Forum Replies Created
Hi PropertyGuru
I just went to ATO web site then the legal database and searched for ID 2002/177. id2002/764 pops up as well. Suggest reading both. Thin capitalisation rules (ie the top end of town off shore tax planning stuff) was inadvertantly affecting mum & dad investors so the legislation was changed and from memory I think its capped at around $200K of interest.
Regards
Tony
Originally posted by raymondo:My interest in doing this was killed by a NZ accountant who pointed out to me that I would not be able to offset taxation losses on any NZ IP against my Australian income. He quoted and forwarded a copy of ATO interpretive decision ID2002/177. This decision is quite black and white about this matter.
Raymondo, how long ago did you get the advice? – check out ATO’s ID2002/764. The world was flat and now it is round.
cheers
Tony
Hi Lisa
Drop us an email, always happy to talk property.
Regards
Tony
Sensational, why didn’t I think of that.
Tony
Thanks Cilivia & Rugbyfan
Have plugged insurance into cf model & is OK. Its a bit like getting earthquake cover in Newcastle NSW.
My wife mentioned the NZ issue however these properties are in low flow backup waters in northern NSW country.
I was thinking on the lines of how do tenants go when the water is at the doorstep? Who moves them out & back in?
Regards
Tony
Simon
Yes after sale.
Regards
Tony
Email Darren at [email protected] he is in South Perth or if you don’t “fit” his practice he can refer you.
Hope you enjoy the wild West.
Regards
Tony
Andrew
If a buy and hold, sounds like initial repairs and therefore not deductible but added to costbase.
If you are going to renovate and sell its treated as a normal tax deduction.
Cheers
Tony
Hi Everdine
You don’t steal in slow motion.
And if you miss it, don’t worry the deal of the decade does come every week.
Let us know of how you go.
Best of luck
Tony
I had a client purchase a warehouse there in 1996 after the pit closed. When he gave me his tax details I asked him for the loan contacts and told me “no the $1500 was the full purchase price….” It wasn’t rented then I wonder if it is still empty now especally as the rates were $2K p.a.
Cheers. Got to hop paying client waiting.
Tony
Risky
1)Demolish, then strata,(I quess you mean subdivide) then sell. The question is “am I carrying on an enterprise” and if yes how will I be taxed, looking at both income tax and GST? The ATO have lots of worked examples of these scenarios on the website.
2) demolish and then sell. Implying greater sale value as vacant land to a potential purchaser even after demolish costs? I have seen this happen recently and CGT wouldn’t apply as it is a private asset being presented in the best way for sale, (I think its the Lambton mine case around 1930?)
Hope this helps
Regards
TonyHi TeacherK6
Cost is deductible
We use and recommend clients to BMT
Also, no one has mentioned the sting in the tail when you come to sell the property and the tax treatment of Div 40 & Div 42 deductions.
Steve, at the Nov 03 Sydney reckons it’s recouped and not eligible for the 50% discount. Our tax advisers Hayes Knight reckon you ” apportion the sale price accordingly” what ever that means. Nowhere on the ATo site is a worked example.
Regards
TonyOriginally posted by TeacherK6:Hello,
4) is the cost a tax deduction?
5) my accountant always claims some sort of deduction on the property i have for depreciation, will the QS do a better job at finding every cent that i can claim?
Anyone recomend a QS that they are happy with???
Hi troyid
I can recommend Steves “wealth guardian”. Brings you up to speed quickly & efficiently and I’m a CPA.
Cheers
Tony
Hi thefirstbruce
We are doing 3 now
2 x 4 bd project homes subdivide and sell to neg gear investors. We will lease them to Defence housing Authority to make them more attractive to the investor. It is hard to add value with these and to a certain extent the rising market will carry us – to profits.
2nd one is a subdivision of a corner block and we have a DA & CC for a commercial downstairs and 2 x 2 bd flats up stairs. This job is more what Steve talks about finding a problem and creating a solution. the block had an old house (office) on one frontage, however it had 2 DPs ie 2 titles. With the advice of our surveyor we did a boundary realignment and then pushed through the DA, using a planner,geotech engineer,stormwater engineer and landscape artichoke (on their fee!) The old office was renovated and leased. The back block is ours pretty much for free. Building prices are crazy right now so we are selling it rather than build & sell.
Finally we have a 2 x 3bd & 1 x 4 bd development in an upmarket seaside suburb. We have used an architect, consulting engineers and surveyor trying to build a team with a demonsratable record in these types of jobs. The team is really only a tool like a hammer. They will not do it for you, you have to be the driving force especially when you have openly hostile neighbours objecting and council officers under so much pressure due to the flood of developent applications that it is easier for them to say no then yes. We always have a plan B if it doesn’t work out ie and exit plan.
Why do we do it? Firstly we like it – even with all the associated problems and secondly any profits are put back into +ve cf IP’s to get us to the retirement stage quicker.
Best of luck
Tony
PS find a mentor and a good accountant
Yack
Thanks. Will try vendor finance & if it goes south they can have it back in 5 yrs.
Regards
Crackles
The 6 yr rule you are refering to is when you are say transfered with work and rent out your PPR while renting at your new location. the PPR exemption will apply for 6 yrs.
I think what you are really asking is, “Am I carrying on an enterprise” If yes the ATO would seek to tax you on the sale(both income tax and GST,assuming the development turnover is greater than $50K). You may get away with the first townhouse, the longer you live in it the more weight to your argument – and thats all it is – an argument.
Get some advice from an accountant who has a demonstratable record in this area for both structure and tax planning
Regards
TonyHi Nayes03
Deductions prior to commitment, (I guess you mean after settlement and prior to being available for rent?) Not deductible.
Why? Prior to the start of the income stream. And it’s not even included in the cost base on the eventual sale.
You can argue w/ the ATO but thats all you will have at the end of the day- an argument.
Best to see an accountant or read the vast amount of Rental rulings and cases on the ATO website.
CheersTony
Hi Ronulas
Is $500 – $600 a year worth it? After 4 road trips in 60 days to NSW regional towns these are the same kind of numbers we come up with as well on $60K homes and one has been on the market for 3 years, (it’s in a getto).
We figure its God’s own numbers game and as Brett & Tiffany (MAP guys) put it so well at the Sydney Nov 03 seminar, “if it looks like duck, quakes like a duck then it is a duck”.
If there is an easier way please let me know, (yes we have booked the flight to NZ).
Regards
Tony
In NSW it pays to ensure the units are not classified as “low cost housing” as you may not be able to sell them for a number of years after doing the strata. Again ask the surveyor.
Cheers
