Can you (or someone) explain the main lesson here ?
What type of things was the $40K spent on ?
Learning from mistakes
- Thread starter antistar
- Start date
Can you (or someone) explain the main lesson here ?
What type of things was the $40K spent on ?
Had a large parcel of shares in Forge Group. Day before they went into administration I almost sold them, was on the sell screen, had entered all the details to sell the shares and then thought give it another day, hopefully they will go up a bit more.
I might of reduced my losses to $20k if I did sell
I might of reduced my losses to $20k if I did sell
Did you get a depriciation schedule?
It's an odd rule because it's common sense that it's better to make repairs or improvements when no one is living in the property. What if the hot water system is broken? Do you advertise it saying sorry mate you have to have a couple of days with cold showers before I get it repaired? If the ATO won't allow you to deduct the expense would they allow you to depreciate it instead?
Renovations are different however and I would agree these are improvements and are depreciated.
Thanks for the reply.
I am still not quite getting it and I think I'm missing out on something important.
Repairs I can understand - but for a $40K reno I would have thought that mosting things are being replaced. In that case they would be a capital expense and depreciated whether done before or after it has been tennanted.
Can you give an example of the major items where the treatment is different?
If u read the ato site, it is clear that property must be "available to rent". Because i renovated prior to the property being tenanted, any cost incurred is not claimable as a repair deduction and a lot of the cost will form part of the capital base for calculating capital gains. Of course there are costs i can depreciate over time but not the whole lot.
Ie : i didnt just repair the kitchen, it ws ripped out and new one installed (the previous kitchen was a shell and not liveable in the condition it was in) which was just under $10k. This is classed as an improvement and not a repair. I can depreciate appliances but not the cost of installing the kitchen.
Same goes with the bathroom. Please note that i will still claim depreciation on what i can. It was just disappointing i couldnt claim more as a repair expense immediately.
Hard to convince ato if i got audited that the flooring had to be replaced or something was broken if the property had never been rented.
My next purchase will be something that either is currently tenanted or i will buy something and stick a tenant in first before any renovation. At least then i might be able to claim more expenses as a repair instead of an improvement. I will also treat the reno differently too.
Hope this makes sense
Ie : i didnt just repair the kitchen, it ws ripped out and new one installed (the previous kitchen was a shell and not liveable in the condition it was in) which was just under $10k. This is classed as an improvement and not a repair. I can depreciate appliances but not the cost of installing the kitchen.
Same goes with the bathroom. Please note that i will still claim depreciation on what i can. It was just disappointing i couldnt claim more as a repair expense immediately.
Hard to convince ato if i got audited that the flooring had to be replaced or something was broken if the property had never been rented.
My next purchase will be something that either is currently tenanted or i will buy something and stick a tenant in first before any renovation. At least then i might be able to claim more expenses as a repair instead of an improvement. I will also treat the reno differently too.
Hope this makes sense
Im finding this thread quite interesting.
In some cases I am failing to see how some of the posts are considered "regrets" - or Mistakes?
I have always taken the view that you always make the right decision at the time, otherwise, you wouldnt have made that decision. Certainly, with 100% hindsight, you might have made a different decision - however, you now have more information now, then what you did at the time.
When people make a profit on the sale of an asset - even though the future value was higher. I dont consider it a mistake by any stretch. You invested, you made a profit = success? No?
Anyway as I mentioned my investment career has been scared with "mistakes" though I have learnt from each one.
1) I had secured a property at $204k 'subject to finance'. I then got cold feet and got the bank to decline finance. The property a short time later was worth double, and now would be worth 3-4x that much. Regret? no. I was 24 and already had one IP. I would have struggled to pay the deposit and SD, and if it wasnt quickly rented I would have been in all sorts of trouble. I got cold feet bacause I knew I was stretching myself too far. However, my research was spot on. This WAS a good investment - if only I had a bit more up the sleeve - which I didnt.
2) Purchased a vacant block to build my PPOR. Shortly after was the GFC and the market crashed. At the same time I moved overseas, so didnt build my home. I still own the block, and it still isnt worth what I paid for it. Admitedly I purchased poorly as I failed to do adaquate research as this wasnt an investment it was a PPOR so it was an emotional purchase more than a calculated purchase. I will still build my PPOR on it (one day).
3) Purchased a development site which didnt make me a dime. Read my complete thread in my signature panel. I could rattle off a long list of mistakes I had made. Though Im not sure I regret any of it. The learning from this 'failure' will serve me well going forward.
Given my salary level I should be well ahead (financially) of where I am - however, I have invested a lot in my own education, invested a lot in 'unrecognisable' learning (such as international travel), invested a lot in 'life'. Im now comfortable that no matter what happens I wont get to an old age and think "you know, I regret not taking the oportunity to open my eyes to something new instead of endlessly persuing another $". I think the $$ will come, as will the comfort that $$ provide. I have worked hard all my life, but I have enjoyed every moment, and really, have no regrets. I wouldnt be where I am today if I hadnt made any mistakes.
