By way of background, for many years now the Tax Office has accepted that trusts could make distributions to private companies but not actually have to pay the amount. These were called unpaid present entitlements.
These amounts were taxed in the hands of the company and the trustee was able to continue to use the funds for the benefit of all the beneficiaries.
The Tax Office has now reversed that longstanding view and issued a draft ruling that many see, at the very least, as contentious.
New draft rulingThe new draft ruling means that, generally speaking, where a trust does not physically pay out a distribution to a private company, the Tax Office will deem that a loan has been provided by the private company to the trust.Where that occurs, the amount owing under the 'newly created loan' may be treated as a dividend to the shareholders of the company.
"Carve-out" for existing unpaid distributionsHowever, distributions made before 16 December 2009 are not affected by the ATO's new interpretation, and will therefore not generally be treated as loans (or dividends).
Editor: We have not gone into the technical side of this issue which is quite complicated to the uninitiated. However, while we will be in contact with clients over the next short while, we recommend that any clients who may be concerned with how this draft ruling could affect them should contact our office.For what it's worth, this is a draft ruling and it is possible, but not likely, that the ATO will change its view. In addition, the Tax Office's position has yet to be tested in Court.
Source: AFA
www.activefa.com
Showing posts with label Info. Show all posts
Showing posts with label Info. Show all posts
Monday, March 1, 2010
Wednesday, December 16, 2009
Invest in US
You need to commit to the process
Buying 1 cf+ over there will not be enough to change your life. Accumulation will change your life.
Yield > 20% is very common if you know what kind of property you are looking for
Australian tax resident can claim tax credit for tax paid in the other country under double tax agreement, but with broad tax country like US, we can quarantine the income in US and only pay us tax rate.
You can have several LLC under 50k income, and always pay 15% tax only.
Capital gain can be quarantined in US. You can pay only 15% CGT in US, or roll it over into the next purchase.
NZ is not a broad tax country.
Dymphla focused on multi-family properties over there
Properties Dymphla bought, cheapest 23k, mostly 35-40k without the need for reno
Only 1 property she had vacancy that she bought for life style.
Condo conversion = strata title
Single family home yield was 15% a few yrs ago, now with the price coming down, they can be 20-30% yield
People over there have corporate mentality, particularly in manufacturing industry.
Normal foreclosure rate was 4% GCC, (0.4% in Au), now 8% there, and .6% in au
No FIRB equivalent regulation for foreigners over there
Each state is different.
Over there institutions can clean your credit in 6 months if you know how to do it. Here it’s 3 years from bankruptcy + another 7 years before the record is cleared.
Structure
It’s crazy to buy anything under your name over there.
S corp not available to foreigners. C corp is similar to company here, but it’s a stronger entity, unless. To go after director, you have to prove fraud.
LLC can be like a company or act as a pass through company to pass the profit to its members, or you can pass the profit to the member being a Australian entity such as a piggy bank trust.
Trust law differs from state to state, and it’s more difficult. LLC is just as good for Australian.
Some state you pay both federal and state tax on your rental income. Some state has no state tax at all.
If you buy properties in a few different states, you can start with LLC, as you accumulate more, it’s worth set up a c-corp in state w/o state tax.
Navada and wyoming don’t have state tax.
You can set up LLC here, difficulty is setting up bank account for LLC.
Three is a process to set up bank account and structures.
When you have your personal bank account, it’s easier to have LLC bank account set up （can I do it offshore then?）. Then you have your EIN (entity identification no) for your LLC.
Once they get you identified, it’s easy to add another one.
Finance:
Hard money: a private lender who lends at very high rate. E.g. 16% for 6 months with balloon payment in the end. 1 day late, they take the property.
In the last 3 months, hard money dries up. You couldn’t get bank finance unless you are prime premium American, but the bank has eased. Private money prefers to lend 50-70% LVR to a foreigner, at around 6.5-8.5% （2% normal finance over there）.
A little bit of bank finance is coming back.
A lot of brokers will not touch a deal <$120k, so you group a number of properties together for financing, but it’s a slow process.
You are better taking the line of credit here and pay cash over there.
Quick plan D: taking over someone else’s mortgage
Team required:
Sec1031 for CGT roll over
It’s tough to have property managed over there. They are starting to have property management in some areas. That’s one of the biggest obstacle is to find good managing agent you can trust.
Renovation = rehab; You’ll be astounded how little it costs. One tradie will have a team of people working under him that’s lowly paid. Au price is sometimes 3-4 times higher.
Going to home Depot site (Bunnings equivalent), you can set up a Depo account once you have a credit rating. You can cost a whole project on their website. Dymphla had a whole kitchen done <$800 which would cost $8000.
Insurance
It’s similar to Australia. $300-$800.
Research
Without going there talking to people, you are going there blind.
When you target varing areas. You are never going to invest in ever state, if you are looking for uplifting area, you look for where the price really dropped. If you are buying for cashflow, it’s a completely different type of property.
Tax deeds and tax leans?
Council has the right to sell property if someone doesn’t pay their rate (property tax they call it there). Tax leans can be bid online over the internet. Selecting state is important. Some state has claw back period of 4 years. There is a guaranteed return on the tax lean.
Say $8000 tax lean, you get 18% yield + penalty and your $8000 at the end of 2 years. If they don’t pay, then you get the property at the end of 2 years. You might bid $10000 say and still get good return, but if you end up with the property, you can’t reno or do anything until the claw back period is over.
Missisipy is 4 years.
Don’t buy property with existing deed or leen which becomes your liability when you buy the property.
Status of market
The market has continue to fall through this year. We have just starting to see the market turn in some sector.
Financing market has just started to turn.
There will be a 2nd tier fall out in the commercial industry. It won’t affect the yield of the high cash flow residential property Dymphla is talking about. People still have to live somewhere. The vacancy rate in a lot of these places are very very low. The only thing it will do is the growth might be slow.
Caution about buying commercial at this time, maybe end of 2010.
The seminar
Feb 6-7
Novotel Sydney brighton beach, Brighton Le Sands 2216
Preforeclosure, foreclosure and post foreclosure propertyis
PT: not having to pay tax ever
To Dos:
1. Ring citi bank to apply for credit card.
2. set up an LLC
3. secure good management agent
4. to buy, check the property doesn’t need reno, doesn’t carry a deed or leen,
5. follow Dymphla’s system to get a credit rating in their system
Buying 1 cf+ over there will not be enough to change your life. Accumulation will change your life.
Yield > 20% is very common if you know what kind of property you are looking for
Australian tax resident can claim tax credit for tax paid in the other country under double tax agreement, but with broad tax country like US, we can quarantine the income in US and only pay us tax rate.
You can have several LLC under 50k income, and always pay 15% tax only.
Capital gain can be quarantined in US. You can pay only 15% CGT in US, or roll it over into the next purchase.
NZ is not a broad tax country.
Dymphla focused on multi-family properties over there
Properties Dymphla bought, cheapest 23k, mostly 35-40k without the need for reno
Only 1 property she had vacancy that she bought for life style.
Condo conversion = strata title
Single family home yield was 15% a few yrs ago, now with the price coming down, they can be 20-30% yield
People over there have corporate mentality, particularly in manufacturing industry.
Normal foreclosure rate was 4% GCC, (0.4% in Au), now 8% there, and .6% in au
No FIRB equivalent regulation for foreigners over there
Each state is different.
Over there institutions can clean your credit in 6 months if you know how to do it. Here it’s 3 years from bankruptcy + another 7 years before the record is cleared.
Structure
It’s crazy to buy anything under your name over there.
S corp not available to foreigners. C corp is similar to company here, but it’s a stronger entity, unless. To go after director, you have to prove fraud.
LLC can be like a company or act as a pass through company to pass the profit to its members, or you can pass the profit to the member being a Australian entity such as a piggy bank trust.
Trust law differs from state to state, and it’s more difficult. LLC is just as good for Australian.
Some state you pay both federal and state tax on your rental income. Some state has no state tax at all.
If you buy properties in a few different states, you can start with LLC, as you accumulate more, it’s worth set up a c-corp in state w/o state tax.
Navada and wyoming don’t have state tax.
You can set up LLC here, difficulty is setting up bank account for LLC.
Three is a process to set up bank account and structures.
When you have your personal bank account, it’s easier to have LLC bank account set up （can I do it offshore then?）. Then you have your EIN (entity identification no) for your LLC.
Once they get you identified, it’s easy to add another one.
Finance:
Hard money: a private lender who lends at very high rate. E.g. 16% for 6 months with balloon payment in the end. 1 day late, they take the property.
In the last 3 months, hard money dries up. You couldn’t get bank finance unless you are prime premium American, but the bank has eased. Private money prefers to lend 50-70% LVR to a foreigner, at around 6.5-8.5% （2% normal finance over there）.
A little bit of bank finance is coming back.
A lot of brokers will not touch a deal <$120k, so you group a number of properties together for financing, but it’s a slow process.
You are better taking the line of credit here and pay cash over there.
Quick plan D: taking over someone else’s mortgage
Team required:
Sec1031 for CGT roll over
It’s tough to have property managed over there. They are starting to have property management in some areas. That’s one of the biggest obstacle is to find good managing agent you can trust.
Renovation = rehab; You’ll be astounded how little it costs. One tradie will have a team of people working under him that’s lowly paid. Au price is sometimes 3-4 times higher.
Going to home Depot site (Bunnings equivalent), you can set up a Depo account once you have a credit rating. You can cost a whole project on their website. Dymphla had a whole kitchen done <$800 which would cost $8000.
Insurance
It’s similar to Australia. $300-$800.
Research
Without going there talking to people, you are going there blind.
When you target varing areas. You are never going to invest in ever state, if you are looking for uplifting area, you look for where the price really dropped. If you are buying for cashflow, it’s a completely different type of property.
Tax deeds and tax leans?
Council has the right to sell property if someone doesn’t pay their rate (property tax they call it there). Tax leans can be bid online over the internet. Selecting state is important. Some state has claw back period of 4 years. There is a guaranteed return on the tax lean.
