Forum Replies Created
Dan42,
regarding – house prices would not be allowed to drop 40%.
Obviously you mean in Australia? Ask an American about house values and reserve bank saving them..Whilst I take your point that house prices have not crashed as predicted…lets just wait a bit longer and see if the economies around the world continues to improve once the governments run out of money..
TheBish,
Get used to it… lots more to come….goodie.Another month – another 0.25% rate rise……
Interest rate rises send house prices into reverse
Author: Chris Vedelago
Date: November 24, 2009
Publication: Sydney Morning Herald (subscribe)Get ready for a surprise. Despite the appearance of a market on fire, new figures from Residex show that property prices may have lost ground for the first time in six months.
cmason,
If you buy a house for $300,000
You pay stamp duty say $15,000
You pay solicitor fee say $1000
You pay inspection fees for structure and pest say $500You cannot claim the cost of above on tax, but you can claim total $316500 as your cost base for CGT when you sell.
But if you do 2 1/2% depreciation on building cost over 10years say $15,000, then your cost base is reduced when you sell down to $301500.
How's that!
Katy,
Yes. There has been rummers of it being the sellers responsibiliy some time in the future.
The sellers doesn't need to fix a problem, as you say, its then up for negotiation on price if you find a problem or they just say " too bad take it or leave it" and you walk away, but have to pay the solicitor and inspection fees. No tax claim sorry. It's not fair, but that's why you take a chance when you try to buy a house in Australia.
If you buy then you can claim the costs of inspections, but its costs of purchase – so you cannot claim it until you sell the house and claim it as initial buying cost for CGT purposes. So don't expect to see your money soon..Good Luck
DeeBeez,
Can you afford to pay the interest if you have no tenants for a while?
The new unit will give you lots more deductions than the older unit to help with cash flow, but against this you have the one near the beach will always be worth more and give better rent for the long run gain.Haven't sat down and checked the figures as yet, but ask yourself. Is it worth it in the long run, work out your possible gains and losses, write it all down yourself, put in capital growth at different rates ( if you are lucky you should get some ).
Good Luck.
microchip78
Reply to first part – I do not know all your individual situations obviously, so do not know what bank or banks etc have your loans, but if same bank for both. Then maybe they will charge a valuation fee, a withdraw fee, a fee for breathing ( just a joke). Also you will need to keep some calatoral on house otherwise morgage insurance and all that stuff. Thats what I mean, but maybe you have that worked out.
Part 2. I understand what you are trying to do, it makes sense to do what you say. But as I said I don't like your chances of the ATO allowing it, they will say its a tax minimization attempt, its where the money goes to that determines the tax claim ability. So if you are not creating extra income than its not allowed. Otherwise everyone would do what you are planning eg You will hear the question on this forum all the time " Can I rent my house that I own ( or mostly own ) and buy another house with the money I borrow by using my existing house as calatoral – then claim the interest on the new loan" Which the answer is NO, since the money is not put into a new investment.
Part 3. Don't believe one accontant – get the tax man to make a private ruling if the accountant says its ok.Best of luck.
propertybaby,
If you are travelling – what are you going to use for expenses??If you are not working , depending on what part of the financial year you are away. Then maybe you should do nothing, you can utilize the $6000 tax free part of tax as your investment return from your rental. Just a thought.
microchip78,
If you call the tax office, they can give you a ruling.But, my guess is – you will not be up for any tax, since are only withdrawing equity, your bank may charge you a fee and may not even allow it since you will have no equity in the house, but that another subject.
Also I can understand your reasons for your thinking and yes it makes sense, but again, if you use the money to simply repay some loan with another then you have not created another assett, thus will not be able to claim a tax deduction as you have no new assett giving you extra income.But, again if you ring the tax man they can give you a ruling…. It would be interesting to find out if you can get away with it legally.
Suggest you go to this site as posted by weath4life and start worrying.
wealth4life,
I knew of this, but its good to see a 60 min post to back me up. Look out America and look out the rest of the world.Lets have a monthly update.
Interest rates up 0.25% and FHBG down. It's a start. Lets see what happens next month.
Noted everyone saying house prices are up. Yes this is correct, up since last year, but still overall flat over last 4 – 5 years taking inflation into account.
The post is related to house prices as of the end of September 09.
Dan42 – Steve Keen predicted 20% drop not 40%. But even he was surprised by the large drop in interest rates, to save the house drops. But, lets see how we go from here, I know lots predict massive price rises over next few years ( if it happens then I will be happy and make lots of money ). I posted this not wanting it to come true, but this is what I think will happen.
ps try this site for another view , it has very interesting reading.
http://www.moneymorning.com.au/20091026/the-smoking-gun-behind-the-property-bubble.html#more-2380Qlds007
Next they will have 105% loans freely available again and we will get back to where we started again and then have another crash in 10 years.Ksana
You can claim to borrowing cost over 5 years eg bank fees
But you have to claim your stamp duty and conveyancing fees when you sell.But then again I'm too lazy to talk about it…..
Perhaps I should have added a question mark ?? after the statement.
This just posted.
Just like a giant ponzi scheme, people have paid to join and will only realise profits when the next generation pays even more to jump on board.
The problem that Mr Stevens is warning us about is that one day, perhaps not too far away, the next generation won't have enough money to buy their tickets.
The only outcomes in that event are young people staying at home until they inherit it, homelessness surging or house prices falling sharply when people can't afford their mortgage payments anymore, or most likely a combination of all three.
Either way, without action to increase supply and moderate further land price rises, the real estate gravy train is destined to derail in Australia, just as it did in the UK and US.
As Mr Stevens himself said, "the prominence of household demand in driving the expansion from the mid 1990s to the mid 2000s should not be expected to recur in the next upswing" – and that inevitably must include house prices.
Andrew,
Also its tax free, saving you another 30% or so.I think the good old days of capital growth have gone years ago
Maybe if you are lucky some small capital growth, but probably capital loss is the expected thing over the last 5 years and into the future.
Good luck
frosty 1
I think the answer is NO.
You are trying to claim against a property you do not own, the only way I think you could claim it is if you were a full time investor ( or most of your money came from investing not working ) then you would be classed as an investor for tax ( probably what j900 was hinting at ).I would relate it to the argument such as you cannot claim for training courses say for a plumber if you are currently employed as an electrician.
Happy to be proven wrong.
IP Freely,
I think its a good thing for auctions. Bad for pest and building inspectors who can do one job and then copy and paste for next couple of customers, and make money for nothing.But of course if its run by the government – then it will definitely be stuffed up.
god_of_money,
Well maybe so, I hope you are right, I will make lots of money if all goes up. I think you missed your chance at blue chips in Feb 09, but if all goes as I think it might, it will be cheaper than Feb 09 next time ( in a few months ?? ).
I have been buying shares since Dec 08 and left my super in cash ( since nov 07 ), so I have an each way bet…
