Hi duckster,

I have a similar question. My situation is:

– Have a PPR (let's call it P1) almost paid off
– Have a IP (let's call it P2), negative geared before

I moved into my P2 from P1 in the end of last year, so now P2 becomes my PPR. I haven't done the FY09-10 tax return yet, so this has not been triggered in my tax return with ATO.

P1 has been rented out privatly, I manage it myself since I moved out. I wish to withdraw some some equity out of P1 in the future, maybe to buy a P3 or maybe lend/gift the money to my family member.

My questions is, if I withdraw the equity in P1 and gift it to my family member, does ATO have any rules about it? After I withdraw the equity, P1 will be neutral geared, will that attract audit from ATO? Will I need to document it somehow to show them where my equity goes to?

And anything else I should watch out that I shouldn't do?

Thanks a lot for your help!

u can transfer profit from another trust to offset the loss, so effectively u don't pay tax on the profit from the other trust.
if you don't have another trust that making profit, then loss will be locked in this trust with no benefit.

u may want to consider the asset protection that the trust provide too. also, u may want to set up a proper JV agreement with the other couple to avoid any legal complication.

also note that the properties in the trust have no exemption of land tax. and make sure you do tax return for the trust every FY too.

Thanks Terry, also you mentioned that it is not always possible to transfer the profit between trust, why is it?
If i have trust no.1 that's holding a negative  geared property, effectively making a loss and trust no.2 buying, renovate and selling for profit, can I make trust no.1 beneficiary of trust no.2 then distribute the profit to trust no.1 to offset the loss?

If the two trust have the same company trustee, will that be possible?

thanks a lot!

Hi Terry,

Can an overseas resident be beneficiary of a discritionary trust in Australia? Obviously they have to pay tax in their home  country, but will they be required to pay tax in Australia?

cheers.

viv

HI all, the report is in soft copy pdf format, it is encripted so that u will need password to open up the report.

 it includes overall NSW market trend analysis and a hotspot map, basically a NSW map color coded according to growth rate. then it has couple of paragraphs summarizing what they believe drive the market in the past 12 months or so. The main part of the report is the suburbs prediction, ranked by the highest future growth suburbs to the lower one. for each suburb, they provide past growth, future growth(1 year, 5 years and 8 years), current median price, current median yield.

In this report you receive 50 top growing suburbs for units and another 50 top growing suburbs for houses. The title top 100 is a bit misleading, as I thought i would get top 100 suburbs for houses and another 100 for units, which is not the case.

The report I got was published in February. I've also purchased "Top Budget Growth' report, which features the top growth suburbs in NSW which has median price lower than 400k.

Please PM me if you are interested to know more. cheers.

Hi there, i've purchased 2 residex report couple of months ago. one is Top Budget Growth in Sydney, another one is Top 100 suburbs in Sydney.
We've purchased one house in Sydney last month based on the residex report and more due diligence we did.

I think it is really helpful in terms of narrow down your due diligence research area. There are hundreds of suburbs in Sydney and to decide which area to target at can be very time consuming. I found my target suburbs within 1 day with the report in hand.

Their report is based on past numbers, and they apply statistics to predict the future, which is very scientific approach. It is useful but you still need to do your own due diligence on top of the report to maximize your return.

They provide both units and houses prediction. I only need the houses part, so am thinking of sharing the report with someone to split the cost. Please feel free to contact me if you r interested.

Hi Jess,

Thanks a lot for the thorough feedback. I also have a question about the financial feasibility software.
How does it look like? And how do you use it? Is it just like a excel spreadsheet that helps you to work out the holding cost, renovation cost (with predetermined renovation cost of each component such as bathtub or toilet or wall in it), and selling cost to show you the end profit?
How does it help you decide the end selling value? or do you need to work it out yourself manually?
Does it also have a project management type component that helps you estimate how long the reno is gonna take and the milestones?

And for the suburb due diligence, is that all manual data collection combined with RP data?

Thanks a lot and looking forward to your reply!

Vivian

hello,
declaring the rent is completely up to you.
if you don't declare it, you just keep the cash rent to help the mortgage repayment and you still get 50% off CGT when you sell the house.
if you declare it, you can declare part of your mortgage interest now, but when you sell the house you will lose the 50% off CGT on the part you declared, because that part is investment.
so it really depends on what you want to do in the longer term.

about the inconvenience of sharing with others, everyone has different living standard. my personal experience is if you find good tenants, it's actually really nice because you become friends with each other. Actually one of my housemates lived with me for 4 years and she even moved together with me and we remain close friends now. 

it all comes down to what you value more: comfortable lifestyle or financial goal. one thing you need to consider is if you want lifestyle now, it will slow down the speed you reach financial goal. if you can reach your financial goal faster then you can have comfortable lifestyle faster too.

good luck.

I've been to their meetings. totally waste of my time.

the presenter just keep repeating the advantages of negative gearing. she said she was really happy with her 8 heavily negative geared properties, instead of paying 40% tax, she is only paying 9% tax and can live off from withdrawing equity from existing properties. when we asked what happens if the market goes down, she replied, in long term the market keep going up.

they only promotes negative gear, long term buy and hold, didn't mention anything about other strategies and had no idea about asset protection.

and the people attending the meeting seems know very very little about properties too, some of them don't even know what negative gear is……..

I won't go back to their meeting again, that's just my experience.

Agree with JacM,

I don't think the simple ROI calculation is valid for super. Firstly, It is something I can not touch for 30 years, even though it has a value today, the real return is only realised when i withdraw it, and it won't be in today's dollar. Secondly, if you withdraw early, the fees and charges are so heavy that you automatically lose half of the book value immediately. thirdly, you still have to pay tax when you start withdrawing from super, so the 'saved tax' is only deferred, not eliminated, so the saved tax should not be part of the calculation.

anyway, what i notice is that my super's annual growth is not even enough to cover the annual management fees charged.