Say $8000 tax lean, you get 18% yield + penalty and your $8000 at the end of 2 years. If they don’t pay, then you get the property at the end of 2 years. You might bid $10000 say and still get good return, but if you end up with the property, you can’t reno or do anything until the claw back period is over.
Missisipy is 4 years.
Don’t buy property with existing deed or leen which becomes your liability when you buy the property.
Status of market
The market has continue to fall through this year. We have just starting to see the market turn in some sector.
Financing market has just started to turn.
There will be a 2nd tier fall out in the commercial industry. It won’t affect the yield of the high cash flow residential property Dymphla is talking about. People still have to live somewhere. The vacancy rate in a lot of these places are very very low. The only thing it will do is the growth might be slow.
Caution about buying commercial at this time, maybe end of 2010.
The seminar
Feb 6-7
Novotel Sydney brighton beach, Brighton Le Sands 2216
Preforeclosure, foreclosure and post foreclosure propertyis
PT: not having to pay tax ever
To Dos:
1. Ring citi bank to apply for credit card.
2. set up an LLC
3. secure good management agent
4. to buy, check the property doesn’t need reno, doesn’t carry a deed or leen,
5. follow Dymphla’s system to get a credit rating in their system
Sunday, March 29, 2009
How to spot a bargain
http://www.realestate.com.au/doc/Resources/Buy/fhbg/how-to-spot-a-bargain.htm?rsf=newsletter_rea
Everybody likes to get a bargain. Whether it is everyday goods, such as food and clothing, or more expensive items, such as cars and real estate, there are bargains to be had.
It is relatively simple to spot a bargain when shopping for food, clothing or even cars as all you need to do is compare prices and brands. It is not so easy when looking at real estate, but the rewards when you do find a good deal can be tremendous.
There are five tips to consider when looking for real estate bargains:
Keep your eye on properties for sale
Search the public trustee, deceased estates and mortgagee sale websites
Recognise any renovation potential
Understand the development potential
Ask the right questions
Keep an eye on the properties for sale in your area You need to keep an eye on the properties for sale in your area and, in particular, the time they spend on the market. The longer a property has been for sale, the more chance you have of picking up a bargain.
However, this is not always the case. A property that has been on the market for a long time but whose asking price has not changed is unlikely to be a bargain. This indicates that the vendor is not willing to budge on their price. On the other hand, if you see that the asking price has continually dropped over a period of time, your eyes should start to light up as this is a sign that the vendor is flexible and could be willing to negotiate as they have to sell.
Search the public trustee, deceased estates and mortgagee sale websites When people are forced to sell, due to a death or mortgagee sale, the property can often sell for less than it would under normal circumstances.
A deceased estate can be off putting to many potential buyers. The property is often not presented in its best state as it may have been vacant for a period of time and the house has a musty smell, the garden is overgrown and the faults of the house are very evident. In the end, the sale price will be determined by how quickly the beneficiaries are keen to receive their money.
In a mortgagee sale, the bank has a duty to try and achieve the best price they can. This is so that it can recoup its money and then the vendor can keep any funds that are left after all debts have been paid. However, in a buyer’s market, which is what we are currently experiencing, it is the buyer that will determine the final sale price, not the seller.
As mentioned earlier, forced sales will often result in properties selling at lower than expected prices. However, low prices don’t always mean that it is a good buy. For example, buying bruised fruit at half the normal cost doesn’t represent a bargain. Nor does buying imitation top brand names at a fraction of the real cost. Buying something cheaply doesn’t always represent good value.
Recognise any renovation potential Bargains are often bought because other people don’t see the potential of the property. Most people will walk through an old house and only see the peeling wallpaper, ugly carpet and an old fashioned kitchen. Renovators will see an opportunity to paint the walls, rip up the carpets, polish the floorboards, expose the authentic fireplaces and put in a modern kitchen. Many people choose not to see the opportunity as they don’t know how to renovate and think that the costs of a makeover are too prohibitive.
Understand the development potential Most people will drive by a property and see a run-down house on a large block of land. Those who are familiar with property development and know the rules and regulations of the local council will see a unit site. To the novice it may seem daunting at first to contemplate building units, but it is just a matter of confidence. Knowledge will build your confidence. You only need to know a little more than the rest to be able to pick up a bargain.
Ask the right questions “Why are they selling?” is the best question you can ask. If they don’t give you an answer, continue to ask open-ended questions. An open-ended question will force the sales person to give you more than just a “yes” or “no” answer.
For example, you will gain a better insight into what price the vendor will accept if you ask: “If I make a cash unconditional offer with a short settlement, what figure do you think they will accept?” Rather than: “Will they accept $350,000?”
The first answer may reveal the lowest offer they are willing to take, whereas the second question will only provide you with a “yes” or “no” reply.
Peter Koulizos is a university lecturer and author of The Property Professor’s Top Australian Suburbs. You can buy Peter’s book at our online bookshop.
To read Peter’s other columns, visit Peter’s property pep talks
Everybody likes to get a bargain. Whether it is everyday goods, such as food and clothing, or more expensive items, such as cars and real estate, there are bargains to be had.
It is relatively simple to spot a bargain when shopping for food, clothing or even cars as all you need to do is compare prices and brands. It is not so easy when looking at real estate, but the rewards when you do find a good deal can be tremendous.
There are five tips to consider when looking for real estate bargains:
Keep your eye on properties for sale
Search the public trustee, deceased estates and mortgagee sale websites
Recognise any renovation potential
Understand the development potential
Ask the right questions
Keep an eye on the properties for sale in your area You need to keep an eye on the properties for sale in your area and, in particular, the time they spend on the market. The longer a property has been for sale, the more chance you have of picking up a bargain.
However, this is not always the case. A property that has been on the market for a long time but whose asking price has not changed is unlikely to be a bargain. This indicates that the vendor is not willing to budge on their price. On the other hand, if you see that the asking price has continually dropped over a period of time, your eyes should start to light up as this is a sign that the vendor is flexible and could be willing to negotiate as they have to sell.
Search the public trustee, deceased estates and mortgagee sale websites When people are forced to sell, due to a death or mortgagee sale, the property can often sell for less than it would under normal circumstances.
A deceased estate can be off putting to many potential buyers. The property is often not presented in its best state as it may have been vacant for a period of time and the house has a musty smell, the garden is overgrown and the faults of the house are very evident. In the end, the sale price will be determined by how quickly the beneficiaries are keen to receive their money.
In a mortgagee sale, the bank has a duty to try and achieve the best price they can. This is so that it can recoup its money and then the vendor can keep any funds that are left after all debts have been paid. However, in a buyer’s market, which is what we are currently experiencing, it is the buyer that will determine the final sale price, not the seller.
As mentioned earlier, forced sales will often result in properties selling at lower than expected prices. However, low prices don’t always mean that it is a good buy. For example, buying bruised fruit at half the normal cost doesn’t represent a bargain. Nor does buying imitation top brand names at a fraction of the real cost. Buying something cheaply doesn’t always represent good value.
Recognise any renovation potential Bargains are often bought because other people don’t see the potential of the property. Most people will walk through an old house and only see the peeling wallpaper, ugly carpet and an old fashioned kitchen. Renovators will see an opportunity to paint the walls, rip up the carpets, polish the floorboards, expose the authentic fireplaces and put in a modern kitchen. Many people choose not to see the opportunity as they don’t know how to renovate and think that the costs of a makeover are too prohibitive.
Understand the development potential Most people will drive by a property and see a run-down house on a large block of land. Those who are familiar with property development and know the rules and regulations of the local council will see a unit site. To the novice it may seem daunting at first to contemplate building units, but it is just a matter of confidence. Knowledge will build your confidence. You only need to know a little more than the rest to be able to pick up a bargain.
Ask the right questions “Why are they selling?” is the best question you can ask. If they don’t give you an answer, continue to ask open-ended questions. An open-ended question will force the sales person to give you more than just a “yes” or “no” answer.
For example, you will gain a better insight into what price the vendor will accept if you ask: “If I make a cash unconditional offer with a short settlement, what figure do you think they will accept?” Rather than: “Will they accept $350,000?”
The first answer may reveal the lowest offer they are willing to take, whereas the second question will only provide you with a “yes” or “no” reply.
Peter Koulizos is a university lecturer and author of The Property Professor’s Top Australian Suburbs. You can buy Peter’s book at our online bookshop.
To read Peter’s other columns, visit Peter’s property pep talks
Thursday, March 5, 2009
What needs to be in an agreement
source: http://investinginproperties.com.au/
Any partnership, no matter how small or large, and no matter who it is between, must have an agreement that covers the interest of both parties.
It is best to have a solicitor draw up an agreement for you. When considering what needs to be in the agreement, work out the absolute worst case scenarios for all parties, and make sure those issues are covered.
Some partnerships are between friends or family. Regardless, remember that your relationship with your partner may be in jeopardy if something goes wrong, so it is important to cover everything you possibly can in the agreement.
Here are some of the areas that need to be covered.
Firstly, the agreement needs to state clearly who is involved – this could be individuals, or entities such as trusts or companies.
Make sure the agreement is dated, and beginning and end dates are clearly stated. If you are unsure of how long the partnership will take, cover this so that all partners are clear.
Remember that circumstances can change very quickly, so cover the possibility of someone needing to end the agreement quickly. How will this happen, what period of notice needs to be given, how will the partner be compensated.
The agreement needs to clearly state the terms of the partnership. If the partnership involves money, profit shares, bonuses or interest payments, make sure these are clearly stated with no room for misunderstanding.
You may be part of a partnership that involves something other than money – for example, knowledge, skills or time. Again, make sure that the terms of this agreement is clearly stated.
The agreement is a legal document, and therefore must be executed in a legal format. It will need to be witnessed and signed by all parties. Depending on the law, you may need to have a Justice of the Peace certify the document, and, in some cases, you may need to lodge the documents with some authority.
Agreements also need to be in place for when the partnership is dissolved. Make sure that all parties are released in writing from the partnership, and that all obligations of the partnership are met. Have each party sign off on the partnership.
