I'm trying to grasp AU property.
Points for clarification:
Interest payments on mortgages are not deductible in AU?
Many US states have trust deeds (or their equivalent) whereby it's conceptually possible to get property through the acquisition of such deeds, often by paying outstanding liens … AU?
Recently, adjustable rate mortgages (ARMS) have been popular where short term (ex. 3 to 5 years) low interest rates (ex. 1% to 3%) were available as a means of allowing people without other means to get into property … AU?
The concept of "going stated". Persons with sufficiently strong credit scores could essentially get a loan on their stated financial situation without much need for supporting documentation. Sometimes referred to as a "no doc" or "low doc" loan… AU?
Foreclosure market. In theory, the supply of foreclosures is sufficiently high that houses (usually at auction) can be had at pennies on the dollar… AU?
In AU, same RE agent represents both buyer and seller?
A particular popular RE investment strategy in AU is negative gearing? Though poking around here on this site, that strategy seems to be dismissed https://www.propertyinvesting.com/strategies/negativegearing.html
Other major points of difference?
Hi there
will try and answer some of your queriesInterest on a mortgage will be deductible if the property is an investment property. It is not possible to deduct interest on a property which is owner occupied – though if some one has a home office in that property – a proportion might be deductible.
As to acquistion of property through deeds – that is a system known as old system title. We have a system known as Torrens title which a buyer gets unchallengable title once registered upon the title. It is not necessary to prove a chain of title to a property to become its owner.
There have been new developments in finance here – which the brokers can probably give you more details on – some are cashflow mortgages which have the lower interest rates at the outset.
There are definately low doc and no doc loans available which once again a broker can advise you on. You will pay a higher interest rate for the privilege.
Foreclosures – most mortgagees will have a reserve price to achieve so I don't believe that the property will go for pennies. It may certainly go for under the market price for similar properties.
The real estate agent will normally be acting for a seller and doesn't act for the buyer. There are dedicated buyers agents who are real estate agents who act for a buyer.
Negative gearing is definately touted for higher income earners but from a serviceability aspect a positive cashflow or positively geared property is preferable.
thanks
Thank you for the response.
Torrens title… I have now googled this and read up on it in Wikipedia. Interesting concept. So in short, once a name is attached to a property with the appropriate government body, then by virtue of that registration the person is deemed to be the owner (or at least partial owner). To a suspicious mind, that sounds kind of scary. (i.e. I'm the owner because this book says so and you can't refute that. Regardless on whatever shenanigans may have occurred to wind up with my name in the book, once recorded, I am the owner.) But it is a clean system.
I'll google "cash flow mortgage" and also hope to hear from some of the brokers who frequent this forum.
I'll also look to hear from the brokers on the subject of "no doc" loan. The ease of the US situation (at least in California where I'm from) was that I was able to get a "no doc" loan AND the low ARM loan. Because I had the score, I was approved for $750K at 1.5% for 3 years on the strength of my credit score alone. Now of course the bad part of the story is that the California market is/was so over heated that even then I couldn't find a deal that met my investment criteria. Every deal was upside down. I was looking to buy small apartment buildings where the rents for fully capitalizing the mortgages — didn't find any. I'm now in Sydney and am investigating similar scenarios.
Thank you again
sjordan wrote:I'm trying to grasp AU property.
Holy Crap!Please, please, please tell me it's not you…
Quote:Serin handed the haterz even more ammunition this week by disclosing that he had left his wife, Galina, behind in West Sacramento, Calif., with only about $300 in the bank and had set up operations in an undisclosed location in Australia.http://news.zdnet.com/2100-9588_22-6190628.html
Quote:June 11th, 2007 7:44 pm
Australia and Idiot Haterz
In AustraliaYes, I’m here in Australia. The rumors are true. But a lot of people are slanting the story to make it seem worse than it is. These people are spreading crap about me to ruin anything left of my name and ruining the reputation of everybody who is associated with me.
