Where and How Do You Get The Money

[Doodles]

Originally Posted by MarkJ

No. Boofhead. Its because our laws are different.

The realestate in Australia is NOT taxed anually like UK and US housing and only investment real estate is once the land value is above $390,000 (NSW).

Real estate in Australia has had a steady increase over half a century. See Below.

If you want to invest, chuck some money into real estate

As soon as I hit the reply button, I was wondering how long before MarkJ comes along a sets me straight!

I'll get back to the painting I was doing now. But I still say the "bubble" is gonna burst one day.

[sctpc]

Originally Posted by Doodles

I've learned that Aussies are not very logical when it comes to real estate. They seem to feel immune to the concept of asset bubbles that the rest of the world has been experiencing.

Yes some are like that thats why I now only own I after the last down turn in the late 80s I bought 8 houses. I do change my investment structure to try and keep up.

One million dollars at 4% per annum would be about $759 per week, every week, in interest income. And you can get more than 4% on a million dollar investment, while your corporate rentals surely also have costs and vacant weeks to consider.

true but its also appreciation in realstate and I would at this stage keep a land asset for my own peace of mind, currently I live hear and have 3 kids so will for the next 10years so my plans may change who knows.

[MarkJ]

Originally Posted by Doodles

I'll get back to the painting I was doing now.

Nudes????

[VirtualVagabond]

Originally Posted by Doodles

I've learned that Aussies are not very logical when it comes to real estate. They seem to feel immune to the concept of asset bubbles that the rest of the world has been experiencing.

Hey Doodles... of course we lack logic. That's why our Aussie$ is is buying $1.06/7 US. No logic to it at all...

That lack of logic means that SCTPC hadn't thought through the need to spoonfeed the details of his thinking, so here goes...

Interest from the $1mil would be taxable, so nowhere near $759 per week to live on. (actually my calc has it as $769).
Ok, the rental income is taxable too, but only after all expences, including depreciation which is a paper write off only.
In the bank, not only is the $1mil losing value with inflation, but also eroding that $759 income in real terms.
The rent will rise with inflation... better than interest which will only ever be the going rate.
Did you see the info on the property? Big land and near town. In Aus that means solid capital growth over time, tax free, even capital gains tax free if it was his home and he hasn't rented it out for more than 5 years (might actually be 7) by the time he sells it.
But he wouldn't sell if he's smart.
If he needs more than the rental income and owns the property outright, he goes to the bank and takes out a line of credit. He draws it down as he needs it TAX FREE. It's a loan, not income. In essense he is just accessing his own wealth/equity.
Sure the bit of interest he'll owe isn't tax deductible, but he can let it accumulate against his equity. With sensible management he can continue like this for the rest of his life.

So, throw another shrimp on the barbie, grab a beer... we're quite enjoying our illogical life

[Doodles]

Originally Posted by MarkJ

Nudes????

No, unfortunately the best I could do in that area would be a stick lady!

[VirtualVagabond]

Originally Posted by sctpc

Yes some are like that thats why I now only own I after the last down turn in the late 80s I bought 8 houses. I do change my investment structure to try and keep up.

One million dollars at 4% per annum would be about $759 per week, every week, in interest income. And you can get more than 4% on a million dollar investment, while your corporate rentals surely also have costs and vacant weeks to consider.

true but its also appreciation in realstate and I would at this stage keep a land asset for my own peace of mind, currently I live hear and have 3 kids so will for the next 10years so my plans may change who knows.

Sorry sctp... you posted while I was typing so I hadn't seen your reply
...should have left you to say it for yourself

[Doodles]

Originally Posted by VirtualVagabond

Hey Doodles... of course we lack logic. That's why our Aussie$ is is buying $1.06/7 US. No logic to it at all...

That lack of logic means that SCTPC hadn't thought through the need to spoonfeed the details of his thinking, so here goes...