There are many other areas that could be added to an agreement. The main consideration, however, is to make sure that you have covered all possible scenarios, and that you have a legal document drawn up for you covering all parties.
Any partnership, no matter how small or large, and no matter who it is between, must have an agreement that covers the interest of both parties.
It is best to have a solicitor draw up an agreement for you. When considering what needs to be in the agreement, work out the absolute worst case scenarios for all parties, and make sure those issues are covered.
Some partnerships are between friends or family. Regardless, remember that your relationship with your partner may be in jeopardy if something goes wrong, so it is important to cover everything you possibly can in the agreement.
Here are some of the areas that need to be covered.
Firstly, the agreement needs to state clearly who is involved – this could be individuals, or entities such as trusts or companies.
Make sure the agreement is dated, and beginning and end dates are clearly stated. If you are unsure of how long the partnership will take, cover this so that all partners are clear.
Remember that circumstances can change very quickly, so cover the possibility of someone needing to end the agreement quickly. How will this happen, what period of notice needs to be given, how will the partner be compensated.
The agreement needs to clearly state the terms of the partnership. If the partnership involves money, profit shares, bonuses or interest payments, make sure these are clearly stated with no room for misunderstanding.
You may be part of a partnership that involves something other than money – for example, knowledge, skills or time. Again, make sure that the terms of this agreement is clearly stated.
The agreement is a legal document, and therefore must be executed in a legal format. It will need to be witnessed and signed by all parties. Depending on the law, you may need to have a Justice of the Peace certify the document, and, in some cases, you may need to lodge the documents with some authority.
Agreements also need to be in place for when the partnership is dissolved. Make sure that all parties are released in writing from the partnership, and that all obligations of the partnership are met. Have each party sign off on the partnership.
There are many other areas that could be added to an agreement. The main consideration, however, is to make sure that you have covered all possible scenarios, and that you have a legal document drawn up for you covering all parties.
Sunday, February 22, 2009
Melbourne @ 5 million
http://www.dse.vic.gov.au/DSE/dsenres.nsf/LinkView/B9023E3BAACA5A6ACA256EF60019E55806C7DF80826B65674A256DEA002C0DCA
Victoria in Future 2008 - Detailed data files
O
verseas migration
Net overseas migration to Australia is assumed to be 200,000 persons per annum for the first three years of the projection period, then 180,000 persons per annum over the remaining period of the projections. This assumption follows closely the ABS medium assumption of 180,000 persons per annum for the entire projection period, as published in "Population Projections Australia, 2006-2101". It is assumed that 26.5% of net overseas migration willl be to Victoria, consistent with ABS assumptions.
180000 x 26.5% = 47700 new imigrants to Victoria every year
Interstate migration
Net interstate migration from Victoria is assumed to be a loss of 2,000 persons per annum for the first three years of the projection period, then a loss of 6,000 persons per annum over the remaining period of the projections. This assumption follows closely the ABS medium assumption of a loss of 6,000 persons per annum for the entire projection period, as published in "Population Projections Australia, 2006-2101".
Net population increase is 47700-6000=41700 per annum projected for Victoria.
New Dwellings
In metropolitan centres such as Melbourne, there are not unlimited opportunities for housing development.
Additional dwellings are generally only created in three ways.
1. in established residential areas, through infill development (the take-up of unused lots or portions of lots, or the creation of vacant lots through demolition). i.e. vacant block or subdivision in established areas
2. Secondly, land can be converted to residential use from a former non-residential use, such as industry or education. The resulting developments are known as major redevelopment sites.
3. new dwellings can be constructed on broadhectare, or greenfields sites - vacant (generally ex-rural) land which is zoned for subdivision.
Population and number of Private Dwelling Growth Trend by LGA:
Victoria in Future 2008 - Detailed data files
O
verseas migration
Net overseas migration to Australia is assumed to be 200,000 persons per annum for the first three years of the projection period, then 180,000 persons per annum over the remaining period of the projections. This assumption follows closely the ABS medium assumption of 180,000 persons per annum for the entire projection period, as published in "Population Projections Australia, 2006-2101". It is assumed that 26.5% of net overseas migration willl be to Victoria, consistent with ABS assumptions.
180000 x 26.5% = 47700 new imigrants to Victoria every year
Interstate migration
Net interstate migration from Victoria is assumed to be a loss of 2,000 persons per annum for the first three years of the projection period, then a loss of 6,000 persons per annum over the remaining period of the projections. This assumption follows closely the ABS medium assumption of a loss of 6,000 persons per annum for the entire projection period, as published in "Population Projections Australia, 2006-2101".
Net population increase is 47700-6000=41700 per annum projected for Victoria.
New Dwellings
In metropolitan centres such as Melbourne, there are not unlimited opportunities for housing development.
Additional dwellings are generally only created in three ways.
1. in established residential areas, through infill development (the take-up of unused lots or portions of lots, or the creation of vacant lots through demolition). i.e. vacant block or subdivision in established areas
2. Secondly, land can be converted to residential use from a former non-residential use, such as industry or education. The resulting developments are known as major redevelopment sites.
3. new dwellings can be constructed on broadhectare, or greenfields sites - vacant (generally ex-rural) land which is zoned for subdivision.
Population and number of Private Dwelling Growth Trend by LGA:
LGA with the sharpest poulation growth trends are:
Casey
Wyndam
Whittlesea
Cardinia
Which is a result of availability of additional dwellings in these areas to accomadate the growing population
Average household size change Trend by LGA:
* To calculate average household size, divide Persons in Occupied Private Dwellings (POPD) by Occupied Private Dwellings (OPD)
Across all LGAs, average houlse hold size is projected to decrease slightly by 0.13 over the next 20 years. No LGA is projected to have a different trend.
Larger household size indicates more demands for larger family homes
The household size decreases slightly across all LGAs
City of Nillumbik, City of Hume, City of whittleseas currently has the highest household size of 3.03, 3.02, 2.99, and City of Port Phillip and City of Melbourne rank the lowest at 1.89 and 1.92 respectively.
Year to June 30th 2009
** The total for the Shire of Yarra Ranges does not include data for the Statistical Local Area (SLA) of "Yarra Ranges (S) - Pt B", as this lies outside the Melbourne Statistical Division
Melbourne Statistical Division 2.57
Nillumbik (S)
3.03
Hume (C)
3.02
Whittlesea (C)
2.99
Casey (C)
2.92
Brimbank (C)
2.91
Melton (S)
2.91
Wyndham (C)
2.85
Cardinia (S)
2.79
Manningham (C)
2.76
Knox (C)
2.76
Greater Dandenong (C)
2.72
Yarra Ranges (S)
2.72
Monash (C)
2.63
Boroondara (C)
2.54
Banyule (C)
2.53
Maroondah (C)
2.52
Hobsons Bay (C)
2.50
Whitehorse (C)
2.50
Bayside (C)
2.49
Frankston (C)
2.47
Kingston (C)
2.45
Moonee Valley (C)
2.43
Moreland (C)
2.40
Darebin (C)
2.39
Mornington Peninsula (S)
2.38
Glen Eira (C)
2.37
Maribyrnong (C)
2.37
Stonnington (C)
2.13
Yarra (C)
2.11
Melbourne (C)
1.90
Port Phillip (C)
1.87
Occupancy Rate
* To calculate occupancy rate, divide Occupied Private Dwellings (OPD) by Structural Private Dwellings (SPD)
** The total for the Shire of Yarra Ranges does not include data for the Statistical Local Area (SLA) of "Yarra Ranges (S) - Pt B", as this lies outside the Melbourne Statistical Division
The occupancy rate of each LGA is not projeced to change over the next 20 years:
Year to June 30th 2009
Knox (C)
0.98
Nillumbik (S)
0.98
Whittlesea (C)
0.98
Manningham (C)
0.98
Casey (C)
0.97
Monash (C)
0.97
Banyule (C)
0.97
Hume (C)
0.97
Maroondah (C)
0.97
Whitehorse (C)
0.97
Greater Dandenong (C)
0.97
Kingston (C)
0.96
Boroondara (C)
0.96
Yarra Ranges (S)
0.96
Frankston (C)
0.96
Cardinia (S)
0.96
Brimbank (C)
0.96
Glen Eira (C)
0.96
Darebin (C)
0.95
Hobsons Bay (C)
0.95
Moreland (C)
0.95
Moonee Valley (C)
0.95
Maribyrnong (C)
0.95
Wyndham (C)
0.95
Bayside (C)
0.95
Melton (S)
0.95
Yarra (C)
0.94
Stonnington (C)
0.94
Port Phillip (C)
0.92
Melbourne (C)
0.88
Mornington Peninsula (S)
0.76
Friday, February 20, 2009
reblocking, releveling and underpinning
source: http://www.betterfoundations.com.au/
Contact Details
Ph: (03) 9304 4844 Mob: 0409 180 821 Fax: (03) 9354 6870
Reblocking
Re-blocking means the replacement of rotted and defected stumps which causes structural damage to a new concrete or red gum stumps this will involve the re-levelling of the house.
Re-blocking is needed when:
Cracks on the plaster
Doors and windows are stuck
Floors sloping
Cracks in the floor or tiles
Re-levelling and extra stumps
Because of extreme weather and poor soil condition or plumbing leaks some of the houses with a concrete stumps needed re-levelling or extra stumps to support the structure of the house If any signs of
Cracks on plaster,
doors and windows are stuck,
floor sloping or not level.
Do not paint or renovate until the house is supported with extra stumps or re-levelled…..
Definitions of underpinning
Underpinning is a means of transferring foundation loads to deeper soil supported by new concrete pad to provide vertical support that is not present in the existing footing.
Causes and signs of foundation failure:
Foundation damage tends to happen very slowly, so its often difficult to notice it.Moisture beneath the center of your foundation remains consistent unless aggravated by the introduction of excess moisture, such as plumbing leaks or sub-surface water movement. As evaporation and transpiration cause the soils to dry and shrink around the perimeter of your foundation, the structure begins to move. Uneven moisture causes uneven movement, which can lead to structural and cosmetic damage to your home.
