sitloti
- Thread starter grossreal
- Start date
Hi Everyone,
I have not had time to read all of the thread as it is quite long and as Mry correctly stated it is a busy time for accountants.
I believe Joanna is correct in accounting for the sale of each unit on an apportioned basis. ie each unit has profit inherent within the sale price.
In relation to repayment of GST credits if the creditable purpose has changed then:
http://www.ato.gov.au/Businesses/co...htm&pc=001/003/014/002/004&mnu=&mfp=&st=&cy=1
Para 4.1.2 is relevant.
Having recently been through an ATo audit of a property developer at no stage did they dispute the calculation of the profit.
Hence i state on good authority that the GST credits should be repaid under Div 129 if the property has been rented for 12 mths or more.
GR, you have certainly have some innovative/creative methods but i do recommend that you get written tax advice in relation to your projects.
Good Luck
NickM
I have not had time to read all of the thread as it is quite long and as Mry correctly stated it is a busy time for accountants.
I believe Joanna is correct in accounting for the sale of each unit on an apportioned basis. ie each unit has profit inherent within the sale price.
In relation to repayment of GST credits if the creditable purpose has changed then:
http://www.ato.gov.au/Businesses/co...htm&pc=001/003/014/002/004&mnu=&mfp=&st=&cy=1
Para 4.1.2 is relevant.
Having recently been through an ATo audit of a property developer at no stage did they dispute the calculation of the profit.
Hence i state on good authority that the GST credits should be repaid under Div 129 if the property has been rented for 12 mths or more.
GR, you have certainly have some innovative/creative methods but i do recommend that you get written tax advice in relation to your projects.
Good Luck
NickM
I'd love to comment but will need time to read through the thread. Busy preparing two seminars for Mercedez Benz of Sydney (any forumites are more than welcome to attend) so will look at later on.
Reading through the last few posts I can only assume that gross has a number of developments on the go (development one is sold with a profit of say $100K in trust one), development two however has incurred costs (e.g. interest - which do not need to be capitalised but can be claimed) and so trust two has a loss. Are the groups consolidated for tax purposes ? Have family trust elections been made ? Because if so the $100K profit may be flowed from trust one into trust two deferring the tax until the gain is ultimately made on the profits in trust two. Am I close to what you are doing gross ?
hi coastymike
I have posted a structure and the way that structure uses equity to invest the finer points of my structure, I have already said has been designed by me for me and how they are put to gether is not a simple buy a property and sell a property and as sitloti suggests this is a structure and If it has taken this amount of a post to explain how I use equity I am not about to use 5 times this amount of post to explain the rest of the structure.
I have mentioned before that I use companies and trusts and more then one and have even spoken couple of times on the use of unlisted trusts in simple answer coastymike this structure as with in it a couple of unit trust, hybrid trusts, a blood trust,discret trust and a super trust and a mix of different ones
and the structure is growing.
I do not have a problem explaining what I do
I have a bit of a problem releasing a networth and my structure and you coastymike would understand why not with standing this is a free to air board and would leave my structure open to problems.
both this and gross and his system were for people to understand what can be done but like every thing its not all laid out on a silver plate once you have the idea you do ahve to build the structure your self similar to the ikea of investing
all the parts are there you just have to work out how to make it work for you.
have fun I did making it.
and before I get question like can you give me this or that on the structure the answer from the start is simply no
its propriotory to my main company.
I have posted a structure and the way that structure uses equity to invest the finer points of my structure, I have already said has been designed by me for me and how they are put to gether is not a simple buy a property and sell a property and as sitloti suggests this is a structure and If it has taken this amount of a post to explain how I use equity I am not about to use 5 times this amount of post to explain the rest of the structure.
I have mentioned before that I use companies and trusts and more then one and have even spoken couple of times on the use of unlisted trusts in simple answer coastymike this structure as with in it a couple of unit trust, hybrid trusts, a blood trust,discret trust and a super trust and a mix of different ones
and the structure is growing.
I do not have a problem explaining what I do
I have a bit of a problem releasing a networth and my structure and you coastymike would understand why not with standing this is a free to air board and would leave my structure open to problems.
both this and gross and his system were for people to understand what can be done but like every thing its not all laid out on a silver plate once you have the idea you do ahve to build the structure your self similar to the ikea of investing
all the parts are there you just have to work out how to make it work for you.
have fun I did making it.
and before I get question like can you give me this or that on the structure the answer from the start is simply no
its propriotory to my main company.
Fair enough gross. No problems with that. I can't comment on something without knowing all the facts. Was just interested in responding to JoannaK's questions but will leave it alone.
My previous post related to the properties that you supposedly sell down to achieve a neutral position. It is totally irrelevant whether or not the property is retained within the same ownership structure or not. And it is totally irrelevant what sort of structure you are doing your developments in. The ATO views a development as a development, and nothing else.