Interest from the $1mil would be taxable, so nowhere near $759 per week to live on. (actually my calc has it as $769).
Ok, the rental income is taxable too, but only after all expences, including depreciation which is a paper write off only.
In the bank, not only is the $1mil losing value with inflation, but also eroding that $759 income in real terms.
The rent will rise with inflation... better than interest which will only ever be the going rate.
Did you see the info on the property? Big land and near town. In Aus that means solid capital growth over time, tax free, even capital gains tax free if it was his home and he hasn't rented it out for more than 5 years (might actually be 7) by the time he sells it.
But he wouldn't sell if he's smart.
If he needs more than the rental income and owns the property outright, he goes to the bank and takes out a line of credit. He draws it down as he needs it TAX FREE. It's a loan, not income. In essense he is just accessing his own wealth/equity.
Sure the bit of interest he'll owe isn't tax deductible, but he can let it accumulate against his equity. With sensible management he can continue like this for the rest of his life.

So, throw another shrimp on the barbie, grab a beer... we're quite enjoying our illogical life

Jeez, this is the problem with being in the same time zone now as OZ! They're all up and about and ready to give you grief.

I should know better than to mention real estate and Australia in the same paragraph.

[VirtualVagabond]

Originally Posted by Doodles

Jeez, this is the problem with being in the same time zone now as OZ! They're all up and about and ready to give you grief.

I should know better than to mention real estate and Australia in the same paragraph.

Hey Doodles... nothing personal. You're ok. We've just got lousy weather and a long weekend so too much time on our hands.

Actually most of the post was a response to HelloSailor. Sorry you copped it

[sctpc]

Originally Posted by VirtualVagabond

Sorry sctp... you posted while I was typing so I hadn't seen your reply
...should have left you to say it for yourself

OH dont be sorry you explained it better than me im stuck making flat pack furniture so the wife can buy more stuff to fill the house maybe I should read the "HOW MUCH DOES A WOMAN COST TO RUN " thread alot maybe sell the wife then, no who would cook.

[avb3]

Originally Posted by VirtualVagabond

....
Ok, the rental income is taxable too, but only after all expences, including depreciation which is a paper write off only.

Are you sure there is no recaptured depreciation charges in Australia? If the property sells, and depreciation was charged against it, in most jurisdictions that means if one sells it above the depreciated (paper value), it is recaptured depreciation, and normally assessed towards the current year's income. A very dangerous practice!

...Did you see the info on the property? Big land and near town. In Aus that means solid capital growth over time, tax free, even capital gains tax free if it was his home and he hasn't rented it out for more than 5 years (might actually be 7) by the time he sells it.

Yup, probably meets the requirement of good real estate, location, location, location.

It also assumes Australia is immune to property devaluations. The U.S. could post similar charts such as Mark did, as long as the time was cut off before 2008. When does the equivalent of 2008 happen in Aussie land?

But he wouldn't sell if he's smart.

No one can answer what the "Smart" answer is; if one can pick the time just before a correction, then is the time to sell. If one starts seeing multiple bids on property in their price range at over listing price, that may well be a clue, even if that continues for 1-2 years.

[hellosailor]

Mark, perceived appreciation in real estate is also one reason the US economy is in the crapper right now. My mother used to keep carping about the house her father could have bought for $5000 when it was on the market for 1/4 million. I ran a quick spreadsheet and showed five grand in the bank at annual interest rates would have turned into a quarter million over the same period anyhow.

All the rest, the mortgage deductions, the taxes, the insurance costs the rent saved...Yeah yeah, that's a complicated calculation and any easy answer will either be a lucky one or a wrong one. Bottom line, in general real estate 'appreciation" is only one form of speculation, there are others. Sometimes better sometimes worse.

As to median home prices? MEDIAN isn't a good way to compare. At least in the US, the median home SIZE has also skyrocketed, so it isn't quite apples to apples as to whether the older smaller homes rose on the same tide. (Segueing back to nautical.)

I'm not surprised to hear property values in Oz have gone up in the last 20-30 years. Since they opened up the immigration policies, was that back in the 80s?, there must be a need to someplace for all the newcomers to live. Same thing probably happened here in the US after Carter changed quotas, too.

