anyone has any personal experience dealing with any of the accountants mentioned above, I know I would love to hear some feedback (and I'm sure HJ72 would as well), whether it be as a further post or via private message.
Hi HJ72
I noticed that you haven't received any replies to your post, but as I posted almost the identical question on another forum recently I thought I could give you some feedback. The following accountant was recommended by about 3 different people who have actually utilised their services (I have not as yet):
R.M.G. ACCOUNTING
Cnr Harbourne St & Salvaldo Rd SUBIACO
PHN 9380 9533
WEB http://www.rmgaccounting.com.auFrom my own searches on various forums I have also come across a few posts that mention Chan & Naylor as having a Perth office, but I don't have actual feedback from people who have used their services in Perth.
The other main referral I have come across (from many happy clients) is for Gatherum-Goss & Associates who are actually based in Melbourne. It appears that a lot of serious investors choose their accountants based on the best person for the job rather than geographical proximity. GGA's website certainly presents well in terms of them having a proactive focus in relation to property investing.
If anyone has any personal experience dealing with any of the accountants mentioned above, I know I would love to hear some feedback (and I'm sure HJ72 would as well), whether it be as a further post or via private message.
Luke.S wrote:Wood Heaters – OOhhh Sooo Romantic until you need to light the fire, go outside and get more wood, keep it going, collect/buy wood… Sounds like BIG Trouble.I remember when i was young and a tennent we nearly burnt a house down. It was Damn cold and wood heaters take so long to warm up after getting home from work we used to have containers of diesel with a dash of super fuel in the house to spice things up a bit. I bet you can guess what nearly happened…
A number of years ago my brother-in-law lived in a house with a number of other young guys.and the place had an open fireplace. They got sick of the repeated need to get wood and re-stoke the fire, so they decided to put a whole sleeper down the chimney. They climbed up on the roof and dropped it down only to unbeknowingly knock some bricks loose in the wall of the chimney. They had a lovely warm fire that fed embers into the roof cavity through the holes left by the dislodged bricks. This caused a fire in the ceiling and the whole house ultimately burnt to the ground! I wouldn't like to have been the agent making the call to the landlord.
Extreme case I know, but enough years have passed to make it a funny family story!yarpos wrote:Chaser – do you run the evaporative cooler with a few of the windows cracked open. Those things need airflow and you dont close the house up like you do with A/C, otherwise you are just pumping the house full of humid air and it gets stuffy as you say. We did the same thing at first when we lived in Sydney eons ago until a mate coached us on how to use it properly.Yarpos – we do have the windows cracked open. Luckily we have some great neighbours who we met early on and they filled us in on what to do.
Unfortunately all our other properties have been PPOR's with reverse cycle air and so we were used to a certain level of 'chill' during the hotter summer days. Personally I feel that evaporative units just can't compare in the hotter weather. I only wish this place wasn't a rental – I would convert the ducted evaporative to reverse cycle given half a chance!Hi poordeveloper
I can't really answer your post from a landlord's perspective, but I can give you some tenant feedback. My husband and I (and 2 young children) currently rent a lovely house that is excellent in all respects except cooling and heating. Cooling is simply a ducted evaporative system, which in the hotter weather simply makes the house stuffy. There is no permanent heating system in place and the house is quite cold already and we haven't even reached winter. The house has absolutely everything else we could want, we are excellent tenants and had intended staying long-term. However we find the hot and cold living conditions very uncomfortable and as such I will keep an eye on other rental opportunities.
Look at it from whether you would be comfortable living there without the additional heating. If not, why would a tenant? Personally if your budget allows I would install the heating now whilst the place is empty. Hopefully it will pay for itself as tenants will be happy/comfortable living there and less likely to move on due to discomfort. Hope that helps (although it is only my opinion and I am no expert!).