Evaporation - hot dry wind and intense heat will often cause the soil to shrink beneath the foundation. This settlement may cause cracks to appear throughout the structure.
Transpiration – Tree roots may desiccate the soil beneath a home causing the soil to shrink and the home to settle.
Plumbing Leaks – Water from plumbing leaks is often a cause of foundation repair.
Drainage – Improper drainage is a leading cause of foundation failure. Excess moisture will erode or consolidate soils and cause settlement.
Inferior Foundation Construction – Insufficient steel and inferior concrete will contribute to movement on the slabs of perimeter foundations.
Poor Soil Conditions – Poor soil and its expansion and/or contraction contribute to foundation failure.
Extreme Weather – Hot, dry weather and cool, wet weather cause soil to expand and contract unevenly causing differential foundation movement.
Signs of foundation problems:
Signs on the inside of the home
Misaligned doors and windows
Cracks in the plaster
Doors and windows that stick
Sloping of the floor
Cracks in the floor or tile
Signs on the outside of the home
Cracks in the brick
Gaps around the doors and windows
Cracks in the foundation
Fascial board pulling away
Signs in the garage
Separation from door
Wall rotating outward
Cracked Brick
Signs in the basement
Walls leaning in or out
Cracks in the wall
Water intrusion
Foundation maintenance
Homeowners can take active steps to maintain their foundations. Typically these include watering the foundation to keep the soil near the foundation (uniform) moist.Changes in the grading around the house such as fencing or planting beds immediately diagnose and repair any plumbing leaks.After all when the house needs the foundation repair, the homeowner should consider the risk that something worse might happen and the loss of resale value in the home because this is a complex and sometimes emotional issue with every day trade-off between budget and the new cracks on the plaster or brick wall.
Underpinning Process
A site inspection of the property is required to investigate the damage; a detailed quotation will be given explaining the cost involved for each pin. If the owner would like to go ahead with the quotation, they are required to sign a contract which will be sent out for signing.Our engineer will inspect the site to determine the amount of pins required and to draw the plan explaining the depth and the positions of the pins.Once we receive the plan, our underpinning team will set out to prepare the property for the work to commence. During this process, concrete, doors, fence etc may need to be removed.
Once the area is prepared, the holes for the pins will be cleaned out for council inspection.After the inspection, the concrete is placed in to the pin holes leaving enough space for jacking, the concrete needs approximately three to four days to cure. Once the concrete is fully cured, our underpinning team will return to the site to attempt to jack the building back to the original level. After this procedure, the concrete will be placed in to the pin holes. Our team will ensure that no gap exists between the underpinning concrete and the existing concrete footing.
Contact Details
Ph: (03) 9304 4844 Mob: 0409 180 821 Fax: (03) 9354 6870
Reblocking
Re-blocking means the replacement of rotted and defected stumps which causes structural damage to a new concrete or red gum stumps this will involve the re-levelling of the house.
Re-blocking is needed when:
Cracks on the plaster
Doors and windows are stuck
Floors sloping
Cracks in the floor or tiles
Re-levelling and extra stumps
Because of extreme weather and poor soil condition or plumbing leaks some of the houses with a concrete stumps needed re-levelling or extra stumps to support the structure of the house If any signs of
Cracks on plaster,
doors and windows are stuck,
floor sloping or not level.
Do not paint or renovate until the house is supported with extra stumps or re-levelled…..
Definitions of underpinning
Underpinning is a means of transferring foundation loads to deeper soil supported by new concrete pad to provide vertical support that is not present in the existing footing.
Causes and signs of foundation failure:
Foundation damage tends to happen very slowly, so its often difficult to notice it.Moisture beneath the center of your foundation remains consistent unless aggravated by the introduction of excess moisture, such as plumbing leaks or sub-surface water movement. As evaporation and transpiration cause the soils to dry and shrink around the perimeter of your foundation, the structure begins to move. Uneven moisture causes uneven movement, which can lead to structural and cosmetic damage to your home.
Evaporation - hot dry wind and intense heat will often cause the soil to shrink beneath the foundation. This settlement may cause cracks to appear throughout the structure.
Transpiration – Tree roots may desiccate the soil beneath a home causing the soil to shrink and the home to settle.
Plumbing Leaks – Water from plumbing leaks is often a cause of foundation repair.
Drainage – Improper drainage is a leading cause of foundation failure. Excess moisture will erode or consolidate soils and cause settlement.
Inferior Foundation Construction – Insufficient steel and inferior concrete will contribute to movement on the slabs of perimeter foundations.
Poor Soil Conditions – Poor soil and its expansion and/or contraction contribute to foundation failure.
Extreme Weather – Hot, dry weather and cool, wet weather cause soil to expand and contract unevenly causing differential foundation movement.
Signs of foundation problems:
Signs on the inside of the home
Misaligned doors and windows
Cracks in the plaster
Doors and windows that stick
Sloping of the floor
Cracks in the floor or tile
Signs on the outside of the home
Cracks in the brick
Gaps around the doors and windows
Cracks in the foundation
Fascial board pulling away
Signs in the garage
Separation from door
Wall rotating outward
Cracked Brick
Signs in the basement
Walls leaning in or out
Cracks in the wall
Water intrusion
Foundation maintenance
Homeowners can take active steps to maintain their foundations. Typically these include watering the foundation to keep the soil near the foundation (uniform) moist.Changes in the grading around the house such as fencing or planting beds immediately diagnose and repair any plumbing leaks.After all when the house needs the foundation repair, the homeowner should consider the risk that something worse might happen and the loss of resale value in the home because this is a complex and sometimes emotional issue with every day trade-off between budget and the new cracks on the plaster or brick wall.
Underpinning Process
A site inspection of the property is required to investigate the damage; a detailed quotation will be given explaining the cost involved for each pin. If the owner would like to go ahead with the quotation, they are required to sign a contract which will be sent out for signing.Our engineer will inspect the site to determine the amount of pins required and to draw the plan explaining the depth and the positions of the pins.Once we receive the plan, our underpinning team will set out to prepare the property for the work to commence. During this process, concrete, doors, fence etc may need to be removed.
Once the area is prepared, the holes for the pins will be cleaned out for council inspection.After the inspection, the concrete is placed in to the pin holes leaving enough space for jacking, the concrete needs approximately three to four days to cure. Once the concrete is fully cured, our underpinning team will return to the site to attempt to jack the building back to the original level. After this procedure, the concrete will be placed in to the pin holes. Our team will ensure that no gap exists between the underpinning concrete and the existing concrete footing.
Thursday, February 19, 2009
subdivision
source: http://www.abodedac.com.au
Subdivision
Before a subdivision permit may be obtained, a town planning permit must be approved. However in some cases /councils this is the same thing.
Once a town planning permit has been approved, this subdivision is a formality. The town planning permit was the concept – the subdivision permit is the details.
The main objection of a subdivision permit is the issue of multiple titles at the end of it. To do this, a number of letters of consent/compliance must be met by local authorities/boards. Once all of these have been met, council will issue a statement of compliance which is handed to the titles office for issue of titles.
The bulk of the independent work is performed by a land surveyor. They will draw up the required subdivision (i.e., proposed new title boundaries, dimensions, easements etc) as per the approved town planning permit and its conditions. Along with this, a schedule of body corporate if required will also be submitted.
Once received and approved in principal, council forward the proposed subdivision to all the local authorities for their response / letter of consent. Firstly they will determine whether they are happy with the planned subdivision, then determine whether increase in the infrastructure is necessary to accommodate this. Generally a once-off fee (acceptance fee) is payable, then a letter of consent is issued. These change per size and location of the subdivision, the authorities concerned are
1. Power
2. Waterboard (water/sewer
3. Telstr
4. Cas
For larger scale subdivision, a civil engineer will be engaged to design
1. Storm water
2. Sewer
3. Water reticulation
4. Roads, internal access ways incuding finished ground levels
A subdivision permit/grant of titles can be a lengthy process. Please be aware that you MAY build multiple dwellings BEFORE multiple titles are issued. This ensures long delays are masked while construction is taking place.
Subdivisions vary immensely – so please contact us direct for direction with your project. No set fees exist for this service, so a proposal will be tailored to your needs.
Subdivision
Before a subdivision permit may be obtained, a town planning permit must be approved. However in some cases /councils this is the same thing.
Once a town planning permit has been approved, this subdivision is a formality. The town planning permit was the concept – the subdivision permit is the details.
The main objection of a subdivision permit is the issue of multiple titles at the end of it. To do this, a number of letters of consent/compliance must be met by local authorities/boards. Once all of these have been met, council will issue a statement of compliance which is handed to the titles office for issue of titles.
The bulk of the independent work is performed by a land surveyor. They will draw up the required subdivision (i.e., proposed new title boundaries, dimensions, easements etc) as per the approved town planning permit and its conditions. Along with this, a schedule of body corporate if required will also be submitted.
Once received and approved in principal, council forward the proposed subdivision to all the local authorities for their response / letter of consent. Firstly they will determine whether they are happy with the planned subdivision, then determine whether increase in the infrastructure is necessary to accommodate this. Generally a once-off fee (acceptance fee) is payable, then a letter of consent is issued. These change per size and location of the subdivision, the authorities concerned are
1. Power
2. Waterboard (water/sewer
3. Telstr
4. Cas
For larger scale subdivision, a civil engineer will be engaged to design
1. Storm water
2. Sewer
3. Water reticulation
4. Roads, internal access ways incuding finished ground levels
A subdivision permit/grant of titles can be a lengthy process. Please be aware that you MAY build multiple dwellings BEFORE multiple titles are issued. This ensures long delays are masked while construction is taking place.
Subdivisions vary immensely – so please contact us direct for direction with your project. No set fees exist for this service, so a proposal will be tailored to your needs.
