I Don't Pay Tax
- Thread starter tasii
- Start date
Ajax said:
I wouldn't waste my money.
Ajax said:
I agree. Perhaps this thread should be deleted, or the name and number removed for the protection of the individual. Even if it is his own contact details, there's no reason to post them in such a way.
Tasii's post just drips with suspicion.
Jo, you had me rolling on the floor in laughter. Can I be second in line?Monopoly said:Upset???Oh please whatever you do don't mistake my sense of curiousity for aggrevation in anyway.
Puhleez !!!
If this post is true and not a wind-up then he has clearly defrauded Centrelink. No way would they be paying out $30000 a year if he had declared he had enough cash to build a house.
They will catch up with him.
Nat
They will catch up with him.
Nat
OK, someome had to do it - so I rang the number.
To my surprise, and probably to most of you, I got a very genuine older guy who posted a question in good faith.
He reiterated that his circumstances were that he had a 'goodly' sum of money in an "unrestricted non-preserved superannuation fund". The asset is known by Centrelink but is considered as an 'invisible' asset because he does not draw from it. If he were to draw an annuity, clearly it would be considered as income.
He stated that the bank (I didn't ask which bank) were prepared to authorise the loan amount based on his supperannuation figure, the value of his partially built house (and land) and to a much lesser extent his Centrelink payments.
We didn't go into details (primarily because I don't have the expertise to do so) but his intent remains to build a house and move into it as his PPOR. He would sell the partially built house and land to reduce the payments. He thought he would build and move each year (his PPOR) to gain some equity.
Now, with the risk of being labeled as a totally gullible fool I do believe the forum has a genuine question from a guy who lacks any investor education and who found the site while 'surfing'.
I encouraged him to log back into the site and explain his situation with some more clarity and I hope that he does because there could be some wonderful photo opportunities of 'butt kissing' somewhere around Melbourne.
To my surprise, and probably to most of you, I got a very genuine older guy who posted a question in good faith.
He reiterated that his circumstances were that he had a 'goodly' sum of money in an "unrestricted non-preserved superannuation fund". The asset is known by Centrelink but is considered as an 'invisible' asset because he does not draw from it. If he were to draw an annuity, clearly it would be considered as income.
He stated that the bank (I didn't ask which bank) were prepared to authorise the loan amount based on his supperannuation figure, the value of his partially built house (and land) and to a much lesser extent his Centrelink payments.
We didn't go into details (primarily because I don't have the expertise to do so) but his intent remains to build a house and move into it as his PPOR. He would sell the partially built house and land to reduce the payments. He thought he would build and move each year (his PPOR) to gain some equity.
Now, with the risk of being labeled as a totally gullible fool I do believe the forum has a genuine question from a guy who lacks any investor education and who found the site while 'surfing'.
I encouraged him to log back into the site and explain his situation with some more clarity and I hope that he does because there could be some wonderful photo opportunities of 'butt kissing' somewhere around Melbourne.
This may clarify a little:
My assets consisted of about $500,000 in unrestricted non-reserved superannuation. Centrelink view this as an invisible asset. It was Centrelink who suggested that I work as a volunteer in exchange for Newstart Allowance 3 years ago. They give me a contract for 12 months at a time and have renewed it twice so far. Since I receive Newstart, my wife qualifies for Parenting Allowance. The children mean we qualify for Family Tax Benefit A & B. It was Centrelink who suggested this ‘set-up’, I wouldn't have had the brains! (This was at a retirement seminar presented by Centrelink). I then got myself a financial advisor who confirmed that Centrelink was correct. He even came to the meeting I had with Centrelink to set up this financial plan.
Nor do Centrelink ‘see’ the PPOR as an asset for allowances purposes. Therefore I withdrew sufficient funds from my super to purchase a block and started constructing my first ever home and qualify for the First Home Buyers Grant of $7,000
I then decided it was a good idea to become a property investor and bought another block and hope to start construction in about 7 weeks. The financier took the 1st block and currently-under-construction-home as equity to fund 100% the 2nd block and construction. The loan is from Homeloans Ltd and they were not interested in my Centrelink income when deciding my ability to service the loan.
I then talked to my accountant who told me I must move into the first home and live in it for 12 months, by which time the 2nd home will be ready. I then sell the first (no CGT) and move.
I set aside sufficient to pay the interest only loan for 12 months, by which time I should have moved into the 2nd home and be in the process of selling the first. The proceeds of the sale will then be taken by Homeloans to reduce the debt. All I have done is move funds from one invisible safe asset, (my super) to a 2nd invisible safe, asset (my PPOR). If my guess is correct, the PPOR will perform better than the super. It's more fun also.
