Forum Replies Created
- Terryw wrote:1) paying IO on your main residence reduces your monthly repayments which enables you to hold more investments. If the investments are growing faster than the interest being outlayed than this can help your overall position.
I agree it is best to pay off non-deductible debt first is a good principle. But paying less means owning more.
If I have plans to upgrade my PPOR in a few years time from my current apartment to a house, and turning the apartment to an IP, would that then make more sense to have the PPOR loan as a IO?
Terryw wrote:2) THis needs careful planning – see another recent thread on this topice. THe theory is you borrow to pay for investment expenses and free up more cash to pay into your non-deductibe debt (but see 1) – or into your 100% offset account. Overall the interest should be the same, but you are increasing your tax deductible interest.Thanks, yes, I saw the other thread. Just wondering if LOC is a common approach for property investors?
Terryw wrote:3). This would not work now in a way that would benefit you. To be able to claim the interest the unit holder would need to get all of the rent and the capital gain. See ATO TD 2009/17. A lot of people have deeds set up which are not commerically viable and the ATO will deny the interest deductions. Lots of anguish in years to come. You would also have problems borrowing for this these days.Thanks for the update. I think that book was published a few years back.
Thanks for the response, awsydney.
1) Yes, I was under the same impression that paying off PPOR asap is good until I read the book, and since it was written by accountants, I thought I might have missed something.
3) Just to clarify that the unit trust mentioned in the book is basically setting up a unit trust to own the investment properties. Not sure if I'm using the right terms, but I'll then be the trustee & beneficiary of the trust. According to the book, I could structure the unit trust such that the capital units go to the lowest income earner, so that in the event any of the properties in the trust is sold, the CCGT is taxed according to the lowest income earner tax bracket. Similarly, if the properties in the trust is negatively geared, then the highest income earner would receive the income (which will be negative) units.
Hi Mike,
Many thanks for the report. It's really helpful.
Cheers
Thanks for the feedback, wisepearl. I would think the same applies here in NSW as well.
We just bought our first home 6 months ago, so great to hear that you're thinking of buying a property.
You can ask the agent about the quarterly strata, council and water rates. Sometimes they maybe able to tell you how much is left in the admin and sinking funds, but more often, you'll need to get a strata search done through a conveyancer or property lawyer to find out more about the strata. The strata check can also reveal the by-laws and any major issues they have been brought up. However, I wouldn't recommend that you do a strata search for every property that you inspect as it cost a few hundred dollars to do so. I only did mine when I've got my offer accepted.
Past sales reports from Residex or RP Data, like what Richard mentioned, is really useful. You can see what your neighbours paid for their units if there were sales in the last 12-24 months.
All the best.
I'm about to call some valuers, but I'm just confused whether valuers also provide depreciation schedule? I was told that I would need to get a quantity surveyor to do that. Is that right?
In that case, does the valuer only provide a valuation for the property, e.g. $400k for the unit and nothing else?
BTW, how much would a typical valuation cost and how do I know if a valuer is certified for the job?
Thanks for all the feedback. I was always under the mistaken impression that the 6 years CGT exemption rule applies, but I guess in my case, I would still have to pay CGT if the rent is considered as an income.
What if the one of the room becomes vacant at any one point, can I still claim 2/3 of the expenses?
Thanks, Scott.
Thanks for the advice, Scott.
I guess my question wasn't worded correctly. Basically, I'm looking through the strata accounts as the strata is in the deficit. Looking at the start of the strata, I noticed that the strata commenced on 1st Jan 07, but the income from the strata levies only started a couple of months later.
The difference in the strata commencement date and the levy commencement could be due to owners already paid their quarterly levies to the builder prior to the start of the strata.
The problem then arised when the strata has to pay for costs incurred from 1st Jan 07 to 28 Feb 07, although the income for the strata is for periods starting from 1 Mar 07. This partly resulted in a deficit in the current budget. It seems to me that either the costs incurred from 1st Jan 07 to 28 Feb 07 be billed back to the builder or that the builder should pay the 2 months worth of levies to cover for that period.
Any thoughts on this? I will be asking the strata manager about this as well, but wanted other opinions as we didn't think the manager is doing a good job so far.
Thanks.
The builder owns a number of units and some others are owner occupied. The builder still owns some of the units when the levies kicked in.
A few months prior to start of the strata, the builder already sold some of the units. I understand that the strata scheme only needs to start once a certain percentage of the units are sold.
Yeah, we've listed a number of questions for the strata manager as we found a number of items that seemed strange.
For example, we have been charged a monthly line rental for a phone, although we don't have a dedicated strata phone on the premise nor do I think the strata manager has a dedicated line just for our block. Is that legal?
I'm actually helping the strata committee to understand the statements sent by the strata manager. We're currently trying to get the detailed financial records from the strata manager, so I thought I get some independent views as well to see if the manager is doing her job.
Thanks for the explanation, Terryw.
Hi all,
I was supposed to have my settlement date brought forward but my solicitor informed me that the vendor's bank isn't ready for settlement. Is it possible for a vendor's bank not to be ready for settlement? Wouldn't the vendor prefer to receive money earlier?
Thanks.
Thanks again for your advice, Terryw. You've been very helpful.
Thank you for all the replies, they are very useful information.
Ben, how could I make an acknowledgement of debt? Is it just an IOU note that I write and keep somewhere?
Thanks for the advice, Linar. What about the case where I was to pass away? Is the will the only way to make sure things are in order?
Thanks for the response, Terryw.
If anything should happen to me or the relationship, I would imagine it would be stressful time for my fiancee, so I wouldn't want her to spend time lodging a caveat or going through the money trail. Is there anything I can do on my end to ensure everything is arranged nicely right from the start? Should I write a will or perhaps make sure she would receive enough money from my insurance should anything happen to me, etc?