Tuesday, February 17, 2009
Ways to bag a bargain
Source: Your Property Investment
http://www.realestate.com.au/doc/Resources/Invest/property-investment-bargains
Your next property purchase could be a steal if you adopt the right approach and get ready to take a shot when it raises its head. We looks at ways to sniff out a great buy.
Markets are all about supply and demand, and a property’s value is a fixed figure reflecting a balance of both. Right? Well, mostly yes, but there are ways to push your advantage so that you end up paying less than you may have expected and land a great buy that will fill out your portfolio plus provide plenty of opportunities for dinner party gloating at your next social engagement. The key is to get smart, get ready and back your judgment.
We’ve found a few ways to help you look back on your next purchase with smug self-satisfaction.
1- Look for an eager vendor
A vendor under distress is the most obvious component of a cheap purchase. There is no moral high ground here – often it’s a case that the seller needs a quick disposal and is willing to cut back on the price in order to move the bricks and mortar on.
While it isn’t pleasant to see another party in a sticky situation, you may be doing them a favour by relieving them of the property and, in most circumstances, it’s a business transaction where if you don’t someone else will.
Ben Anderssen is the director of Brisbane-based buyer’s agency Property Chase and is on constant lookout for property bargains for his clients. He often finds his best source of information to be the seller’s own representative.
“If you quiz the agent you’ll get to the point where they’ll start telling you perhaps a bit extra... And you can’t forget that agents, despite everything else, are there to do a deal. You’ll be able to tell pretty quickly whether or not they’re in a hurry to sell,” says Anderssen.
Some eager vendor situations:
The vendor has bought elsewhere
Gun-shy buyers will contract on one home before selling their current abode and will include a ‘subject to sale’ clause in the dealings. As settlement draws near, they become eager to dispose of their old property and now is the time for you to leap. Drive hard on the bargain – particularly when you’re armed with a cash contract free of conditions.
“I spoke to an agent the other day and he said: ‘It’s a young couple that owns this property and they’ve bought another house and have bridging finance.’ And I just thought: ‘Oh, my god, this is perfect,’” recalls Anderssen.
Divorce settlement
No one enjoys seeing these situations come to a head, but the end of a relationship is often punctuated by cutting ties and the settling of assets. Even where the separation is amicable, there is often an eagerness to move on and this means disposing of assets at a quick sale price. The effect can be amplified in acrimonious endings where both parties are eager to sever ties as quickly as possible.
Mortgagee sale
Costs of living pressures, interest rate rises, spiralling petrol prices – these are all catch phrases that have put further stress on those trying to service a mortgage and keep their head above water. Unfortunately, an overextended buyer may receive an unwanted knock on the door from the financier looking to recoup their loan.
Watching for a ‘Mortgagee in Possession’ sale is one strategy, and another is to seek out an owner trying to consolidate their assets and settle their loan.
Deceased estate
In the situation where property is willed to the next of kin, there may be many recipients to consider. While this is sometimes a sticking point, it’s common for family members to agree that a quick disposal of the property will help put the estate to rest.
Another consideration when multiple beneficiaries are involved is that the value of their share becomes diluted, so any reduction in the offer can appear minor. For example, a $500,000 home divided between four siblings will reap $125,000 per share. If a cash unconditional offer of $460,000 is forwarded, a $40,000 saving to the buyer means each sibling now gets $115,000 – not too dramatic a fall in the scheme of negotiations.
2 - Get smart
Forearmed is forewarned. When a bargain arrives, the first buyer to spot it will be the victor, so if you don’t recognise the opportunity when it arrives, someone else will run off with it.
My first purchase occurred in inner Brisbane in 2003. After months of researching the market, I was sure a dated two-bedroom unit with lock-up car accommodation could be located for under $180,000. Despite the agent’s reservations about such an animal existing, I received a phone call from one local realtor informing me that something had come onto the market “just yesterday”.
He first called the out-of-town lady at the top of his possible purchaser list who was keen to find a Brisbane base for her student daughter, but she had baulked at the $145,000 asking price.
Within three hours we’d arranged to meet at the unit and, armed with an intimate knowledge of the market, I suggested he bring around a standard contract of sale at the asking figure. The contract was signed on the kitchen bench within the first half hour of the inspection.
The body corporate manager told me later that the Gladstone-based couple who sold it was delighted to get $145,000 for it. My response was: “That’s great because I was delighted to pay $145,000 for it.” After $30,000 worth of renovations, the unit was worth approximately $210,000 and now five years later is around the $340,000 mark.
Know your market. Set your criteria on what you want and get informed. If you know that your next investment is to be a four-bedroom, two-bathroom, double-garage renter in outer Melbourne, get real about what they sell and rent for. Dig, dig, dig so you become the local expert.
When the right property comes along, you might be surprised to find that both the vendor and your competing buyers have scant idea as to what a great deal a property offers.
3 - Be prepared
By taking care of a few of the basics, you can remove uncertainties and move quickly.
Arrange your finance before you start hunting your prey. Know how much you can afford to borrow and get it organised. Now is the time to shop around for finance, not when your unconditional day of reckoning is imminent.
Also, go through the exercise to work out what sort of rental you need to achieve on your property to help service the loan.
This is an important step that can stop a prospective buyer in their tracks if they haven’t taken the time to consider the return on the investment.
Form a relationship with professionals whose help you’ll need when snapping up a deal.
Most valuers will be happy to discuss their general expertise and what they look for in a property, and can stand at the ready to provide their services quick-smart when they know you’re likely to call.
Similarly, have the phone number of your trusted pest and building inspector handy so they can provide a ready-to-go service when you come up with a possible winner.
By making their acquaintance early, you can get some pre-purchase heads-up on possible pitfalls that might surround your sale of the century.
4 - Look for the angles
Bargains aren’t always obvious and you must dust off a little dirt to find the gold seam. Try thinking outside everyone else’s square to see if you can make a go of a property possibility.
For example, one agent in a near-university suburb has built a formidable self-funding rental portfolio by identifying homes where additional bedrooms can be created for leasing on a per room basis to the student market.
It’s also worth considering whether a property holds a value to you over and above the local market. Perhaps by purchasing your neighbour’s home you may suddenly find yourself with a potential development site ripe for rezoning to units. And all for not much more than the cost of a standard residential dwelling.
Bargains may also be had by considering other angles for savings. Purchasing a home from a family member or buying the property you currently rent may circumnavigate the need for agents, thus saving on commission. In the latter case, you may also come to an arrangement where you’re compensated for upgrades you’ve carried out on the property yourself.
5 - Stick with the basics
Bargains aren’t bargains if things go sour easily.
Avoid main roads and adjacent rail lines. These things don’t sell in a soft market.
The rule is: a window of opportunity comes around to sell a dud property about once every seven years, so avoid them like a biblical plague.
http://www.realestate.com.au/doc/Resources/Invest/property-investment-bargains
Your next property purchase could be a steal if you adopt the right approach and get ready to take a shot when it raises its head. We looks at ways to sniff out a great buy.
Markets are all about supply and demand, and a property’s value is a fixed figure reflecting a balance of both. Right? Well, mostly yes, but there are ways to push your advantage so that you end up paying less than you may have expected and land a great buy that will fill out your portfolio plus provide plenty of opportunities for dinner party gloating at your next social engagement. The key is to get smart, get ready and back your judgment.
We’ve found a few ways to help you look back on your next purchase with smug self-satisfaction.
1- Look for an eager vendor
A vendor under distress is the most obvious component of a cheap purchase. There is no moral high ground here – often it’s a case that the seller needs a quick disposal and is willing to cut back on the price in order to move the bricks and mortar on.
While it isn’t pleasant to see another party in a sticky situation, you may be doing them a favour by relieving them of the property and, in most circumstances, it’s a business transaction where if you don’t someone else will.
Ben Anderssen is the director of Brisbane-based buyer’s agency Property Chase and is on constant lookout for property bargains for his clients. He often finds his best source of information to be the seller’s own representative.
“If you quiz the agent you’ll get to the point where they’ll start telling you perhaps a bit extra... And you can’t forget that agents, despite everything else, are there to do a deal. You’ll be able to tell pretty quickly whether or not they’re in a hurry to sell,” says Anderssen.
Some eager vendor situations:
The vendor has bought elsewhere
Gun-shy buyers will contract on one home before selling their current abode and will include a ‘subject to sale’ clause in the dealings. As settlement draws near, they become eager to dispose of their old property and now is the time for you to leap. Drive hard on the bargain – particularly when you’re armed with a cash contract free of conditions.
“I spoke to an agent the other day and he said: ‘It’s a young couple that owns this property and they’ve bought another house and have bridging finance.’ And I just thought: ‘Oh, my god, this is perfect,’” recalls Anderssen.
Divorce settlement
No one enjoys seeing these situations come to a head, but the end of a relationship is often punctuated by cutting ties and the settling of assets. Even where the separation is amicable, there is often an eagerness to move on and this means disposing of assets at a quick sale price. The effect can be amplified in acrimonious endings where both parties are eager to sever ties as quickly as possible.
Mortgagee sale
Costs of living pressures, interest rate rises, spiralling petrol prices – these are all catch phrases that have put further stress on those trying to service a mortgage and keep their head above water. Unfortunately, an overextended buyer may receive an unwanted knock on the door from the financier looking to recoup their loan.
Watching for a ‘Mortgagee in Possession’ sale is one strategy, and another is to seek out an owner trying to consolidate their assets and settle their loan.
Deceased estate
In the situation where property is willed to the next of kin, there may be many recipients to consider. While this is sometimes a sticking point, it’s common for family members to agree that a quick disposal of the property will help put the estate to rest.
Another consideration when multiple beneficiaries are involved is that the value of their share becomes diluted, so any reduction in the offer can appear minor. For example, a $500,000 home divided between four siblings will reap $125,000 per share. If a cash unconditional offer of $460,000 is forwarded, a $40,000 saving to the buyer means each sibling now gets $115,000 – not too dramatic a fall in the scheme of negotiations.
2 - Get smart
Forearmed is forewarned. When a bargain arrives, the first buyer to spot it will be the victor, so if you don’t recognise the opportunity when it arrives, someone else will run off with it.