Im sure there are more, but its enough divel from me for one day.
Blacky
In some cases I am failing to see how some of the posts are considered "regrets" - or Mistakes?
I have always taken the view that you always make the right decision at the time, otherwise, you wouldnt have made that decision. Certainly, with 100% hindsight, you might have made a different decision - however, you now have more information now, then what you did at the time.
When people make a profit on the sale of an asset - even though the future value was higher. I dont consider it a mistake by any stretch. You invested, you made a profit = success? No?
Anyway as I mentioned my investment career has been scared with "mistakes" though I have learnt from each one.
1) I had secured a property at $204k 'subject to finance'. I then got cold feet and got the bank to decline finance. The property a short time later was worth double, and now would be worth 3-4x that much. Regret? no. I was 24 and already had one IP. I would have struggled to pay the deposit and SD, and if it wasnt quickly rented I would have been in all sorts of trouble. I got cold feet bacause I knew I was stretching myself too far. However, my research was spot on. This WAS a good investment - if only I had a bit more up the sleeve - which I didnt.
2) Purchased a vacant block to build my PPOR. Shortly after was the GFC and the market crashed. At the same time I moved overseas, so didnt build my home. I still own the block, and it still isnt worth what I paid for it. Admitedly I purchased poorly as I failed to do adaquate research as this wasnt an investment it was a PPOR so it was an emotional purchase more than a calculated purchase. I will still build my PPOR on it (one day).
3) Purchased a development site which didnt make me a dime. Read my complete thread in my signature panel. I could rattle off a long list of mistakes I had made. Though Im not sure I regret any of it. The learning from this 'failure' will serve me well going forward.
Given my salary level I should be well ahead (financially) of where I am - however, I have invested a lot in my own education, invested a lot in 'unrecognisable' learning (such as international travel), invested a lot in 'life'. Im now comfortable that no matter what happens I wont get to an old age and think "you know, I regret not taking the oportunity to open my eyes to something new instead of endlessly persuing another $". I think the $$ will come, as will the comfort that $$ provide. I have worked hard all my life, but I have enjoyed every moment, and really, have no regrets. I wouldnt be where I am today if I hadnt made any mistakes.
Im sure there are more, but its enough divel from me for one day.
Blacky
Blacky
very honest post mate thanks for sharing your experiences even though it wasn't favourable to you financially. We all live and learn.
If u read the ato site, it is clear that property must be "available to rent". Because i renovated prior to the property being tenanted, any cost incurred is not claimable as a repair deduction and a lot of the cost will form part of the capital base for calculating capital gains. Of course there are costs i can depreciate over time but not the whole lot.
Ie : i didnt just repair the kitchen, it ws ripped out and new one installed (the previous kitchen was a shell and not liveable in the condition it was in) which was just under $10k. This is classed as an improvement and not a repair. I can depreciate appliances but not the cost of installing the kitchen.
Same goes with the bathroom. Please note that i will still claim depreciation on what i can. It was just disappointing i couldnt claim more as a repair expense immediately.
Hard to convince ato if i got audited that the flooring had to be replaced or something was broken if the property had never been rented.
My next purchase will be something that either is currently tenanted or i will buy something and stick a tenant in first before any renovation. At least then i might be able to claim more expenses as a repair instead of an improvement. I will also treat the reno differently too.
Hope this makes sense
A new bathroom and kitchen would not be a repair - even if tenants were in place.
A repair would be fixing a broken oven - a new oven would be an improvement.b
Would this mean having to get a new depreciation schedule done?
Mine would have been not having a clearly articulated investment plan/strategy when I started. My wife is the nervous type with money (if she had her way, it would all sit in high-interest accounts), and even now with a plan it's hard to convince her.
I own two close to neutrally-geared IPs (one in Adelaide, one in Canberra), sold my first place in Adelaide (at a decent profit) as I'd structured the finance wrong, and it was easier. My strategy has always been to buy big blocks and houses I would be happy to live in, which has worked well for me, and I'm building towards buying a PPOR (hopefully) in Melbourne. I'm happy working at the moment, and we've just had baby #1, so real estate is a hobby to a degree, as well as my method of saving/future-proofing.
I own two close to neutrally-geared IPs (one in Adelaide, one in Canberra), sold my first place in Adelaide (at a decent profit) as I'd structured the finance wrong, and it was easier. My strategy has always been to buy big blocks and houses I would be happy to live in, which has worked well for me, and I'm building towards buying a PPOR (hopefully) in Melbourne. I'm happy working at the moment, and we've just had baby #1, so real estate is a hobby to a degree, as well as my method of saving/future-proofing.
