If anyone could help me with advice I would greatly appreciate it.
5 weeks ago I purchased a property for $250,000. I have thrown $30,000 in Renovating it to make it more special. Whoops! I purchased in my own name. [withstupid]
I’m a newbie and didn’t know about the use of structure then. I purchased this property in a little slump and the vendors knocked 40,000 off their original asking price.[thumbsupanim]
(I’m going up to the next reno kings workshop and wanted to do one first so I learn more on the day)
I hope to be able to put this home back on the market for $350,000 and make a profit. I know about the capital gains, stamp duty and legal fees (now[blush2]someone told me the US rules and I believed them) and I have done some figures but wondered if anyone else has some knowlege to help me. Should I hold for 12months or just sell. If I rent it out it would be very definatley cashflow negative. Don’t know what else I need to tell you.Regards
Rebecca2Beck.
I’m doing it. You learn faster when you do it.Well you need to work out the advantage of the 50% CGT reduction after 12 months and determine which is better for you.
If it is funds you need then you can use the equity in that property to buy the next one if you need to. No need to sell.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Rebecca,
Really you are the only one that can answer the question but there are some issues you will need to consider.
Any sale of an asset within 12 months of purchase will realise full CGT – you make $50K you will have $50K added to your gross taxable income – if you can hold on for a year and a day (at least) you’ll have $25K added to your gross taxable income.
Notwithstanding the ealrier comments you may be able to sell the property to your trust (I assume this is the ‘structure’ you are referring too), incur stamp duty and CGT but still retain the asset.
A bit hazy here about the process (and legalities and technicalities here)so additional advice and information should be sought.
While the property may be cashflow negative at the moment you may find that there may be some thinking differently strategies you can apply that will give better cashflow. Possibly the addition of an airconditioner etc – the options are really only limited by your mind.
While it may be cashflow negative this could be offset by some cashflow positive properties to assist with cashflow. This way you can retain a growing asset – that even at 5%/annum and based on your figures is going to compound from $17500 annum based on the figures provided.
My advice is to consider what you are trying to achieve in the long and short term and have an exit strategy in mind, then determine whether or not this property fits your needs.
If it does – hang on – if not, then sell – but (as a broad brushed statement)- successful property investors are long term players because of the largish entry and exit costs for traders of property.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Questions
Do you need to sell?
How confident are you of getting that price?Suggestions if keeping
Could re-value, establish LOC for future investments
Depreciation schedule from QS to maximise tax depeciation benefitsSuggestions if selling
By waiting twelve months after purchase, you reduce CGT liability by 50%.
Get comparable sales figures for your property through agents in your area. This will give you a better indication of what pice you maybe able to realiseJames
Hi Rebecca, Are you talking of the Property Masters seminar in Brisbane in May?
I will be at the seminar then, so I will see you there!
Cheers Brenda.
If you want to get out of a hole, first stop digging.
Hi Rebecca,
As a property investor for many years, I have in my experience found, that when buying a property as an investment it is always more beneficial to HOLD ONTO IT FOR AT LEAST A YEAR. Markets change, prices fluctuate, but if you can…wait things out…why put it back on the market for 350 when waiting a bit longer may get you 400 !!!
If you are determined to sell; then please consider living in it first….will save you the cost of paying Capital Gains Tax.
Cheers,
JO
This is the first question that I have posted on this forum. I would like to thank everyone for their kind replies. I went off to the house we are renovating to continue with the floor tiles and came home to see such great advice from you all.
Yes I could do with some quick cash flow. I have a mum needs somewhere to live that she can afford. She is currently living in a house that we purchased for her to live in about 7 years ago. She pays us $90 a week and its time to move her closer to public transport and/or shops. I own a business (two shops) and I am only just pulling a basic wage at the moment. It has been a bit quiet for about 8 months and it doesnt seem to matter if I am there 10 hours a day or 2. I read a book called “Renovate for Profit” along with many others and thought here’s an oportunity.
I will do more sums and check out all the information that you have all given me.
Brenda,
Yes I am going to the same workshop. I have talked my husband and another couple in to coming with me I cant wait. I’m not sure how many people are going to be their but I would love to meet you.[specool]Thanks again
Rebecca2Beck.
I’m doing it. You learn faster when you do it.
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