Quite simply, my concerns lay in that you have stated numerous times within this thread ZERO profit and ZERO tax....and I know it first hand to be virtually impossible to achieve ZERO profit and ZERO tax when in fact on an apportioned basis (which is the ATO take on developments) you are making profit, therefore have to pay tax.
To state otherwise is simply misleading, wrong and completely irresponsible (unless of course you have private rulings that say otherwise...then I'll happily shut up).
hi joannak
I beg to differ a development is not the same irrelavent of how you purchase or how you construct or the entity that is developed in this maybe the case with regards to the structures that you are used to or may not.
to post this is wrong
And it is totally irrelevant what sort of structure you are doing your developments in. I would if I were you go back to the person that setup your structure to construct and ask can you supply me a structure that can do this and it has nothing to do with private ruling as it does need a private ruling its a fact not an opinion.
I don't need to go back to my accountants I have already done that and as posted I have no intention of posting a structure here or anywhere else before you post that you understand that its fact you do need to ask a trust and structure expert can this be done.
maybe before posting.
To state otherwise is simply misleading, wrong and completely irresponsible (unless of course you have private rulings that say otherwise...then I'll happily shut up)
you need to find out if its possible.
thats as far as I wish to go down this path.
these structure are for information only and as posted.
sitloti is not for everyone and maybe not for anyone but me and there's a very simple why.
because I designed it
I built it.
I hope you well with your next development.
I beg to differ a development is not the same irrelavent of how you purchase or how you construct or the entity that is developed in this maybe the case with regards to the structures that you are used to or may not.
to post this is wrong
And it is totally irrelevant what sort of structure you are doing your developments in. I would if I were you go back to the person that setup your structure to construct and ask can you supply me a structure that can do this and it has nothing to do with private ruling as it does need a private ruling its a fact not an opinion.
I don't need to go back to my accountants I have already done that and as posted I have no intention of posting a structure here or anywhere else before you post that you understand that its fact you do need to ask a trust and structure expert can this be done.
maybe before posting.
To state otherwise is simply misleading, wrong and completely irresponsible (unless of course you have private rulings that say otherwise...then I'll happily shut up)
you need to find out if its possible.
thats as far as I wish to go down this path.
these structure are for information only and as posted.
sitloti is not for everyone and maybe not for anyone but me and there's a very simple why.
because I designed it
I built it.
I hope you well with your next development.
Equity Markets
Interesting progress on this thread.
Grossreal,
You speak of trading equity and an equity market.
What/where is this equity market?
Are you simply referring to, for instance, where you equity lend to a developer/builder to help them finance their projects (like the eg. with $1 mill. equity giving you 15% pa return)?
GSJ
Interesting progress on this thread.
Grossreal,
You speak of trading equity and an equity market.
What/where is this equity market?
Are you simply referring to, for instance, where you equity lend to a developer/builder to help them finance their projects (like the eg. with $1 mill. equity giving you 15% pa return)?
GSJ
I got lost back at the bit (in the resi example) where you could use the Equity in a property without it costing you anything as you dont actually take it out but rather secure it by a lien or 2nd Mortgage
With Tax and GST etc coming into it its now become rather perplexing and beyond my comprehension.
With Tax and GST etc coming into it its now become rather perplexing and beyond my comprehension.
Redwing get Skype and ring gross up and chat for free! It's bit easier to 'get it' that way.
hi all
I will be a bit of a infrequent visitor for a while.
as you will see from welcome to my world it exchanged today
so my time will be involved in putting the rest of the pieces into place forthat project so I will leave sitloti at this stage and will be concentrating on core business.
I will pop back every so often.
if you read welcome to my wortld you will know why.
have fun all I will
I will be a bit of a infrequent visitor for a while.
as you will see from welcome to my world it exchanged today
so my time will be involved in putting the rest of the pieces into place forthat project so I will leave sitloti at this stage and will be concentrating on core business.
I will pop back every so often.
if you read welcome to my wortld you will know why.
have fun all I will
I just had a thought. I dont have many, and they usually end up hurting my brain, but here it is ...
I think I see how equity lending may work.
EG:
You have an IP, Value = 500K, Mortgage = 300K. Equity = 200K. Lender 1
You find another investment, Purchase price = 400K.
You approach Lender 2 and say look: I have 200K equity in IP1.
I want you to loan me 320K to buy IP2.
However, I dont want to pay you cash for the deposit, will you please accept 80K of the equity I have in IP1 as the deposit.
Now.... this is where I struggled in the past ... why would a bank do this??
Well .. I think its because If they say yep - then they take a charge over that 80K equity (Lien as someone previously said). This then goes down on their balance sheet as an asset. And this is the important bit. It is an asset, just like cash, that is on their balance sheet, which they can then on-lend to other moms and dads, not once, but a few times (not sure what the rules are but its got to do with fractional lending and stuff like that - waaayyy over my head).
Its just like cash.
Except YOU dont have to pay Lender1 7% to USE the available equity.
