salary packaging and tax

[sveta]

hello

I am a new member on the forum. This is my first post but i have reading others posts on a daily basis for the past few months now.

I have a couple of questions. I hope some of the gurus on the forum could help me find answers.

My husband and i together earned around 140 K as gross income. I was working only part time as we have a 2 year old son. My husband has salary packing and we just received a mail saying that we have not used 11K before tax in the package. The only purpose we used the package was to package our rent and has a meal card. Can some one tell me if its better to get the money into our offset account and use it to finish off our ppr which is near completion in abt 6 weeks which means we will have to pay 40% tax or have the 11 K transferred to hubby's superannuation which means no tax. we are so confused.. Please advise.

The next question is we committed ourselves to building a house in a new estate worth 215 K (land) + 530K house with 95% mortgage. We didnt have to pay mortgage insurance as we both work in the health industry. The land price has gone up to 295 k since then. We did all this before we became a member of this forum and read books like rich dad poor. Now we realise what a terrible mistake we have done. Now we desperately want to buy an IP. How should we go about it?

Thanx

 

[wobbycarly]

Instead of buying the H&L as PPOR, can it work as an IP?

 

[monalisa]

A pre-tax contribution into super is a concessional (pre-tax) super contribution, and taxed at 15% (the employer claims a deduction for such contributions as these are a business expense for them)... pls check with your super provider.

 

[monalisa]

http://www.ato.gov.au/businesses/content.asp?doc=/content/38172.htm&page=2&H2

 

[Mez]

I am not sure what kind of salary packaging arrangements you / your partner have my I currently salary package $300 per week to my mortgage, and this amount remains tax free.

We can package towards rent, credit card, mortgage, child care, accomodation, venue hire, and a range of other things. I would speak directly to your salary packaging provider and explain your situaiton, then they should be able to give you some options in what you can do with the money.

Hope this helps...

 

[tobe]

$530k build price? On 200 to 300 land? That seems like overcapitalising to me. Get a couple of estimates on what it might rent for, and run the numbers. Unless the rental is really good, I would just hold it as a rental fro a year (to avoid CGT) and then sell. It depends a bit on what sort of grant you got, or have available now. If you switch it to an IP now, you can keep your FHOG powder dry and do another PPOR purchase later in the year and get it on the second house.
The other alternative is to move in, get the grant, and try to sell in 6 months or a year, but its hard to say whether you will get a profit.

Having the land value increase does not mean the value of your property has increased. They are now selling vacant blocks down the road for an increased price. This has no bearing on the price of established property nearby. None whatsoever.

 

[theparlourroom]

hello

We didnt have to pay mortgage insurance as we both work in the health industry.

Can I ask what you mean about not paying mortgage insurance b/c you work in the health industry? I've not heard of this before and I work for NSW Health.

Thanks

 

[sveta]

Instead of buying the H&L as PPOR, can it work as an IP?

I dont think it can and Canning vale does not command that sort of returns. The rent is good in the area but not high enough that it will cover the home loan and rent requirements. On a 7.5% interest we would have to pay around 2.3 k f/n, and I dont think we can get that kind of rental returns.

 

[sveta]

A pre-tax contribution into super is a concessional (pre-tax) super contribution, and taxed at 15% (the employer claims a deduction for such contributions as these are a business expense for them)... pls check with your super provider.

Thanx monalise for the link and it was really helpful. I guess we are better off getting the money into our offset account

 

[sveta]

$530k build price? On 200 to 300 land? That seems like overcapitalising to me. Get a couple of estimates on what it might rent for, and run the numbers. Unless the rental is really good, I would just hold it as a rental fro a year (to avoid CGT) and then sell. It depends a bit on what sort of grant you got, or have available now. If you switch it to an IP now, you can keep your FHOG powder dry and do another PPOR purchase later in the year and get it on the second house.
The other alternative is to move in, get the grant, and try to sell in 6 months or a year, but its hard to say whether you will get a profit.

Having the land value increase does not mean the value of your property has increased. They are now selling vacant blocks down the road for an increased price. This has no bearing on the price of established property nearby. None whatsoever.

Unfortunately this is true 530K is the build prices :. Lamd only cost us 215k. Now looking back we think it was a really bad decision backed by ignorance and inexperience...decisions made from the heart and not using brainsthe worst part is we still need another 50 k to finish off the house
Our FHOG was 21K, which we used up to get the airconditioning done and some for the floor covering.

The bank says we are eligible for upto a million in loan. So the way things look and from and advices i have received so far from this forum looks like we might have to hang on to this property forever. Since we are not borrowing to the max of our borrowing capacity, can we get the bank to finance our investment property from the remaining amount while using the current build as PPOR.

 

[sveta]

Can I ask what you mean about not paying mortgage insurance b/c you work in the health industry? I've not heard of this before and I work for NSW Health.

Thanks

Anz has given loan in the same manner to quite a few friends as well here. Its quite common. I think it depends on your combined income and how long you have been in the current job. All loans are assessed on a case by case basis apparently.

Sorry parlourroom unfortunately, i dont have any furthur explanation to this as I didnt ask any more questions when the lady at the bank said no need for mortgage insurance coz NO MI was a good enough answer for me

 

[sleepy929]

Can I ask what you mean about not paying mortgage insurance b/c you work in the health industry? I've not heard of this before and I work for NSW Health.

Thanks

ANZ has a medico package, but I was told it only allow you to borrow up to 90% LVR (Waived LMI depending on your occupation in health industry), so not sure how sveta got hers at 95%, must be a pretty good deal


Correct me if wrong, I think they only offer it to your first property (doesnt matter owner occupier or investment)

 

[theparlourroom]

ANZ has a medico package, but I was told it only allow you to borrow up to 90% LVR (Waived LMI depending on your occupation in health industry), so not sure how sveta got hers at 95%, must be a pretty good deal


Correct me if wrong, I think they only offer it to your first property (doesnt matter owner occupier or investment)

How exciting - I'm sure my fellow NSW Health employees will be very interested to know this!! I'll follow it up. Thanks heaps.