Hi all,
I have been renovating homes for the last 4 years and selling some and keeping some, but the CGT is crippling me.
The renovating game is almost to a stop here in Newcastle NSW and the only thing happening in the property game is new homes.
The finance to buy renovate and sell a home is easy to get, but sold within a year of purchase gets me CGT and a premium to my lender of about $3,000. to break the loan on resale. Same problem with a construction loan, low doc, 80% lend, but the same $3,000 to get out of the loan early.
Any financing suggestions please.
YesfellaHi,
Talk to a finance broker and get them to research all the banks for you and find one that has no exit fees. Even banks with slightly higher interest rates would work out better if you aviod an exit fee.
Currently we doing the same thing as you (renovating and selling within a year). We are upto house 5. I havent once paid an exit fee. We have all our loans with the national (and I am not suggesting they are the best) but because we owe over $250K with them all our loans are under a choice package – which is $375 a year. And we can sell, buy, redraw – change our loans as much as we like and we don’t pay any more set up, exit fees. Just one $375 payment a year.
It works for us. But other people I know also have good deals too at other banks.
If you don’t have the time to research it yourself – then talk to a non-bias finance broker.
I could recommend one, but he is in Brisbane.
Lisa
Lisa, pulease, can you name this non-bias broker in Brisvegas I am expat Melb boy clueless in the nether world of BrisBANE…
Much appreciated!
Sincerely, Jarrah
“ask and you shall recieve”
++CASH FLOW PROPERTY HUNTER
(Climbing & Consulting
Arboricultural Services)
0431433288“be ye angels?”,
“nay we are but MEN!”Hi Lisa,
Do you mean a “line of credit”? over a property you own.I am an early retiree, with no real income, so I am making it from my capital and renovations.
Must admit after about 15 renos in the last 2 years I am growing tired of the manual labour. Now I would like to move into new homes and have a builder build them for me.
I’m not complaining about the reno profits of about $30,000 each house, but it’s getting tiring, being constantly dirty, dusty, having to break your back when you are tired etc.Would like to hear more about your finance set up.
Thanks
Yesfella (Allan)No I don’t have a line of credit. The negative thing about the way our loans are set up is that they are all guantees for each other. But this helps us to have a tiny loan on our PPOR (which you can’t claim) and 100% loans of the IP (therefore we can claim more interest). Doing only one house at a time has made this way work for us, and selling just over a year.
The loan type is classed as the ‘choice package’ with the national. And like I said you can chop and change all house loans under that package and it doesn’t cost extra fees (though you still have stamp duty etc). Just that once a year fee.
We also are starting to get sick of the reno work involved, and have started to build new homes. Our first one is underway right now.
The finance broker we use is a friend, so I know he’s not bias (with us anyway).
Lisa
Yesfella,
I am in Newcastle and am currently looking for a knockdown for a new home in the Hamilton area. I would love to catch up and chat about your experiences to date.
Coffee or a beer – my shout.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
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.
hey simon im keen 4 a beer if your shoutin.Dont know whether i will be chattin much though[cigar]
Drop me an email – the Duke of Wellington is my local….
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
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.
I know an old bloke (probably only65 or so I guess) who is an ex farmer who gets builders to build new places s0 he can sell them for a living.
He is one of those careful, pedantic but clever fellows who is exceedingly careful about how he does it all.
He has enough $$$ from the sale of his farm to have 2 on the go at a time. This way he gets through about 3-4 every year. One starting while another is on the market. he also is always buying blocks of land ahead of time. A land bank.
He does a hellova lot of research into what stuff the young first home buyrs want in their new homes, even down to brands of dishwashers, roof colours etc.
He also is extremely careful about location.
He has a close relationship with one builder who does ALL his houses for him, and also a RE agent who sells em all for him.
He frequents display homes and asks questions.
All his homes are sold fairly quickly to FHBuyers.
He told me he makes about 30 – 35 k on each one. He has no other income so I suppose he ends up with 100k or more a year minus the CGT.
By the way, as well as all the admin work he does he also does the landscaping and little bits to finish off the home.Sounds safe but a bit of cash required to do it.[suave2]
What do others think?Giddo
http://www.standrewsplace.com.au“I am not a religious man; but if you are out there somewhere Superman, save me now! -Homer Simpson
You need a new accountant. And a corporate entity. You should be running these through a company and claiming them as INCOME. You can do that if you own the property for 12months or less. If it’s a line ball decision the tax office will generally run with income anyway. Don’t take my word for it check it out with the ATO.
Look into it this is the usual general advice only and is not intended to be taken as financial advice. It may also not be relevant to your circumstances.
Stuart Milne
Non-Conforming Specialist
READY Mortgages
http://www.readymortgages.com.au
[email protected]
Mob: 0404 056 055Stuart, would it be better to do this type of strategy through a company or a Trust..?
Redwing
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
You must be logged in to reply to this topic. If you don't have an account, you can register here.