No, I did not leave my wife penny-less and run away to Australia! It’s amazing how some people are trying so hard to sabotage my efforts to make an honest buck through my story/publicity. More on that below.
For now… why in the WORLD am I in Australia?
I have been thinking of getting away and doing some massive action in business for a while. I wanted to focus on getting the foreclosure book done and get a lot of other stuff done in a distraction-free environment.
http://iamfacingforeclosure.com/241/austra…nd-idiot-haterz
Nope, not me. I am from Los Angeles, and never lived in Sacramento.
And believe it or not, I don't know that guy… surprising as it may seem, I don't know everyone in the US.
Phew! No offence intended. It was just the combination of…
* Californian
* Articulate
* Recent arrival
* Living (visiting?) in Sydney
* Familiarity with credit scoring, trust deeds, “going stated”, ARMS, foreclosure, US RE in general
* Interested in “no doc”
* Mis-spelling “liens” as “leans”
… that made my Casey-rader misfire I’m afraid.Apologies, and welcome to Aus.
F. [cowboy2]
No worries. And thanks for pointing out the spelling error (fixed).
@foundation: now that we've clarified things maybe you can help educate me on the nuances of AU real estate.
You clearly seem familiar with many of the US concepts. Maybe you could provide a point by point comparison of the items I raised and then perhaps add others.
Hey,
he doesn't say "like" and "you know what?" and "omigod" every second word – can't be from L.A.
Although… he DOES have a Starbucks in his hand in the photo; maybe he is legit.
All he needs is the cell phone in his ear and the token miniature dog hangin' out the driver's side window of the Hummer or Beamer or Merc to complete the package.
Just kidding.
Whereabouts in L.A are you from, Jordan? Anywhere near the La Brea Tar Pits in Mid Wilshire?Point of difference; no property tax on your house in Aus – just Council rates each year.
Like; totally awesome.
@L.A. Aussie Nope, not from near La Brea. Though I did work on Wilshire Blvd. once. I am from Long Beach.
"No property tax"?
Everything I learn here I Google and try to gain expanded insight. According to the Real Estate Institute of Australia:
"Currently, Australia ranks the fifth highest nation in OECD countries in respect of its reliance on property taxes. Governments in Australia now collect nearly as much from property taxes as they collect from motor vehicles, general payroll taxes, and gambling taxes combined."
While I don't doubt what you wrote LA Aussie, perhaps you can clarify what seems like a discrepancy?
Thanks for the rates tip. This brings up another issue. I still don't quite understand Councils. I'd always assumed they were like Districts in the US or possibly Counties. But while I have heard of County taxes, I have not heard of County approval to paint your house pink (for example), which I understand can be the case in AU?
Though it's not always the case, in the US, the attitude is "I own the house, I can paint it any damn color I want". The caveat being agreements to the contrary; for example, condo associations.
HI there
It may be the property taxes referred to are the stamp duty payable to the state government (which is levied on the contract or the transfer of land – depending upon which state you are in) and also land tax (which is levied at various thresholds depending upon the entity purchasing the property – depending upon which state you are in).
thanks
That's true what raddles says; the property tax I was referring to was the yearly tax that homeowners are required to pay in the U.S. it's around 1.25% of the property value apparently.
In Aus we don't have that.Hello sjordan
I don't know which state you are in but here is a link with the addresses of all the state revenue offices.
You might like to read about stamp duty and land tax. Please note that your home (PPOR = primary place of residence) is land tax excempt.http://www.ato.gov.au/corporate/content.asp?doc=/content/8792.htm
This page is on the Aust. tax office site which is definately a good source of information.
These are two reasons why the RIA (justly) complains about the taxes on property.
The other two are GST ( goods and services tax. I think like your VAT?)
and CGT (capital gains tax) which, although not land/property specific, certainly effect the price of properties. You can read about them on the ATO siteHowever, council rates are reasonable and are used to pay for things like parks and facilities within parks, infrastructure repairs, drainage repairs and improvements, rubbish collection etc.
Hope this helps
Elka
Holy Crap!
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