Basic questions from a newbie

[stinadaze]

Right. I'm home all day today and have been sitting at my laptop since 7am reading and searching the net.

i have 2 questions that i cant seem to get a straight answer for

1. if we buy a land and house package, do we only pay stamp duty on the land??

2. re: depreciation, I know this is split out over the years, allowing you to claim only a certain amount a year on the asset value. Does this apply only to new homes? If a property is say 6 years old can you still claim depreciation?

sorry if these have already been answered but i cannot seem to find direct reference to them. (mind you the source of this information, a supposed investment advisor, is not very reliable i think and has just confused me!)

Also, I’ve read many stories of people buying "cheaper" properties, renovating and then renting out. Is there anyone who has gone with the strategy of buying new houses?

thanks!

 

[Cherry Pro]

Hi and welcome !

Good on you for taking the time to go through the many posts on this forum.

Don't know the answer to Q 1 but Q 2...yes, to claim depreciation, you'd have to have a Depreciation Schedule drawn up by a Quantity Surveyor ..will cost around $500 and will provde the amount that can be depreciated over the next 20 years. Yes, properties over 6 years old will definitely have a fair amount of depreciation. Even my close to 40 yo property has a small amount of depreciation ..$2500 pa and reducing.

About buying new houses as an IP, I would chose not to go that way, unless you plan to live in first. Our first home was a display Jennings home, brand spanking new and lovely but not in the suburb of our choice. Today, I'd go for location, location, location but maybe that's only me !

Good luck

 

[stinadaze]

Thanks Cherry! Well that's one question answered, which also answers a few others i had floating in my head! Let me see if I have this right….

See I was worried that if we renovated, the expense for the renovations is not deductible and would be out of pocket. But if I understand correctly now, after the renovations are complete, that’s when the quantity surveyor comes in and draws up the Depreciation Schedule which will include the renovations! And that’s were I get some of the expense back right!

If this is the case I will definitely look into buying older houses needing renos. We have a location in mind but we still need to research research research.

For those who do renos, do you always get a third party to do these or do any of you do the renos (or some of them) themselves?

 

[j_p]

Hi, in Victoria we only pay stamp duty on the land when building. Not sure about other states.

 

[Cherry Pro]

Hi again ...for depreciation ...the Quantity Surveyor can come before the reno is undertaken and survey the place. Once you complete the reno you
can provide him pictures / details of all the upgrades and his final report, will include both new and old fixtures. This is what we just did with our recent purchase.

With the renovations ..you'd have to check with your accountant whether they will be classed as capital or expense items. If capital items (done to improve the capital value of property) then it will be a deduction from sale price. If expense items carried out to bring the IP to a rentable condition, then they can be deducted that year itself. But check with your accountant.

I will share my experience - the roof of the place we bought was in need of repairs as it was leaking ..we were able to claim that cost back in the financial year.

If you have the expertise you can well carry out the reno yourself. We painted (my arm still hurts) the place ourselves, hubby put in a laundry cupboard but we had professionals install new kitchen, reno bathroom etc.

I'll pm you.

 

[Rixter]

In WA you pay stamp duty on the land.

 

[travelbug]

There is a post (in Adding Value) about doing it yourself VS paying someone to do it.

It really comes down to the cost of your time.

If you are in a high paid job then financially it doesn't make sense to take time off work.

Sometimes paying someone else works out cheaper. i.e it may take you 3 days to do a job (3 days pay for you lost) whereas a licensed person may do it in a day.

There are some things you shouldn't try either. A job not done properly can make a huge difference to the overall finish. I should post photos of a house I looked at last week. It was partly reno'd but it was SSSOOO bad you'd have to rip it all out and start again.

Some things are so quick and easy though I think it's crazy to pay someone.
You can save a lot of money buy ripping things out etc getting ready for tradies. Also some people are not that way inclined and don't want to dirty their hands. Location of the property is of course an issue also. It really varies greatly.

 

[stinadaze]

Thanks for the info! much appreciated!