Forum Replies Created
Tjal,
No doubt you need to probably target better than ever where and what you buy. Everyone who has had property in the last 4-5 years has made money. You will buy property however for the longer term.Whilst some properties are going to reduce in price, most others growth will simply return to long run averages. That still is growth!!
Is property, is good!!
James
Richard,
Is then the starting date, the contract date when you buy or when you physically move in?james
Have a read of the book ‘The Big Shift’ by Bernard Salt. That will give you some insight into the coastal phenomenon going on in Australia.
James
Dreamergirl,
Some quick sums which I hope may help.
1. Set-up line of credit (LOC) on your existing PPOR. Therefore this takes you to $240k (80% of $300k), which is $100k LOC facility.
2. Purchase PPOR with $15k savings plus $57k from LOC.
3. Change your payment to interest only (I/O) on your current PPOR mortgage, which will now be IP. Borrowings will be $197k at 6.42% (current Westpac rate that I have for my IP’s), which means repayments of $1,053.95 per month.
4. Rental as you have said is $300 per week, (including 7% rental commission), this means $1209.00 per month.
5. Note that interest on $140k is tax deductible, therefore, you will be making income (for the purposes of your tax return). That is $1209 – 749 = $460 per calendar month (not including other costs)
6. Effectively you are left with a mortgage on your new PPOR of $288k, with $460 per month from your new IP to fund the mortgage.
7. Have your rental paid into the loan account for your PPOR and have the automatic payment for the new IP when it falls due. (Reduces monthly interest bill on your PPOR – which non-tax deductible)
8. Make sure you get a quantity surveyor to go through your new IP and claim any depreciation, to reduce your ‘paper profit’ for tax purposes.
Please be aware that you can keep your new ‘IP’ for 6 years and sell it without incurring capital gains tax.
Hope this provides some food for thought.
Make sure you go and see a mortgage broker though and get their advice.
James
I now think its time to put the respective weapons down and call this subject over. There are some interesting PROPERTY subjects we need your respective knowledge on.
James
Ever thought if Jesus got into reno jobs (given his carpentry skills), that the course of the Christian faith would have been different!!
(Just dumbing it down a bit – sorry)James
Russ,
If you can increase the valuation by $20k, you will only be able to up to 90% (with LMI) and 80% (with no LMI) of that as equity for another investment property.
I recommend you do a serach on valuations in this forum and you will see many comments on this matter.
James
Thanks for all your responses.
Interesting to note that on another forum, I did not get one response to this question. Thanks again.
James
Julian,
I am not totally sure of the specific cost. I have seen costs on the net of between $500-$700.I will be going to see Gatherum Goss accountants to discuss these issues once I have read a little more about them.
James
I think you must mean stamp duty exemption for first home buyers in Queensland.
Not sure of the specific date as I think QLD government trying to put it into place before-hand. Initially it was due for May 1, 2004.
http://www.osr.qld.gov.au/taxes/duties/concession_firsthome.htm
You need to take occupation of the property within 12 months from date of transfer and you cannot sell the land within 1 year of occupation as a home.
James
Tro,
1. Are you claiming depreciation benefits on the property? If not, this may assist in returning the property to cash flow positive.
2. You mention repairs – not sure whether they would fall under repairs (for wear and tear and deductible) or of a capital nature for tax purposes. If you keep, a tax depreciation schedule would take this capital works deduction into account or if selling, reduce cost base for CGT.
3. You mean the property is now cash flow negative. Nothing intrinsically wrong with that. Do you need to sell? CG only paid when you sell? Is there anything intrinsically wrong about the property ie location, type etc
4. If you do need/want to sell – acquisiton/disposal costs may reduce cost base for CGT purposes
In Melbourne, it is fair to say the new auction rules (volunatrily implemented by most agents from last year), but into force from Feb 1, in conjunction with two interest rate rises has ‘spooked’ a lot of people.
However, in the areas that I had been looking, the effect is that is now takes a little more time to sell, to get the price you are looking for. I haven’t seen any great decreases for comparable properties.
James
Steve,
Check this link out – http://www.pmigroup.com.au/calculator.asp
Usually, as a rule of thumb, 1.9% of the loan is the mortgage insurance fee.
James
Steve,
I have seen 15 (I think St George), but I am sure there are many others.James
Interface,
I don’t know the area, but one of the factors in determining value is rental return. Whilst larger homes generally have lower yields, if the average rent for the property is $250, then even at $360k to $380, that is a very low yield.Look at comparable sales before putting in an offer.
James
Mika,
A lot of debate about negative gearing but ultimately, it is just a tool, to assist you in buying and holding a property.
Get the right property and if negative gearing can be used to assist, that’s a bonus.
James
I have just bought in QLD and I have subject to finance approval at the purchasers discretion.
James
Elves,
In the other example and wording from that ruling, where private arranagements between the parties to fund the purchase are not affected for income tax purposes. Therfore if you purchase an IP as joint tenants, the ownership is 50-50. If one person brings 80% of the funding, the ARO does not recognise these private arrangements. Therefore, net profit and losses from the property should be shared in the same proportion as their ownership interests.
If one decides to purchase, with legal interests as 99/1, than whilst it is designed to minimise tax, I cannot see how the ATO can stop it, without saying that purchasing as tenants in common, with a split of greater than 90/10 one way is now illegal.
However, there may be others who have delat with the pointy edge of the ATO sword on this matter, who maybe able to share their experiences??
James
Chan I think Westan was saying if you are on a salary of $100k, a capital gain, in this instance, would effectively make your assessable income $200k. The additional $100k, would be obvioulsy taxed at the marginal rate of 47%. Therefore the $47k figure.
James
