Hi,

Sorry, I thought you meant you had leased it earlier in the FY based on the comment ‘I had it leased in ’13 Financial Year’. So, do you mean you had it leased in 12/13 FY, and not 13/14 FY?

The question seems to simply be, can you claim any expense, including interest repayments if you never generated rent? That’s definitely in the realm of…[Read more]

You should check with an actual accountant rather than ask online.
I’m not an accountant, but my belief would be that:
– If they are actually renovations, in that you are replacing existing fixtures with new ones, and/or creating something new, then this is depreciated over the life of the fixture. This is done in a depreciation schedule. This is…[Read more]

I recently had a discussion with my bank manager about a similar investment, and it would have been my first as well. I wanted to get a loan for about $2mil to build a bunch of units. The basic information I got was:
– They would loan up to 65% of the final value of the properties.- You need to be able to service the loan at all stages. Since you…[Read more]

Sort of hijacking a thread here. But I had the same idea, in the end I just purchased it in my name for the following, but potentially wrong reasons!
– Taxation is easier. Depreciation, potential short term losses – vacancy, changing interest rates etc- Purchasing is easier- Selling, if everything fails seemed easier
This way I just rent it out,…[Read more]

Hi David,
I work in IT, but use that as an income source to support property development – I have a few friends who do the same thing. I can definitely earn more in IT than I probably would in RE. Out of curiosity, where in Qld do you live and what area of IT are you in?
 

Hi,
The interest on the loan is a tax deduction. So if you spent $5000 a year on interest in a FY, then that is what you can claim. Principle payments aren’t deductible, so if you have a $50000 deposit in cash, and just spend it, then there is no deductions there since you don’t pay interest. Some of the brokers here can talk about how to setup a…[Read more]

I tend to take the family on an overseas trip once or twice a year, but since my wife only sleeps under '5-stars' and likes to lay flat on flights it can get quite expensive! So, I'm trying to cut back on the travel bit for the next few years, however, having my 2nd child due in a few weeks will certainly help that. I also play sport, at least 4-5…[Read more]

In addition to the above questions.

How is the apartment presented / what is the condition?
Are you missing a basic amenity – heating / cooling / dishwasher etc?
I know you said that the others aren't having people turn up, but how long are they staying vacant?
Is your RE agent any good?

The thing worth considering is that it's no good…[Read more]

Hey Krystal,

I was in a similar position a few years ago. I left it positively geared and it's really good to know that you have a house / unit generating an income while you're feet-up drinking mojitos in Vegas (.. i wish!). From a purely financial perspective, it's not the best as you end up with a high loan on your PPOR and lower loan on your…[Read more]

What are the costs for selling while the apartment is under a fixed loan? Or are you planning on selling around June 2015?

I would probably not sell, unless I had to, especially if it's near positively geared and looking at possibly capital gains in the future.

I'm assuming it's an Interest Only loan? If not, you could drop the principle…[Read more]

littlelegz wrote:
but i spoke to my mentor who said there are a lot of gain from X-coll. ie great tax savings as i dont touch my off set account funds

This has me a bit worried. I would like to know what this is based on, because it doesn't make sense to me and if I had a mentor, I would like them to make sense.

FYI – I just bought another…[Read more]

I can only talk from personal experience. I have two properties in the ACT that both have had a lot of new housing go up in adjacent suburbs.

3 bedroom, 1996 built, small block house. The property has dropped in value, because it's a small block and all the new properties are also on small, or similar blocks, people are able to get brand new…[Read more]

Hi Littlelegz.

This is what I would do, but I am very new as well:
Account 1. Loan $400k. Secured against your PPOR at $650k
Account 2. Loan: $120k+ (80% LVR, more if you pay LMI). Secured against your PPOR. Tax deductible.
Account 3. Loan $250k. Secured against your IP at ~ $340k. Tax deductible.

What you have is 3 accounts set up with each…[Read more]

jate wrote:

I'm very glad you posted this example as this is exactly how I setup my loans when I started purchasing IP's recently.
However, I've got some follow up questions:

1) Currently my LOC (secured by the PPOR) interest is being capitalised, is this correct or should I instruct my bank to pay the interest for these capital expenses from…[Read more]

Thanks Richard, that's an option I hadn't considered. You might have to explain it to me in a bit more detail though, but is it something like:

Assume I have saved the 10% deposit of a $350000 house. ~ $35000.

The $35000 sits in an offset account against my PPOR.
The bank then puts a freeze on the offset account so I can't reduce the balance…[Read more]

Maybe I misunderstood your comment, but I wouldn't look where you can afford (ie. $220k property) then figure out if it's worth it. You should look where you can get a good investment, then see if you can afford it.

That way you're only looking at good investments. I was originally looking at Brisbane, but not on the south side. In the end I…[Read more]

Hi Liz,

I'm was in your situation a few years ago (I'm 33 now), and had similar questions. I can tell you what I did, and why-

– I bought a new PPOR, and rented my existing place. I did this because I was married, and wanted to have kids. So I bought a bigger, nicer family home that we could live in for 10+ years. The existing property was also…[Read more]

When you say $150k net income, are you talking about after tax and after maintenance and running costs of the investments?
Are you talking about $150k on todays value, or the value when you retire at 55? On 3% CPI, in 15 years you'll need ~ $230k

Some extremely basic numbers in my head.

To earn $150k net, you need to earn ~ $100k each, or $200k…[Read more]

Nice post Benny, you put in way more effort than I could have!

A downside to IO and offset accounts that I found, particularly when I was younger, is having access to your money can burn a whole in your pocket pretty quickly. When I bought my first place I called the bank and made them increase my repayments and deliberately made it I&P so I was…[Read more]

No, you won't pay more. Have a read up on the many articles about how offset accounts work and it might be explained in a way you understand.

FMS explained it pretty well.

$500000 loan. Interest Only.
$500000 in offset account.

Interest is usually calculated on (loan – offset account) x daily interest rate. 500000 – 500000 x interest = $0…[Read more]