My first purchase occurred in inner Brisbane in 2003. After months of researching the market, I was sure a dated two-bedroom unit with lock-up car accommodation could be located for under $180,000. Despite the agent’s reservations about such an animal existing, I received a phone call from one local realtor informing me that something had come onto the market “just yesterday”.
He first called the out-of-town lady at the top of his possible purchaser list who was keen to find a Brisbane base for her student daughter, but she had baulked at the $145,000 asking price.
Within three hours we’d arranged to meet at the unit and, armed with an intimate knowledge of the market, I suggested he bring around a standard contract of sale at the asking figure. The contract was signed on the kitchen bench within the first half hour of the inspection.
The body corporate manager told me later that the Gladstone-based couple who sold it was delighted to get $145,000 for it. My response was: “That’s great because I was delighted to pay $145,000 for it.” After $30,000 worth of renovations, the unit was worth approximately $210,000 and now five years later is around the $340,000 mark.
Know your market. Set your criteria on what you want and get informed. If you know that your next investment is to be a four-bedroom, two-bathroom, double-garage renter in outer Melbourne, get real about what they sell and rent for. Dig, dig, dig so you become the local expert.
When the right property comes along, you might be surprised to find that both the vendor and your competing buyers have scant idea as to what a great deal a property offers.
3 - Be prepared
By taking care of a few of the basics, you can remove uncertainties and move quickly.
Arrange your finance before you start hunting your prey. Know how much you can afford to borrow and get it organised. Now is the time to shop around for finance, not when your unconditional day of reckoning is imminent.
Also, go through the exercise to work out what sort of rental you need to achieve on your property to help service the loan.
This is an important step that can stop a prospective buyer in their tracks if they haven’t taken the time to consider the return on the investment.
Form a relationship with professionals whose help you’ll need when snapping up a deal.
Most valuers will be happy to discuss their general expertise and what they look for in a property, and can stand at the ready to provide their services quick-smart when they know you’re likely to call.
Similarly, have the phone number of your trusted pest and building inspector handy so they can provide a ready-to-go service when you come up with a possible winner.
By making their acquaintance early, you can get some pre-purchase heads-up on possible pitfalls that might surround your sale of the century.
4 - Look for the angles
Bargains aren’t always obvious and you must dust off a little dirt to find the gold seam. Try thinking outside everyone else’s square to see if you can make a go of a property possibility.
For example, one agent in a near-university suburb has built a formidable self-funding rental portfolio by identifying homes where additional bedrooms can be created for leasing on a per room basis to the student market.
It’s also worth considering whether a property holds a value to you over and above the local market. Perhaps by purchasing your neighbour’s home you may suddenly find yourself with a potential development site ripe for rezoning to units. And all for not much more than the cost of a standard residential dwelling.
Bargains may also be had by considering other angles for savings. Purchasing a home from a family member or buying the property you currently rent may circumnavigate the need for agents, thus saving on commission. In the latter case, you may also come to an arrangement where you’re compensated for upgrades you’ve carried out on the property yourself.
5 - Stick with the basics
Bargains aren’t bargains if things go sour easily.
Avoid main roads and adjacent rail lines. These things don’t sell in a soft market.
The rule is: a window of opportunity comes around to sell a dud property about once every seven years, so avoid them like a biblical plague.
Sunday, February 15, 2009
How not to repay the depreciatin you have claimed when you come to sell the property
what you need to do is to attach a schedule to the sale of contract that lists out all th einternal fixtures and fittings at current carring down value. That way the purchaser is buying them at "current carrying value" so that the gain made is a capital gain rather than recouped depreciation.
Friday, January 23, 2009
Location tops tenants' list of priorities
By Terry Ryder, 24th December 2008
Location is the main criteria for tenants seeking rental accommodation, according to a survey by Matusik Property Insights. Tenants desire, above all else, to be close to work, public transport and facilities such as shopping.
Second on tenants’ wish list is the quality of the building or the area, followed by design features of the property such as size, number of bedrooms and yard or balcony space.
The actual rent ranks fourth on tenants’ list of priorities. Fifth is the security and amenity of the immediate neighbourhood and finally tenants would like a view.
The Matusik survey also asked tenants about the features for which they were willing to pay a premium. No.1 on the wish list is a study, preferably a separate room but a study nook will suffice. Broadband internet access is also important. “Many renters are younger people undertaking a tertiary course, so being able to study at home is important,” Matusik says.
No.2 on the list of items tenants will pay more for is a well-located, well-equipped and functional kitchen, preferably will ample storage space. “Renters, even the younger crowd, can cook and entertain at home,” Matusik says.
No.3 is a proper en suite, directly adjacent to the bedroom. “Given the rise in sharing – just under half of our survey respondents share their rental accommodation with an unrelated person – having a private bathroom is a must,” Matusik says.
Tenants will also pay more for a view, bedrooms large enough to fit a queen-sized bed, and secure off-street parking (preferably under cover).
The Matusik survey found six out of ten would pay up to 10% more in rent to get these features, while another one-fifteh saying they would pay a 20% premium.
Tenants will pay a premium for ….
1. Study
2. Quality kitchen
3. En suite
4. Views
5. Large bedrooms
6. Secure parking
Location is the main criteria for tenants seeking rental accommodation, according to a survey by Matusik Property Insights. Tenants desire, above all else, to be close to work, public transport and facilities such as shopping.
Second on tenants’ wish list is the quality of the building or the area, followed by design features of the property such as size, number of bedrooms and yard or balcony space.
The actual rent ranks fourth on tenants’ list of priorities. Fifth is the security and amenity of the immediate neighbourhood and finally tenants would like a view.
The Matusik survey also asked tenants about the features for which they were willing to pay a premium. No.1 on the wish list is a study, preferably a separate room but a study nook will suffice. Broadband internet access is also important. “Many renters are younger people undertaking a tertiary course, so being able to study at home is important,” Matusik says.
No.2 on the list of items tenants will pay more for is a well-located, well-equipped and functional kitchen, preferably will ample storage space. “Renters, even the younger crowd, can cook and entertain at home,” Matusik says.
No.3 is a proper en suite, directly adjacent to the bedroom. “Given the rise in sharing – just under half of our survey respondents share their rental accommodation with an unrelated person – having a private bathroom is a must,” Matusik says.
Tenants will also pay more for a view, bedrooms large enough to fit a queen-sized bed, and secure off-street parking (preferably under cover).
The Matusik survey found six out of ten would pay up to 10% more in rent to get these features, while another one-fifteh saying they would pay a 20% premium.
Tenants will pay a premium for ….
1. Study
2. Quality kitchen
3. En suite
4. Views
5. Large bedrooms
6. Secure parking
Sunday, November 2, 2008
Are property seminars and publications tax deductible?
Source: July 2008 Australian Property Investors , page 83
Tax related books are deductible, as they're to help you manage your taxation affairs and not to provide advice on buying rental properties. Investment magazines such as API and newspapers such as the Australian Financial Review are deductible, providing there's no private use (tax case T96). Less specific publications such as general newspapers are less likely to be deductible because it's difficult to argue that there's no private use. Seminars are only tax deductible if they relate to producing income from the property, so when a seminar teaches you how to find a good property or renovate it you can't claim a deduction against the rent for the cost of the seminar. If it also covers how to manager the property and how to buy or improve it then you can apportion the expense on the basis of the percentage of the time spent on that topic (Interpretative Decision 2003/324). You may be able to include the remaining costs as part of the cost base of a property under section 110-25(4) or (5) if you can link the seminar to that particular property.
Wednesday, September 10, 2008
Council valuations vs. independent valuations methods
- By Greville Pabst
- Published 18/10/2007
The valuation low-down...
There is no doubting the confusion surrounding the differences between a council rates notice valuation and an independent property valuation. Some property owners swear by their rates notice valuation, even though they may not realise they are conducted every two years. Whereas, some are property savvy and understand the property market is prone to fluctuation.
The council classifies the properties within their municipal area based on various features including type of construction, use, building size and land area.These features are then weighed and analysed against sales of each type of property from 3 months before and after the re-valuation date (the next one being January 2008), within the same municipality to determine the market value.
The purpose of a council rates valuation is to divide the whole budget of the council equitably between the rate payers – being owners of commercial, residential and industrial properties.This is done by applying a rate in the dollar by the capital improved value of the property.Other information gathered by the valuation process is used by other government departments for the collection of say, land tax.
The final analysis of each subject property ends up on a rates notice issued to the property owner and is broken down into three different values:
1.Site Value
2.Capital Improved Value (Land Value & Value of Improvements)
3.Net Annual Value; which under the relevant legislation is calculated at 5% of the CIV.The NAV is meant to be an indication on the rental value of the subject property.
The accuracy of the valuation will depend on the diligence of the council valuation staff.Some councils pride themselves on delivering up the most accurate valuation possible, whilst others are happy to appear equitable between all rate payers.
It must be noted that these valuations are done every two years but can only be accurate for a short period of time after the relevant date.For example, the last valuation was 30th January 2006, hence being valid for only a short time thereafter. As at today's date, areas close to the CBD (inner circle), have seen the market values of property drastically understated on their rates notice; whilst areas in the outer circle such as Werribee, may be overstated – purely due to the direction the market has moved since the last valuation date.
Other important things to note are that only approximately 10% of properties in a given municipality are inspected on a rotational basis for a re-valuation and there could be 40 -50 thousand homes in only one municipal area.
Contrary to council rates notice valuations, properties valued by an independent property expert are conducted for different purposes such as refinancing, investment portfolios, family law, body corporate to name a few.
The independent valuation process starts with a physical inspection of the property. The valuer walks around and through the property taking measurements and note of the number and type of rooms, fixtures and fittings, and improvements. The valuer then employs three methods to further analyse the property in order to come up with a value range: direct comparison, summation, and capitalisation of net income methods.
The field of property valuations is often described as an art and not a science, as it takes into consideration so many tangible and intangible aspects of a property and its surrounds. Valuations are a professional opinion based on available evidence; valuers do not set new benchmarks. They must be guided by what has sold recently, that is, within the past six months.
