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Depends on number of dwellings and number of bedrooms. 20-25k per dwelling in QLD. But also depends on council. No idea in WA.
Terry,
thanks for comment. Led to this link from ATO, which covers it fairly well.http://www.ato.gov.au/content/downloads/BUS00271328n73740_02_11.pdf
Depends on how good your crystal ball is – and how large your debt on PPOR is….Run some numbers
1) based on getting rent, claiming 75 % of expenses AND paying CGT on 75% of PPOR when you sell…..of course you need to predict when you will sell and how much capital gain there will be between now and then (say 4% per annum)
2) based on getting boarders to pay your expenses…..but no CGT issues.Will come down to how many expenses you can get paid, actual capital growth and amount of debt on PPOR.
Another thought – if you never sell then also have no CGT issue !! AND you can still leverage of the growth into more property. BUT dont think any lenders would think of your borders paying expenses as "income"
If it was only one room you were renting out then you could come to a "Private Agreement". Such as your flatmate pays all the expenses – such as groceries / power etc – AND does NOT pay you rent!! As soon as you recieve rent – then the tax dept will be interested (as it is income) – trade off being able to claim expenses pro-rata.
Not sure on limts as to what flatmates could pay (rates? Insurance? etc)….
Not sure, I think yes BUT once you do so then also 75% of PPOR would be subject to capital gains!!
Try this website http://www.bantacs.com.au/ Might be something like your question already asked here.For PPOR compare rent to Interest on loan + Insurance + Rates + Maintenance……If numbers are close then buying PPOR will make more sense. Still pay into offset account – INCASE this house becomes a rental later.
Fair to reasonable chance that this claim may put the builder out of business…..resulting in owners having to find the money……resulting in a rush to sell and drop in prices….
– What other building issues will subsequently arise? (unknown)
– Also how about issues with Owner Z refuses to pay?Ask for 50k for 5 years, and to cover ANY special costs (ie law suit funds etc) NOT just building issues….Until these issues are sorted then your re-sale value will be greatly impacted. Only OK if you dont want to sell….
best place to park your money is in your offset account – from your previously purchased property !! all else is second best….saving for first property is a bit tougher.
Cant help sorry, but i am curious – where exactly in NZ is it
Richard,
I have a property (In Gladstone) that i could sub-divide and build on the back. But would need to borrow to do so. Could you give us an outline of the (rough) difference between a construction loan vs normal residential loan…(criteria / int rate difference etc.)– Bad time to revalue, but i may be able to use existing equity to fund a large portion of the build….servicability wont be an issue.
Just trying to get a feel for options
If you subscribe to the thinking that capital gains on dream home over the next few years will be low – which from the general description of dream home likely location is probably the case….
.
Then
– Forget about 1st home owners grant
– rent in desired area (at such a young age, and just starting in career – who knows where job / girlfriend will take you)
– buy IPs in area forecast for captial growth (with Int only period for as long as possible)…with at worst neutral cash flow
– place all savings into offset account (DO Not pay down princpal)
– when the time is right empty all offset accounts and buy "Dream home"Why
– Interest on an IP is tax deductible.
– PPOR capital gain exemption is only useful if you actually get some capital growth !! Which may not be where your dream home is.
– To young to be certain about where you want to settle down – for ever. Also In and Out costs are high. If you end up moving, then the PPOR is either sold for very little net gain. OR kept as a sub-par investment propertyAt such a young age you have a couple of choices
1) Delay gratification and spend 15 years (or so) investing, until financially set-up. And then buy dream home – comfortably. With a huge range of life-style choices at that time.
2) Buy dream home, have kids. Face debts etc. for 20 years. Finally pay off home after 20 years, and then be in a position to begin your investing career. With by then good equity in your home, and a good income – but no actual savings (besides home equity)
3) Try to combine options 1 and 2 above. Results will be dependant on IP value vs PPOR value.What you are trying to weigh up is
– Capital gain in area you are looking to buy….If you think it will be good then PPOR Dream home could be a good choice
– vs non-tax deductabilty of interest on PPOR
Also
Rent + Buy IP (Options and flexabilty) VS
Buy (less flexible)Just my 2 cents worth.
Of course a whole range of other personal / lifestyle factors come into play!
Find out the body corp costs and status, and also vacancy rates for the area – before jumping in to something like this. There are plenty of down town units for sale – at low prices. It might be +ve cash flow, a little. But almost no capital gain – for quite some time.
As well as sorting out the Laneway issue you also want BOTH properties (with laneway) – or NONE
If you succeed with one but not the other, or the laneway purchase is not agreed to by council then you will not have made a happy purchase. I think at some point you are going to have to show your hand – unless you can get a cast iron agreement from council that they will agree to sell the laneway to an adjacent landowner (namely you and not the previous owner!!)…good luck with the council on that!!
Others on the forum might be able to advise but i think you can fill the buyer in as Mr Smith, or nominee. TO achieve a sneaky purchase. May differ between states?
You will need an out, for both contracts. And the abiltiy to push both sellers to signing before your get out clauses expire.
Good luck, curous to hear how it goes
Cheers Wobbly
Gidday Brad,
I am also on Gold Coast so interested to hear responses to this question – not one i can answer though.4 Sighted. To whom did you apply for an SSN, and where did you do it from?
I am sure I have been told that the easiest way to get an ITIN is to wait until you file a tax return. Then check a box somewhere on the tax return form saying "I need an ITIN" and they Govt will sort it out for you.
Sorry i cant give you a reference – but believe it to be correct.A more useful resource, if any one knows of it, would be an idea of rental vacancies. By zipcode…any ideas on this would be appreciated.
IF you do persist with renting to a relative then i would strongly advise that you approach the ATO prior for a PBR (Private Binding Ruling).
Just tell them what you intend doing, and the source for determining market rents. With luck they would agree with you and the auditor would just need to enforce annual rent reviews to bring the rent in line with market rates on a regular basis.
– If they disagree then you know not to rent to your relatives.
– I suspect they would enforce the "At arms length guide", but you never know unless you ask.
– an auditor / accountant on the forum might be able to tell us whether as part of the audit of the SMSF whether the tenants names are required to be checked in order to confirm the SMSF is acting as it should be.I'd also love to find a good property manager in Gladstone….the big name one i am using is just not performing.
Trying to get any kind of maintenance down is proving impossible.
Fantastic,thank you i will look at this after i have set up my Aust Trust !!