I'd still bet there's a better choice of real estate, where the rental income provided a PROFIT instead of a loss, and the real estate value was still growing. If you can't rent it for a profit--the odds are still that the value isn't all that high to begin with, compared with a better property. Most landlords make profit from thir rents, every month, or they find another business.

[sctpc]

Originally Posted by hellosailor

I'd still bet there's a better choice of real estate, where the rental income provided a PROFIT instead of a loss, and the real estate value was still growing. If you can't rent it for a profit--the odds are still that the value isn't all that high to begin with, compared with a better property. Most landlords make profit from thir rents, every month, or they find another business.

100% but you must factor in Growth, I have owned houses that give 12% but I had to work to get that (boarding house) also in the bush I could get 8% or more But that would cost the same 10 years later.

Avb3 depreciation charges in Australia are on the house up to 30 years not the land.

Australia is immune to property devaluations Not at all but im 41 so in 20 years hay any drop should have been recovered, (dont put all eggs in the same basket) but the house is also now only 30% of my investments

Also Hellosailor is correct we have let anyone in this country so they need a house (staying away from politics ) also or mining boom helped but now it could be starting a we had a woman in charge who sold us to the greenys
Smart" answer is get a crystal ball and ill let you know

[avb3]

SCTPC - I recognize that charges of depreciation are against house and not land, but I would be wary and check with a good tax specialist as to what happens when you sell; I repeat that most jurisdictions I am familiar with recaptured depreciation whacks you hard at sell time.

As far as booms and busts in real estate markets, I just have to look at my own area. My neighbors house sold for 400K 3 years ago. I will be lucky to get 300K now for mine (I live in oil rich Alberta). A similar house to mine in Phoenix or Florida would be lucky to get 50K (built 1961, 1200 sq ft).

The "smart money" said that I was nuts to sell mine 3 years ago. The same "smart money" says there is another boom coming to Alberta, and don't sell now.

Methinks sell here, buy in Florida, and go sailing is the right answer.

[sww914]

Originally Posted by sctpc

Australia is immune to property devaluations Not at all but im 41 so in 20 years hay any drop should have been recovered, (dont put all eggs in the same basket) but the house is also now only 30% of my investments

That's what they said about where I bought, coastal California. 5 years later I let it go. It sold for less than 50% of what I paid. I'm glad it's gone.

[MarkJ]

Originally Posted by avb3

SCTPC - I recognize that charges of depreciation are against house and not land, but I would be wary and check with a good tax specialist as to what happens when you sell; .

Look the 2 countries USA and Australia have completely different laws.
Yes when selling a house thats not the Principal place of residence you pay capital gains tax.

but we pay no anual tax on our principal place of residence. Only on investment properties when the combine value of investment land is over a threshold. Which for New South Wales is $400,000 or sommit. Not including value of the buildings. Even then the rate is far lower than what you guys pay in Thou Per Million.

1.7 Am I entitled to a full main residence exemption?

Generally, your client will be entitled to a full main residence exemption for a dwelling if:

• • it was their main residence for the whole period they owned it
  • it was not used to produce assessable income, and
  • any land on which the dwelling is situated is two hectares or less.

Basic capital gains tax issues for legal practitioners
Note that link is our tax departments website.

We don't need a good tax specialist. Its well known stuff to anyone who can afford a house and an investment property.

What is the principal place of residence exemption?

You can claim the principal place of residence exemption for land, including strata lots, that is used and occupied as your principal place of residence (your home). The area or land value of the property does not affect whether you qualify for the exemption or not.

Principal place of residence - NSW Office of State Revenue
Thats a state tax and that infor is from the state tax office.


Land tax on investment properties


For the 2011 land tax year

Land tax is calculated on the combined value of all the taxable land you own above the land tax threshold of
$401,000. The rate of tax is $100 plus 1.6 per cent of the land value between the threshold and the premium rate threshold and 2 per cent thereafter.

So if your investment house is on land worth $500,000 then you pay a tax of Estimated land tax payable:
$1,908.00


Now, do you want me to do your tax for you?