The direct comparison method involves researching recent sales of similar properties in the immediate surrounds, referred to as 'comparable sales'. The subtle and not so subtle differences are taken into consideration to determine the extent to which these comparable sales can be used as a guide to the value of the subject property. In this way, apples are compared with apples and necessary adjustments can be made for the bruises.
The summation method is the land value plus the depreciated value of improvements, which comprises the dwelling plus ancillary features such as garage, pergola and swimming pool. Land value takes into consideration size, shape, topography, slope, location and surrounding infrastructure and amenities. The value of improvements incorporates the style, age, architectural features, layout, number and purpose of rooms, and renovations in addition to the overall appearance and condition.
The valuer may also check these values by way of capitalising net income. This involves applying an investment yields to assessed market rental of the property to derive the current market value. This method is commonly used when valuing investment properties.
When refinancing or selling a property, one may ask - which is the preferred valuation to rely on?Given the fact that council rates notice valuations are conducted only every two years, and only 10% of properties within any given municipality are physically inspected, it is no doubt that an independent valuation is the way to go.Independent valuations are conducted on an as-needed basis and are reflective of the 'present'.Furthermore, banks and lenders will only accept valuations performed and signed off by an independent property expert listed on their panel of valuers.
What's cheaper than building your own house
source: www.homeiown.com than building your own house
If you are on a tightest budget and even building your own house is too much for your pocket, there is another way. You can buy a block of land and relocate someone else’s house – how’s that for an idea?
The advantages are obvious – it’s cheaper than building a new house (you can save up to 50%), it’s faster – removal can be finished within a couple of weeks, and often the quality is better because many of the older houses were built using higher quality materials than those used today.
Apparently there are many people who sell the houses they own for removals - to avoid paying demolishing costs. I saw several houses for sale in the Trading post (http://www.tradingpost.com.au) for $1000 – $2000, plus the removal of a house costs, about $30000 - $35000. The way it is done, you hire a removal company and they handle everything – remove the roof, cut the house in sections of transportable size and then move the house to your site where they install and re-join it, as well as put a new roof over it.
Here is a couple of links to house removal/relocation companies I found:
http://www.khr.com.au/relocating
http://www.drakehomes.com.au
http://www.davidwright.com.au
6 types of houses in Australia you must know about
Houses in Australia - different periods and styles:
Victorian 1840 - 1890
Federation 1891 - 1913
War 1914 - 1945
Post-war 1946 - 1959
Contemporary 1960 – present. There are 2 types, “project style” – meaning a house was built from a common plan and “custom built” - meaning a house was built using a unique design.
6 ways to sell your home for more
A recent Sydney Morning Herald article points to this recent report from Archicentre - the results from a poll of over 800 architects to see what the trends were in renovations. A look at this report could help you decide which home improvements will increase the value of your home, and which will not necessarily break even.
A few other ideas that don’t involve costly renovations:
- mow the lawn; tidy the outside of the house - in times of mortgage stress, a photo of a house where the backyard is untidy suggests that the vendor is desperate to sell, and that they would take a lower price.
- clean and tidy the bathroom - it’s a room where someone who is inspecting the house will quickly sense how well the rest of the house has been looked after.
- remove clutter: rent some storage if you need to - a house that is full to the rafters gives a sense of being smaller than it actually is: if you clear out some of your belongings, you will instantly create more space.
- clean the house thoroughly - in keeping with tip number 1, this will present your house in the best possible light.
- air any rooms that need airing - though it won’t come up in the online listings, someone who inspects your house in person will be able to tell that some rooms have a musty odour. This is especially worthwhile if you have pets.
- add some energy-efficient light globes - with so many people looking to save the planet, it doesn’t hurt to send the message to potential buyers that you are interested in doing your part.
Wednesday, July 23, 2008
Property sub-division and capital gains tax
Source: Wealth Creator Magazine January/February
Subdividing land – will you have to pay capital gains tax?
If you own a block of land and are thinking of subdividing it into two or more separate blocks, remember this can affect the amount of capital gains tax (CGT) you pay when you dispose of the subdivided blocks.
The process of subdivision will not result in any capital gains tax liability as long as you continue to own the subdivided blocks. However, you may make a capital gain or capital loss when you sell or give away any of the blocks.
You also divide the costs incurred in acquiring and subdividing the land across the subdivided blocks on a reasonable basis.
You may know that your home is usually exempt from capital gains tax due to the main residence exemption. If you subdivide land surrounding or adjacent to your home, it does not qualify for the exemption if you sell it separately from the home.
Example
Kim bought a house on a 0.2 hectare (or 2,000 square metre) block of land in June 2003 for $350,000. The house was valued at $120,000 and the land at $230,000. When purchasing the property, Kim incurred $12,000 in stamp duty and legal fees. Since the purchase, Kim lived in the house as her main residence.
Kim found the block was too big for her to maintain. In January 2005, she subdivided the land into two blocks. She incurred $10,000 in survey, legal and subdivision application fees and $1,000 to connect water and drainage to the rear block. In March 2005, she sold the rear block for $150,000.
As Kim sold the rear block of land separately, the main residence exemption does not apply to that land. She contacted several local real estate agents who advised her that the values of the front and rear blocks were the same. Therefore, Kim apportioned the original cost of the land ($230,000) equally between the two blocks ($115,000 each). Kim incurred $3,000 legal fees on the sale.
Kim works out her capital gain by adding together costs she incurred that form the cost base of the rear block, and taking this amount away from the sale price, as follows:
Cost of the land $115,000
50% of $12,000 stamp duty and legal fees on purchase $6,000
50% of the $10,000 cost of survey, legal and subdivision application fees $5,000
Cost of connecting water and drainage $1,000
Legal fees on sale $3,000
Total cost base $130,000
The capital gain on the sale of the rear block is calculated as follows:
Sale Price $150,000
Less
Cost base $130,000
Capital gain $20,000
As Kim owned the land for more than 12 months, she can reduce her $20,000 capital gain by 50%, after deducting any capital losses she made from other assets.
When Kim sells her home, being on the front block, she will get the full main residence exemption for it if she uses it solely as her main residence during all of her period she owns it.
Special rules
If the block you are subdividing was purchased or given to you before 20 September 1985, capital gains tax does not generally apply. However, if after that date, you had a building (such as a house) constructed on the land or made major renovations to the property, they may be subject to capital gains tax when sold.
You may make a profit from the subdivision and sale of land which occurred in the ordinary course of your business or which involved a commercial transaction or business operation entered into with the purpose of making a profit. In this case, the profit is ordinary income. If you need advice about this, you should seek help from a registered tax agent.
More info:
The Tax Office has publications and tools available to help you. The new capital gains property exemption tool is available on the Tax Office?s website http://www.ato.gov.au/ and helps you work out what proportion of any capital gain or loss is subject to CGT when you dispose of the property. If you have any questions relating to your circumstances, you can call the Tax Office on 13 28 61.
More information The Tax Office booklet You and your shares (Nat 2632-6.2004) is available at http://www.ato.gov.au/ or, for a paper copy, call 1300 720 092.
Subdividing land – will you have to pay capital gains tax?
If you own a block of land and are thinking of subdividing it into two or more separate blocks, remember this can affect the amount of capital gains tax (CGT) you pay when you dispose of the subdivided blocks.
The process of subdivision will not result in any capital gains tax liability as long as you continue to own the subdivided blocks. However, you may make a capital gain or capital loss when you sell or give away any of the blocks.
You also divide the costs incurred in acquiring and subdividing the land across the subdivided blocks on a reasonable basis.
You may know that your home is usually exempt from capital gains tax due to the main residence exemption. If you subdivide land surrounding or adjacent to your home, it does not qualify for the exemption if you sell it separately from the home.
Example
Kim bought a house on a 0.2 hectare (or 2,000 square metre) block of land in June 2003 for $350,000. The house was valued at $120,000 and the land at $230,000. When purchasing the property, Kim incurred $12,000 in stamp duty and legal fees. Since the purchase, Kim lived in the house as her main residence.
Kim found the block was too big for her to maintain. In January 2005, she subdivided the land into two blocks. She incurred $10,000 in survey, legal and subdivision application fees and $1,000 to connect water and drainage to the rear block. In March 2005, she sold the rear block for $150,000.
As Kim sold the rear block of land separately, the main residence exemption does not apply to that land. She contacted several local real estate agents who advised her that the values of the front and rear blocks were the same. Therefore, Kim apportioned the original cost of the land ($230,000) equally between the two blocks ($115,000 each). Kim incurred $3,000 legal fees on the sale.
Kim works out her capital gain by adding together costs she incurred that form the cost base of the rear block, and taking this amount away from the sale price, as follows:
Cost of the land $115,000
50% of $12,000 stamp duty and legal fees on purchase $6,000
50% of the $10,000 cost of survey, legal and subdivision application fees $5,000
Cost of connecting water and drainage $1,000
Legal fees on sale $3,000
Total cost base $130,000
The capital gain on the sale of the rear block is calculated as follows:
Sale Price $150,000
Less
Cost base $130,000
Capital gain $20,000
As Kim owned the land for more than 12 months, she can reduce her $20,000 capital gain by 50%, after deducting any capital losses she made from other assets.
When Kim sells her home, being on the front block, she will get the full main residence exemption for it if she uses it solely as her main residence during all of her period she owns it.
Special rules
If the block you are subdividing was purchased or given to you before 20 September 1985, capital gains tax does not generally apply. However, if after that date, you had a building (such as a house) constructed on the land or made major renovations to the property, they may be subject to capital gains tax when sold.
You may make a profit from the subdivision and sale of land which occurred in the ordinary course of your business or which involved a commercial transaction or business operation entered into with the purpose of making a profit. In this case, the profit is ordinary income. If you need advice about this, you should seek help from a registered tax agent.