This website was suggested to me by my local librarian about 2 weeks ago. I also just finished reading my 3rd Jan Somers book.
However, my sincere question to the Forum is this: How can I best get into further property investment when I don't pay any tax, at least at present and for the past 4 years or so?
Malcolm
My assets consisted of about $500,000 in unrestricted non-reserved superannuation. Centrelink view this as an invisible asset. It was Centrelink who suggested that I work as a volunteer in exchange for Newstart Allowance 3 years ago. They give me a contract for 12 months at a time and have renewed it twice so far. Since I receive Newstart, my wife qualifies for Parenting Allowance. The children mean we qualify for Family Tax Benefit A & B. It was Centrelink who suggested this ‘set-up’, I wouldn't have had the brains! (This was at a retirement seminar presented by Centrelink). I then got myself a financial advisor who confirmed that Centrelink was correct. He even came to the meeting I had with Centrelink to set up this financial plan.
Nor do Centrelink ‘see’ the PPOR as an asset for allowances purposes. Therefore I withdrew sufficient funds from my super to purchase a block and started constructing my first ever home and qualify for the First Home Buyers Grant of $7,000
I then decided it was a good idea to become a property investor and bought another block and hope to start construction in about 7 weeks. The financier took the 1st block and currently-under-construction-home as equity to fund 100% the 2nd block and construction. The loan is from Homeloans Ltd and they were not interested in my Centrelink income when deciding my ability to service the loan.
I then talked to my accountant who told me I must move into the first home and live in it for 12 months, by which time the 2nd home will be ready. I then sell the first (no CGT) and move.
I set aside sufficient to pay the interest only loan for 12 months, by which time I should have moved into the 2nd home and be in the process of selling the first. The proceeds of the sale will then be taken by Homeloans to reduce the debt. All I have done is move funds from one invisible safe asset, (my super) to a 2nd invisible safe, asset (my PPOR). If my guess is correct, the PPOR will perform better than the super. It's more fun also.
This website was suggested to me by my local librarian about 2 weeks ago. I also just finished reading my 3rd Jan Somers book.
However, my sincere question to the Forum is this: How can I best get into further property investment when I don't pay any tax, at least at present and for the past 4 years or so?
Malcolm
Malcolm,tasii said:
With all due respect, I appreciate what you are trying to achieve here, but I cannot for the life of me see how any lending institution would give you (under your current situation, even with your superannuation to fall back on) $475K and not be concerned with your ability to service the loan!!! And to say they (Homeloans Ltd) were uninterested in your Centrelink income??? How can they not be, any income is worth taking into account. I understand that the block of land and the first construction may be adequate equity, but that does not address the "serviceability" issue should the unforeseen occur (ie. the house doesn't sell).....How do they expect you and your family to live, I mean love is grand, but hell it don't pay the bills!!!
Cheers,
Jo
Tasii,
Forget about how you can further get into property investment when you dont pay any tax. The bottom line in property investment is will this make me money either through a capital gain or improved cashflow or a combo of the two.
If you find a property that will allow you to make money - buy it and do what you have to do. dont let the fact you are not paying tax stop you.
why not look for places to subdivide, buy, build, sell, buy, renovate, sell or rent out. Let the market determine your strategy
OSS
Forget about how you can further get into property investment when you dont pay any tax. The bottom line in property investment is will this make me money either through a capital gain or improved cashflow or a combo of the two.
If you find a property that will allow you to make money - buy it and do what you have to do. dont let the fact you are not paying tax stop you.
why not look for places to subdivide, buy, build, sell, buy, renovate, sell or rent out. Let the market determine your strategy
OSS
Hi Tasii,
Looks like some forumites, jumped the gun a bit too quickly in appraising your situation. I'm guessing you can have the last laugh now.
Your moving into your (first) new PPOR for 12 months is to qualify for the First home grant, your subsequent sale an move to another residence as a PPOR seems fine, but future moves will be dependant on the time span. It will be considered trading so you better check with your accountant.
I am also assuming, that you are an owner builder, perhap using 'subbies' but as such it might be a little more difficult selling the house as it doesn't come with any builders guarentee and consequently you may need additional insurance to cover any faults to the building for the new owners.
This insurance doesn't come cheap, so tuck some pennies away for it.
Also since this whole project relies on 'invisible safe asset' once you cross the line you will be liable for tax, so tread carefully and double check any decisions you make.
Most of the forumites will have derived an increase of wealth from OPM, Other people paying the rent and tax advantages but that doesn't mean your method is too different. You have a distinct tax advantage, and can add value to your PPOR and build from there, however time may impair your progress (trading problem).
Possibly another avenue would be a IP in one of the children names, in fact they might qualify for the first home owners grant! They could rent it out the first 11 months... provided they live in it afterwards.
