PURCHASING UNREGISTERED LAND AND FORECASTING
I saw a post on the Property Road page the other day about whether buying land in an already established and booming suburb was a good investment in the hope that the land would increase in value. It is a valid question, but my response to this particular post was that it appeared the ship had already sailed and it would take a very long time before flipping that land would return a reasonable profit. Taking into account holding costs and the amount of time it would need to be held, it hardly seemed worth the effort. In property investing whether your strategy is flipping new homes, renovating established homes or buying new land, you want to be in and out as quickly as possible to minimise your risk to market fluctuations.
I thought it might be of interest to our members to know how I personally forecast what suburbs I feel are going to “take off” before they take off. We all know buying into the first release at rock bottom prices is always better than scrambling around in later releases having to pay top dollar and wishing you had have bought earlier for so much less.
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THE VALUE OF A REAL ESTATE AGENT
The Vendor’s Dilemma
Topical at the moment is this question of the value of the real estate agent. A plethora of do it yourself agencies and online marketing packages have appeared on the market (some have in fact been around for many years with varying degrees of uptake) and are generating a fair bit of discussion on social media and the like.
In most cases, probably not. Here’s why.
BUYING PROPERTY WITH A SELF MANAGED SUPER FUND
Did you know that you can set up a Self Managed Super Fund and purchase property with your self managed super fund with a balance as low as $170,000?
INVESTING IN PROPERTY AND NEGATIVE GEARING
Taking out a loan to raise money for an investment is a well-used tactic for many Australians. In fact, borrowing to buy big ticket items is part of financial reality. How many of us could afford to buy a house out of our own pocket?
Borrowing funds will increase the amount you can have invested and naturally amplifies potential gains because there is a larger capital base on which to earn returns. The caveat in all this, of course, is that it can also magnify losses. If you’re using borrowed funds, and the investment makes a loss, you are still responsible for the interest on the loan as well as the principal of the loan itself.
A ‘geared’ investment is just another way of saying that the amount invested has been ratcheted up through getting a loan. The word ‘gearing’ can be understood in a similar way to how gears work on a bicycle – a mechanism that turns a small effort on the pedal into a bigger physical force on the wheel.
THE BENEFITS OF BUYING PROPERTY “OFF THE PLAN”
More and more buyers are choosing to purchase property “off the plan”, but what are the benefits in purchasing off the plan?
There are many benefits from buying property off the plan. The main benefits being:-
- In the first instance you normally put down a small deposit. In most cases that deposit is 10% but you are sometimes able to negotiate an exchange of contract on 5% if you are paying the deposit in cash.
FOREIGN RESIDENT CAPITAL GAINS WITHHOLDING PAYMENTS
In 2013, the Labor Government announced that it would introduce a 10% non-final withholding tax on payments made to foreign residents disposing of certain taxable Australian property with a market value above a specified threshold. The Tax and Superannuation Laws Amendment (2015 Measures No. 6) Act 2016, introducing the new foreign resident capital gains tax withholding regime was passed by Parliament and received Royal Assent on 25 February 2016. The new regime will apply to contracts entered into on or after 1 July 2016.
At the moment, foreign residents are required to lodge an income tax return and pay tax in respect of any Australian assesable capital gain. The withholding obligations in the new regime aim to address the current low levels of compliance with this obligation and will assist the Commissioner in the collection of capital gains tax payable by foreign residents. However, a closer examination of the Act indicates that it will have implications for all vendors, regardless of their residency status.