All Topics / Help Needed! / Can reno’s make money or does stamp duty negate any gains?

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  • Profile photo of leebee1leebee1
    Member
    @leebee1
    Join Date: 2006
    Post Count: 31

    oh, and for the outside we just got some cheap plants and stones and transformed the dirt into a tropical garden = looks great!

    Profile photo of crashycrashy
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    @crashy
    Join Date: 2003
    Post Count: 736

    why do you need to "upgrade" in order to not pay? more B.S

    "I think a better way to do it is to hold the houses as part of your superannuation"
    "But you can never get out of any tax,  All you can do is play around with the timing."

    yet more armchair expert comments from Scamp I mean hbbehrendorff. again all B.S

    if its ok with you, we will take advice from those WITH experience. 

    Its usually impractical to hold because you have too much equity tied up, and you need all your cash free to pay for the next deposit & reno. Even if you revalue, the bank will ask for 20% of the increased equity to maintain your LVR. eg:
     
    buy – 250,000
    reno – 50,000
    revalue – 400,000

    Initial capital required = 50k deposit + 50k reno.
    your equity was originally 50k (20%). to maintain your LVR, the bank will ask for 80k (20% of 400k) deposit. that means that although you made a profit of 100k, the bank will only let you have 70k more. This means you have 50k cash for another deposit but only 20k left for a reno. Then you have nothing to live on or make repayments, so in reality you have nothing for a reno, so it cant be done. you MUST sell.

    Profile photo of hbbehrendorffhbbehrendorff
    Member
    @hbbehrendorff
    Join Date: 2006
    Post Count: 293
    crashy wrote:

    why do you need to "upgrade" in order to not pay? more B.S

    "I think a better way to do it is to hold the houses as part of your superannuation"
    "But you can never get out of any tax,  All you can do is play around with the timing."

    yet more armchair expert comments from Scamp I mean hbbehrendorff. again all B.S

    if its ok with you, we will take advice from those WITH experience. 

    Its usually impractical to hold because you have too much equity tied up, and you need all your cash free to pay for the next deposit & reno. Even if you revalue, the bank will ask for 20% of the increased equity to maintain your LVR. eg:
     
    buy – 250,000
    reno – 50,000
    revalue – 400,000

    Initial capital required = 50k deposit + 50k reno.
    your equity was originally 50k (20%). to maintain your LVR, the bank will ask for 80k (20% of 400k) deposit. that means that although you made a profit of 100k, the bank will only let you have 70k more. This means you have 50k cash for another deposit but only 20k left for a reno. Then you have nothing to live on or make repayments, so in reality you have nothing for a reno, so it cant be done. you MUST sell.

    Are you feeling alright ?  don't you already have enough prozac in your water supply ?  Maybe you missed the footy ?

    I would not have any clue as to what im talking about because I have not had any experience with this matter dozens of times before,  Unlike people who buy a house and call themselves multi billionare dollar super property investors

    The facts are your only exempt from CGT on your own personal place of residence.

    Sure you can make a profit from doing it up and selling it,  But if you go and use that profit to buy yourself a brand new FPV then your not exempt anymore.

    When you sell your PPR you have to spend it back into another PRR.

    Profile photo of bardonbardon
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    @bardon
    Join Date: 2004
    Post Count: 557
    quickchick wrote:
    Needing DA from council, I presume, Bardon.
    What is the minimum height to build under? Or will it vary from council to council?

    quickchick

    Yes you need coucil approval but I dont think thst is is a risk.

    I beleiveyou need a minimum ceiling height of 2.4m.

    Profile photo of quickchickquickchick
    Member
    @quickchick
    Join Date: 2004
    Post Count: 168

    Thanks Bardon. Useful info.

    As distinct from our other  contributor who should stick with "fighting the NWO".
    Your profit from your PPOR is NOT taxable. No matter how much you make, or what you spend the money on. Whether a car, world trip or deposit on another property, (investment or PPOR.)
    I've been there and done that so I DO know.

    However, if you are creating an ongoing income stream by doing this multiple times it will be considered as a business model by the tax dept. ie they will consider you a "property trader".
    At which point, you need to be talking to a good accountant, and using a structure (eg)  such as a trust operated by a company.
    NB Find out from your accountant…. I am not a financial advisor or accountant! But have had this discussion with our accountant, as it pertains to our own situation which may differ to others. But don't take the word of those who assume they know what they actually don't!

    And if you've done a few and are making good money, by using this live-in/reno model, then paying tax is not a bad thing. 

    quickchick

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