Reply: 2.1.1.2
From: Paul Zagoridis
On 3/4/02 9:17:00 AM, Michael Vaughan wrote:
>others. For example I recently
>purchased a property for
>$160,000 in a street where
>other houses were selling for
>$215K. I spend a further $20K
>on this property and it is now
>at a market value of
>$215K(like the others in the
>same street) I have made a
>paper gain of 35K!Now if I
>spent a month full time making
>these improvements My hourly
>rate would be $218/hr tax
>free!
Congratulations on a good deal.
My quibble is when people brag about paper gains and tack on the tax free cherry.
If you don't have the cash in your pocket, all you have is a potential gain. Many people become unstuck when they need the money and can't get at it.
Your hourly rate is also a phantom. I'm not saying you should cash out, but could you afford to eat if you only did those sorts of deals?
The common way to cash out tax free is to borrow against the increases value. While there is no tax payable on such borrowings, the interest is not deductible either.
Again I'm not saying that structure is a bad idea.
My quibble didn't add to the sum of human knowledge. I still like your deal though.
Paul Zag
Dreamspinner
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