More info:
The Tax Office has publications and tools available to help you. The new capital gains property exemption tool is available on the Tax Office?s website http://www.ato.gov.au/ and helps you work out what proportion of any capital gain or loss is subject to CGT when you dispose of the property. If you have any questions relating to your circumstances, you can call the Tax Office on 13 28 61.
More information The Tax Office booklet You and your shares (Nat 2632-6.2004) is available at http://www.ato.gov.au/ or, for a paper copy, call 1300 720 092.
Friday, July 11, 2008
Victoria planning schemes
Victoria
http://www.dse.vic.gov.au/planningschemes
Maroondah
http://www.maroondah.vic.gov.au/MaroondahPlanningScheme.aspx
http://www.maroondah.vic.gov.au/SubdividingLand.aspx
http://www.dse.vic.gov.au/planningschemes/maroondah/home.html
Process:
When find the land, ring the council to check the zoning to see if it can be subdivided
overlay(special planning controls for a local area) requirement: The minimum lot size for subdivision is 864sqm
Firstly get the block surveyed then lodge the application
The council will then refer the plans to various service authority which include Yarra Valley Water, Melbourne Water, Gas and Electricity suppliers, Telstra, VicRoads and CFA, and they will make comments to the council
If all ok, council will then issue statement of compliance for obtaining separate title
From the surveyor lodge the application to issuance of statement of compliance can take up to 6 months.
Application can be lodged before settlement after signing the contract.
http://www.dse.vic.gov.au/planningschemes
Maroondah
http://www.maroondah.vic.gov.au/MaroondahPlanningScheme.aspx
http://www.maroondah.vic.gov.au/SubdividingLand.aspx
http://www.dse.vic.gov.au/planningschemes/maroondah/home.html
Process:
When find the land, ring the council to check the zoning to see if it can be subdivided
overlay(special planning controls for a local area) requirement: The minimum lot size for subdivision is 864sqm
Firstly get the block surveyed then lodge the application
The council will then refer the plans to various service authority which include Yarra Valley Water, Melbourne Water, Gas and Electricity suppliers, Telstra, VicRoads and CFA, and they will make comments to the council
If all ok, council will then issue statement of compliance for obtaining separate title
From the surveyor lodge the application to issuance of statement of compliance can take up to 6 months.
Application can be lodged before settlement after signing the contract.
Thursday, July 10, 2008
The Tax Office is taking a tougher stance in a bid to keep self-managed funds in line.
Max Newnham July 4, 2008 - 10:55AM
http://smallbusiness.smh.com.au/growing/tax/now-you-can-dob-yourself-in-912280922.html
The Tax Office this week issued its long-awaited report on contraventions in self-managed super funds. The report lists the errors made by the trustees of SMSFs that must be reported by auditors of super funds.
Previously, auditors could use their professional judgement on whether they advised the ATO of infringements of the super regulations.
The contravention report is an indication of the tougher stance the ATO will take in performing its role as the regulator of SMSFs, and should be a warning to trustees to fully discharge their duties.
Auditors are now required to report all breaches of regulations in the first year of operation of SMSFs. The accounting and audit cost of SMSFs will rise with this requirement.
The ATO has said this step has been taken to gain a better understanding of how trustees are discharging their duties. They will use this information to better target educational and enforcement activities for SMSFs.
The contravention report is set out in a series of seven questions that, when answered in the affirmative, require the breach of the regulations to be reported. The questions are:Did the fund fail to meet the definition of a SMSF?
As at the end of the financial year, is the SMSF less than 5 months old?
Has the trustees previously received advice of a contravention that they breached again?
Is there an identified contravention from a previous year that has not been rectified at the time the audit is being conducted?
Did the trustees fail to meet a statutory time period by more than 14 days?
Was the total value of all contraventions greater than 5% of the total value of the fund's assets?
Was the total value of all contraventions greater than $30,000?
A super fund meets the definition of an SMSF if it has no more than four members, all members are trustees or directors of a trustee company, no member is an employee of another member unless they are a relative, and trustees are not paid for performing their duties as trustees.
The instruction guide issued to auditors on how to complete the contravention report lists 20 reportable regulations and sections of the act.
The breaches of the super rules most likely to be reported will be failing to segregate super assets from personal assets; buying assets from members; incorrect payment of benefits to members; and failing to provide documents to an auditor within 14 days.
This last regulation is the one that many trustees breach because of the low priority placed on providing documentation to auditors on time.
The inclusion of value limits on breaches of the regulations is a welcome refinement of the contraventions reporting requirements.
Without the $30,000 total value limit, and the 5% of total asset value limit, every simple administration error would have been required to be reported.
The combination of the audit contravention reporting requirements, and the declaration that must be signed by all new trustees of super funds stating that they understand their responsibilities and duties, should result in a greater level of compliance by trustees of SMSFs.
In the past, the ATO has preferred to have mistakes fixed, rather than classing the fund as a non-complying fund. When this occurs, 46.5% of the super fund's assets are taken as a penalty.
If the contravention reports provide evidence of trustees wilfully breaching the regulations, this penalty ay be imposed more regularly.
Questions can be emailed to max@taxbiz.com.au.
Tax for Small Business, A Survival Guide by Max Newnham, is now available in book stores.
http://smallbusiness.smh.com.au/growing/tax/now-you-can-dob-yourself-in-912280922.html
The Tax Office this week issued its long-awaited report on contraventions in self-managed super funds. The report lists the errors made by the trustees of SMSFs that must be reported by auditors of super funds.
Previously, auditors could use their professional judgement on whether they advised the ATO of infringements of the super regulations.
The contravention report is an indication of the tougher stance the ATO will take in performing its role as the regulator of SMSFs, and should be a warning to trustees to fully discharge their duties.
Auditors are now required to report all breaches of regulations in the first year of operation of SMSFs. The accounting and audit cost of SMSFs will rise with this requirement.
The ATO has said this step has been taken to gain a better understanding of how trustees are discharging their duties. They will use this information to better target educational and enforcement activities for SMSFs.
The contravention report is set out in a series of seven questions that, when answered in the affirmative, require the breach of the regulations to be reported. The questions are:Did the fund fail to meet the definition of a SMSF?
As at the end of the financial year, is the SMSF less than 5 months old?
Has the trustees previously received advice of a contravention that they breached again?
Is there an identified contravention from a previous year that has not been rectified at the time the audit is being conducted?
Did the trustees fail to meet a statutory time period by more than 14 days?
Was the total value of all contraventions greater than 5% of the total value of the fund's assets?
Was the total value of all contraventions greater than $30,000?
A super fund meets the definition of an SMSF if it has no more than four members, all members are trustees or directors of a trustee company, no member is an employee of another member unless they are a relative, and trustees are not paid for performing their duties as trustees.
The instruction guide issued to auditors on how to complete the contravention report lists 20 reportable regulations and sections of the act.
The breaches of the super rules most likely to be reported will be failing to segregate super assets from personal assets; buying assets from members; incorrect payment of benefits to members; and failing to provide documents to an auditor within 14 days.
This last regulation is the one that many trustees breach because of the low priority placed on providing documentation to auditors on time.
The inclusion of value limits on breaches of the regulations is a welcome refinement of the contraventions reporting requirements.
Without the $30,000 total value limit, and the 5% of total asset value limit, every simple administration error would have been required to be reported.
The combination of the audit contravention reporting requirements, and the declaration that must be signed by all new trustees of super funds stating that they understand their responsibilities and duties, should result in a greater level of compliance by trustees of SMSFs.
In the past, the ATO has preferred to have mistakes fixed, rather than classing the fund as a non-complying fund. When this occurs, 46.5% of the super fund's assets are taken as a penalty.
If the contravention reports provide evidence of trustees wilfully breaching the regulations, this penalty ay be imposed more regularly.
Questions can be emailed to max@taxbiz.com.au.
Tax for Small Business, A Survival Guide by Max Newnham, is now available in book stores.
Thursday, June 26, 2008
Asbestos
All houses built before 1984 have asbestos in some form. Because so many houses have it, it usually does not become a resale problem.
If the buyer knows an asbestos roof, they will use it to bargain against the vendor. It all depends on the condition of the roof-painted or unpainted, if unpainted, is the house in suburbs of near industrial area or freeway? Also the appearance and is a rain water tank attached?
If intact, asbestos isn't a problem. It is only a problem when it is disturbed/starts to deteriorate, i.e., when the fibres become airborne that you need to start to worry about asbestos.
Handling & Removal:
1. make sure that your contractor deals with asbestos "the correct way" , i.e, wets it downm, doesn't use power tools, wears the correct personal protective equipment and disposes of it correctly (i.e. not in the local river....its been done)
2. Informing the neighbours when you are removing it, because depending how media savy your neighbours are, and whether people are concerned about asbestos . It can get problematic after the fact, if you have a complaint.
3. The cost of asbestos is more like $10k. Make sure the removalist are licenced to do it and vacuum out the roof space.
Also a good idea to check with an asbestos auditor.
Source: mentor.propertyinvesting.com
Wednesday, June 25, 2008
'prime stamped mortgage'
Most states in Aus when you take out a mortgage, the original signed mortage document gets stamped by an agent of the office of state revenue (this stamp shows how much duty you have paid on the mortgage/ loan size you requested). This is then referred to as the 'prime stamped mortgage'.
When you refianance and you want credit for the duty already paid, this document is needed at settlement as proof that you have already paid x amount of mortgage stamp duty. The refiancing institution will then only allow you to be charged duty on the increase portion. E.G. Your first loan was 200K, and the new one is 300K. The new financier will pay duty on your behalf on 100K rather than 300K minus any exemptions/ rebates applicable. They are said to have 'transferred' they duty that you already paid on the 200K in this instance.
source:
When you refianance and you want credit for the duty already paid, this document is needed at settlement as proof that you have already paid x amount of mortgage stamp duty. The refiancing institution will then only allow you to be charged duty on the increase portion. E.G. Your first loan was 200K, and the new one is 300K. The new financier will pay duty on your behalf on 100K rather than 300K minus any exemptions/ rebates applicable. They are said to have 'transferred' they duty that you already paid on the 200K in this instance.
source:
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