Lender2 uses the equity to on-lend and make $$$ on.
Everyones happy.
A bit heavy for a friday afternoon, but thats just the sort of week its been.
Have a good one
T.
I think I see how equity lending may work.
EG:
You have an IP, Value = 500K, Mortgage = 300K. Equity = 200K. Lender 1
You find another investment, Purchase price = 400K.
You approach Lender 2 and say look: I have 200K equity in IP1.
I want you to loan me 320K to buy IP2.
However, I dont want to pay you cash for the deposit, will you please accept 80K of the equity I have in IP1 as the deposit.
Now.... this is where I struggled in the past ... why would a bank do this??
Well .. I think its because If they say yep - then they take a charge over that 80K equity (Lien as someone previously said). This then goes down on their balance sheet as an asset. And this is the important bit. It is an asset, just like cash, that is on their balance sheet, which they can then on-lend to other moms and dads, not once, but a few times (not sure what the rules are but its got to do with fractional lending and stuff like that - waaayyy over my head).
Its just like cash.
Except YOU dont have to pay Lender1 7% to USE the available equity.
Lender2 uses the equity to on-lend and make $$$ on.
Everyones happy.
A bit heavy for a friday afternoon, but thats just the sort of week its been.
Have a good one
T.
hi tomL
in a nut shell you have it in one.
and yes a lender will do it and not only a lender most lenders even your rams etc will.
you do need to max out at two properties or the leins become hard to clear and they are harder to do.
I have a lean to 95% of a property but thats a major, a mezz, and a private all using the same equity and no cost and the tennant is still paying there rent as income.
so yes it can be done by anyone.
not sure about the banks balance sheet but from the banks point of view they are still lending you max 80%(lvr loan to value ratio the value in this case is two properties and when added up an equity position)lvr so they are happy.
also if you do it (for the lender 2 in your example) and you can show how you are covering the loan ie rent from one to off set the other.
serviceability is no longer an issue.
I know westpac, nab,suncorp, anz,and bankwest would have no problem with it haven't tried the others.
the loan is the same it just how you are covering the short fall in the deposit.
the only reason I double with the comm is the return.
they are 10% and over (and before don says you can get that in nz, this would work there. just I will be staying in sydney)
it might be a headache to work out but there is no problem doing it and when you have done the first, you mirror from there.
in a nut shell you have it in one.
and yes a lender will do it and not only a lender most lenders even your rams etc will.
you do need to max out at two properties or the leins become hard to clear and they are harder to do.
I have a lean to 95% of a property but thats a major, a mezz, and a private all using the same equity and no cost and the tennant is still paying there rent as income.
so yes it can be done by anyone.
not sure about the banks balance sheet but from the banks point of view they are still lending you max 80%(lvr loan to value ratio the value in this case is two properties and when added up an equity position)lvr so they are happy.
also if you do it (for the lender 2 in your example) and you can show how you are covering the loan ie rent from one to off set the other.
serviceability is no longer an issue.
I know westpac, nab,suncorp, anz,and bankwest would have no problem with it haven't tried the others.
the loan is the same it just how you are covering the short fall in the deposit.
the only reason I double with the comm is the return.
they are 10% and over (and before don says you can get that in nz, this would work there. just I will be staying in sydney)
it might be a headache to work out but there is no problem doing it and when you have done the first, you mirror from there.
TomL
There's two ways to do this.
One is to say to Mr Bank, that I'd like a loan using my unused equity. Without using mortgage insurance, you could borrow 80% of the value. $500K value, $300K mortgage, borrow 8-%, $100K available for other purposes. Line of credit, or similar. Take that $100K (perhaps to another bank), use it for 20% deposit on something else, make a purchase.
The other way is that the bank itself says, "we want access to the title on #1 before we will give you something for #2. We will take second mortgage on #1"".
In the short term, the outcome is the same. You get to buy property #2.
But in the longer term, the outcomes are very different (as I've found out).
In option #2, the properties are "cross collaterised". The bank has power over both properties (which is an option they prefer).
If you want to refinance again in the future, option #2 becomes extremely limiting (Especially if you want to do the same thing again). I've been there- and it isn't good.
There's two ways to do this.
One is to say to Mr Bank, that I'd like a loan using my unused equity. Without using mortgage insurance, you could borrow 80% of the value. $500K value, $300K mortgage, borrow 8-%, $100K available for other purposes. Line of credit, or similar. Take that $100K (perhaps to another bank), use it for 20% deposit on something else, make a purchase.
The other way is that the bank itself says, "we want access to the title on #1 before we will give you something for #2. We will take second mortgage on #1"".
In the short term, the outcome is the same. You get to buy property #2.
But in the longer term, the outcomes are very different (as I've found out).
In option #2, the properties are "cross collaterised". The bank has power over both properties (which is an option they prefer).
If you want to refinance again in the future, option #2 becomes extremely limiting (Especially if you want to do the same thing again). I've been there- and it isn't good.
