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  • Profile photo of tomjonestomjones
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    @tomjones
    Join Date: 2003
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    March 19, 2003 - 12:44 pm

    Sorry if this an invalid idea, but…

    Could you create a Trust and transfer the house to the trust, whereby you would then lease the property from the trust using a rental, or rent-to-buy, or lease option?

    An idea, although I’m sure the Tax dept has a way of making this inappropriate.

    Paul.

    Profile photo of tomjonestomjones
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    @tomjones
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    March 19, 2003 - 12:32 pm

    Thanks to everyone for their replies.

    This is what I am currently doing: I have selected an area within the City I live (a very large area), and I have been researching the rental prices and the property sales for the last six months. But of course this doesn’t help me when I suddenly find a very interesting possible property.

    So what I try to do is simply, do a search on any properties in the immediate area for Rents and other Property Sales. I determine like for like in terms of the properties, and I hope that I come up with at least a small number of similar properties in the same area.

    I then reduce the median asking price by a small percentage (who pays the asking price :), and that gives me market value for an unknown area. The rentals are done in a similar conservative fashion.

    Hopefully after all this I can feel comfortable with an approximate figure for both MV and Rent Return.

    But as you can see, to look at an unknown area requires quite a bit of investigation and calculations.

    All this just to save a buck :), I was just wondering if others had other ways of doing it….

    Happy Hunting.

    Profile photo of tomjonestomjones
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    @tomjones
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    March 17, 2003 - 4:47 am

    I just spoke to my accountant about the education expenses, and he said that technically you can’t claim unless you show they are used to bring in income. So if you don’t have an IP now then you can’t claim for them.

    But he also said that you could factor them into the costs of buying your first property….

    As for the other expenses, I’m not too sure, although it makes sense that you can claim the due diligence as part of the costs of purchasing a property.

    Thanks.
    Paul

    Profile photo of tomjonestomjones
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    @tomjones
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    March 17, 2003 - 3:48 am

    Hi,

    I was under the impression (although my accountant hasn’t confirmed this), that all education expenses are tax deductable as long as you purchase at least one IP before the end of financial year in which you occur the expense.

    Does anyone have any definates on this? Steve (being the great accountant you are), any ideas?

    Thanks.
    Paul

    Profile photo of tomjonestomjones
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    @tomjones
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    March 17, 2003 - 12:55 am

    Thanks AD, but I was more looking at the situation where you come across a property and you need to quickly decide whether or not to spend time/money looking at it as a possible IP. (i.e. How do you determine Rental levels for this area, how do you determine Approximate Market Value for the area, etc).

    I understand the usage of a Home Price Guide report once you have decided to pursue a property, but it is the actual initial step that I was asking about.

    Thanks.
    Paul

    Profile photo of tomjonestomjones
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    @tomjones
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    March 14, 2003 - 1:42 am

    The B,

    Everyone whom I get advice from (i.e. established investors) always state that my first offer should always be at 20% less than market value.

    What is your general feeling toward that?

    Obviously I am concerned with alienating the Real Estate Agents, i.e. they think I’m a low baller :)… But with most of the properties I can find, they only become +ve Cash Flow at about 20% less.

    So my question really is: Is a 20% less than market value a low ball offer?

    Thanks,
    Paul

    Profile photo of tomjonestomjones
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    @tomjones
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    March 12, 2003 - 3:28 pm

    Hiya,

    I’ve recently spent over $1k researching this topic with some senior taxation accountants at BDO in Adelaide. To be honest, it was money wasted because there was nothing that I learn’t which I didn’t really know (except that it takes an accountant $500 and three days to write up a simple transcript of a 1 hour meeting).

    Anyway, I want to understand from the asset protection point of view, that a trust structure could be useful. Except when discussing it with the accountants, they still informed me that the trustee is liable for the trust itself. This raises a rather large issue with me, in terms of, how do I really get protection by using a trust, where the trustee must be someone I trust (or myself – that doesn’t make sense), or a company which has a directory whom I must trust. Remember, a trustee is as liable for a claim on a trust as you would be if the IPs where under your name…

    From what I was able to gather, having a trust means that you really being reliant upon another person in some way.

    As for myself, I still haven’t decided between an actual trust, or under my own name? I mean, how can I claim a tax deduction for Steve’s Seminar when my trust is the owner of the IPs? [:D]

    Which types of structures do other people like???

    Steve, could you maybe shed some light on the possible structures?

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