Lots of things are possible, but the biggest issue will be "how are you going to pay for it," and perhaps you may need to seek a way of accessing your super to provide for the shortfall in interest payments, without getting out of that 'invisible safe asset' system, that's going to be trick... Also DO THE SUMS, you don't want to be handing over your house to the bank because you are unable to pay or cant get at the super to pay because the super will now be deemed as an income.
There is another thing you should investigate, that is at 59, retirement is around the corner, and they inflict both asset and income tests before you qualify for the pension....You are only allowed to gift a limited amount away, and Centrelink know exactly how much you have, I guessing 500k is way too much. Check with ATO. You can probably pay off your PPOR, but your only allowed a certain amount in reserve. Some forward planning is essential seeing its only 6 years ahead.
Unless you enter the workforce at 65!
Please, Check with a good accountant.
Good Luck!
cheers
Timm
Looks like some forumites, jumped the gun a bit too quickly in appraising your situation. I'm guessing you can have the last laugh now.
Your moving into your (first) new PPOR for 12 months is to qualify for the First home grant, your subsequent sale an move to another residence as a PPOR seems fine, but future moves will be dependant on the time span. It will be considered trading so you better check with your accountant.
I am also assuming, that you are an owner builder, perhap using 'subbies' but as such it might be a little more difficult selling the house as it doesn't come with any builders guarentee and consequently you may need additional insurance to cover any faults to the building for the new owners.
This insurance doesn't come cheap, so tuck some pennies away for it.
Also since this whole project relies on 'invisible safe asset' once you cross the line you will be liable for tax, so tread carefully and double check any decisions you make.
Most of the forumites will have derived an increase of wealth from OPM, Other people paying the rent and tax advantages but that doesn't mean your method is too different. You have a distinct tax advantage, and can add value to your PPOR and build from there, however time may impair your progress (trading problem).
Possibly another avenue would be a IP in one of the children names, in fact they might qualify for the first home owners grant! They could rent it out the first 11 months... provided they live in it afterwards.
Lots of things are possible, but the biggest issue will be "how are you going to pay for it," and perhaps you may need to seek a way of accessing your super to provide for the shortfall in interest payments, without getting out of that 'invisible safe asset' system, that's going to be trick... Also DO THE SUMS, you don't want to be handing over your house to the bank because you are unable to pay or cant get at the super to pay because the super will now be deemed as an income.
There is another thing you should investigate, that is at 59, retirement is around the corner, and they inflict both asset and income tests before you qualify for the pension....You are only allowed to gift a limited amount away, and Centrelink know exactly how much you have, I guessing 500k is way too much. Check with ATO. You can probably pay off your PPOR, but your only allowed a certain amount in reserve. Some forward planning is essential seeing its only 6 years ahead.
Unless you enter the workforce at 65!
Please, Check with a good accountant.
Good Luck!
cheers
Timm
tasii
What is Newstart allowance actually for?
How many hours/week volunteer work is in your contract?
Adrian
What is Newstart allowance actually for?
How many hours/week volunteer work is in your contract?
Adrian
Hiya Malcolm,
I am sorry if my post of yesterday was misconstrued, I was genuinely interested in which bank you got to see past your limited 'income' and judge the loan in the situation you presented.
By the way, if your intention is to sell the house when it's finished, I'd suggest you get it onto the market asap, as sales have slowed (assume it's the same over there). Even if you sell it partly finished, with the contract to finish it, and settle as soon as it's completed. THis would also reduce your holding costs.
asy
I am sorry if my post of yesterday was misconstrued, I was genuinely interested in which bank you got to see past your limited 'income' and judge the loan in the situation you presented.
By the way, if your intention is to sell the house when it's finished, I'd suggest you get it onto the market asap, as sales have slowed (assume it's the same over there). Even if you sell it partly finished, with the contract to finish it, and settle as soon as it's completed. THis would also reduce your holding costs.
asy
Hi,
Regardless of what other people feel, at least this is constructive use of funds. If this means that in a couple of years this guy is self sufficient (which will be the case when income from properties increase), then this is ok by me.
This is far better than hearing about those stories of people on benefits for 10+ years or those who spend their days at the beach thinking that benefits are their right for not choosing to work.
If this new start is giving them a new start then go for it - I've heard much more given away to those more fortunate.
Michael
Regardless of what other people feel, at least this is constructive use of funds. If this means that in a couple of years this guy is self sufficient (which will be the case when income from properties increase), then this is ok by me.
This is far better than hearing about those stories of people on benefits for 10+ years or those who spend their days at the beach thinking that benefits are their right for not choosing to work.
If this new start is giving them a new start then go for it - I've heard much more given away to those more fortunate.
Michael
