HI All!!
Great site.
I am in my final semester of uni and am currently in the midst of getting a job. Giong well so far:)
Just wanted to know a few things. I really want to get into the market as i feel the longer i wait – the more time i waste.
UPon looking at the amount of interest you pay over even a ten year period is so scary. IT puts me off. Even if you were to get 100k increase in value on ur house… after 10 years (on 300k) you have already paid 155k interest!!!
What if i purchased my first little apartment clsoe to the city somewhere. and sold it after 2 – 3 years (depending on market). Pay the loan off i would have only spent about 30k on intereest minimum.
Surely there are ways u can sell your first home quickly to reape the profit give the government what they want (lots of money) and keep giong.
If only it was simple – what do you think?
CheersJoel
Joel, You need to look at what you are trying to achieve. It sounds like you want to live in the house you are planning on buying. In this case you are right that the interest paid is money lost. The upside is that this would be a`PPOR (Primary place of residence) which allows an exemption from capital gains tax if you managed to acheive a capital gain. What you also need to compare is what it costs to rent a place and the fact that you do not experience a gain in capital as you do not own it.
If you are referring to an investment property you can claim interest costs against income if the nettincome is negative. Repair costs and improvements are claimable in a negative gearing situation. If the property was positive or cash flow neutral if is costing you nothing or making you money. I suggest you read some books on property investing to get an understanding of the capital gains tax implications and tax deductibility and the two methods of negative or positive gearing..
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
hey duckster,
thanks heaps for your reply. I do plan on doing heavy research indeed. some good advise none the less.
cheers
Joel
G’day Joel,
As a young guy myself, I can see that ithere are alot of decisions, to make! But I can assure you once the dust has settled and you have your own pad, you will be well on your way, and it is not as scary.
read as much as you can, you can make alot of money at the purchase, not the fial sale, your knowledge is the keythe longer you wait, the more out of reach it gets,
do your sums, and only spend what you feel comfortable with,
Keep reading this website!! I hope I helped alittle,
J
JASE
Your saying your property goes up 100K. and you pay 155K in interest. You feel your losing money. Well if its our PPOR your not gaining anything. Your paying an extra 55K.
But if you make it an IP, then you would get weekly rent. And that would probably slash that interest bill down to only 20% of what it is now. And if you are still putting money into the situation you can claim its a negative gearing and in some circumstances using depreciation you can come out on top and have a positive income from the place. So at the end of the day(or ten years), you are not paying the 155K interest, you are not losing 55K, but possibly gaining 100K(or even more).This is all based on the fact that you are making this property an investment one.
If you can live at home a few more years. I would suggest this, buy 2 IPs before your PPOR. Though consult a professional financial planner before you make any decisions.
Good luck, Christopher.
be aware that if you were to do what DraconisV5 stated
if you can live at home a few more years. I would suggest this, buy 2 IPs before your PPOR.
You will have to weigh up missing out on the first home buyers grant into your figures.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
yeh ill def consult an advisor… but nearly 1/4 through that book by steve mcknight. such a good read.
I will weigh up weather or not its worth losing the grant. Depends hwo much it costs to live at home less over that period. Im pretty good with excel so i should b ok with the figures hopefully.
Cheers
Joel
Hi Joel,
It sounds like you are planing to live in the place you buy. It also sounds like you have looked at the interest you would be paying and broke out in a cold sweat [biggrin], dont worry, that probably what we all did the first time we looked at our first purchase. What helped us at the time to overcome this mindset was to take into consideration what you would be comfortable paying in rent. Lets say you would be happy to pay $200 a week rent, or you were happy to share a house and pay $150 each. Yes, it can be argued that interest is dead money, but then so to can rent money.
At the end of the day, only you know the figures and you need to be comfortable with the repayments. The other piece of advice, if I can offer it, is remember, it is your FIRST place, not your ONLY place. I have seen friends buy their first place with romantic notions of being there forever, and getting caught up in the McMansion brigade and now getting into trouble making repayments. Property investment is not about keeping up with the Jones but being smart.
Goodluck with it all, and dont be afraid to test the waters.
All the best
Tammy
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