The one we missed

[MTR]

Hi All
about 4 months ago we attended an auction (property on the market again, after reno, see below). We were not successful.

http://www.realestate.com.au/property-house-wa-alexander+heights-112272619

RE agent advised that the sellers were close to losing their home, banks at their door steps etc etc. Not sure whether I believe this story.

The house was disgusting, fat on walls and just a complete mess, needed a new kitchen, bathroom, painting, carpets in bedrooms, window treatments and some other repairs, anyway we worked on around $20-25K. We decided to offer no more than $290-300K. The RE agent advised at the time that if renovated nicely we could achieve $380K. I see it is on sale for more $389-429K, perhaps this is due to the lack of stock in Perth ATM, (first home buyers market is reasonably strong).

On auction day it did not sell, but there was an interested party who paid I believe $345K, which I thought was way too much, when one considers reno costs, stamp duty, holding costs, agent fees, settlement costs and 50% CGT I really can not see how the buyers could make any money on this deal.

My point is really if there is not at least 20% in the deal probably best to walk and even our entry level may have been a little tight.

Cheers, MTR

 

[sammy1]

Seems like it's a fairly clean home,25k is overkill if you ask me.
Good luck.

 

[mattnz]

On auction day it did not sell, but there was an interested party who paid I believe $345K, which I thought was way too much, when one considers reno costs, stamp duty, holding costs, agent fees, settlement costs and 50% CGT I really can not see how the buyers could make any money on this deal.

Cheers, MTR

They only paid $325k for it. They won't be eligible for CGT as they have flipped it within 12 months.

Note it also sold in 2007 for $375k.

 

[MTR]

Seems like it's a fairly clean home,25k is overkill if you ask me.
Good luck.

Hi Sammy
this is the renovated property, the after shot.

Cheers, MTR

 

[westminster]

They only paid $325k for it. They won't be eligible for CGT as they have flipped it within 12 months.

Note it also sold in 2007 for $375k.

Is that true? that if you buy and flip within 12mths you don't have to pay CGT? I've never heard of that.

 

[westminster]

Looks like the market in Alexander Heights is moving pretty quickly - everything under $400k is practically all Under Offer.

Will be interesting to watch. But I can see that if you were working on $380k that it wouldn't suit your risk profile.

 

[MTR]

They only paid $325k for it. They won't be eligible for CGT as they have flipped it within 12 months.

Note it also sold in 2007 for $375k.

Thanks mattnz, lies and damn lies, RE agent stated $345K
Figures still not good, we estimated $25,000 this was not a new kitchen, just benchtop, wonder what they paid for the kitchen as stone bench top etc.

Not sure whether it would sell at higher end. I will keep watching, just curious.

Would be interested in knowing what you guys would jump in at, when renovating, what % you expect to make from each deal. Certainly easy to lose money if you get it wrong and let emotion get in the way.



Cheers, MTR

 

[sanj]

Is that true? that if you buy and flip within 12mths you don't have to pay CGT? I've never heard of that.

Pretty sure he meant they wont be eligible for CGT discount

 

[MTR]

Looks like the market in Alexander Heights is moving pretty quickly - everything under $400k is practically all Under Offer.

Will be interesting to watch. But I can see that if you were working on $380k that it wouldn't suit your risk profile.

Hi Westminster
there are markets in Perth that are moving very fast it is all about affordability and close to the city sub $400K, I purchased 2 in an area approx 12 km to city and the first property was valued at $30K above purchase in 2 month period, it not a boom but there are certainly buyers out there. Have not settled on second property same area but am expecting same.

Rezoning helps..

Cheers, MTR

 

[devank]

Is that true? that if you buy and flip within 12mths you don't have to pay CGT? I've never heard of that.

I think what he meant was the 50% discount after 12 months.

 

[mattnz]

Is that true? that if you buy and flip within 12mths you don't have to pay CGT? I've never heard of that.

Hi Westminster, CGT is actually a desirable outcome. It is 50% tax, compared with 100% under standard income tax if flipped within 12 months.

I saw Mark Rolton misleading people at the weekend when talking about options, stating no CGT. He was correct, but instead they would pay 100% of tax.

 

[westminster]

Hi Westminster, CGT is actually a desirable outcome. It is 50% tax, compared with 100% under standard income tax if flipped within 12 months.

I saw Mark Rolton misleading people at the weekend when talking about options, stating no CGT. He was correct, but instead they would pay 100% of tax.

That totally wasn't my understanding. My understanding was:
1. sell within 12mths, you pay 100% CGT (times by your tax rate)
2. sell after 12mths you pay 50% CGT (times by your tax rate)

 

[westminster]

Hi Westminster
there are markets in Perth that are moving very fast it is all about affordability and close to the city sub $400K, I purchased 2 in an area approx 12 km to city and the first property was valued at $30K above purchase in 2 month period, it not a boom but there are certainly buyers out there. Have not settled on second property same area but am expecting same.

Rezoning helps..

Cheers, MTR

The sub $450k market is strong. I tend to buy in the same price bracket and it's tough.

Yay Girra-Doola-Roo

 

[mattnz]

That totally wasn't my understanding. My understanding was:
1. sell within 12mths, you pay 100% CGT (times by your tax rate)
2. sell after 12mths you pay 50% CGT (times by your tax rate)

We are saying the same thing....

From the ATO website

Capital gains tax - overview
Capital gains tax (CGT) is the tax you pay on a capital gain. It is not a separate tax, just part of your income tax. Selling assets such as real estate, shares or managed fund investments is the most common way you make a capital gain (or capital loss).

 

[westminster]

We are saying the same thing....

From the ATO website

Capital gains tax - overview
Capital gains tax (CGT) is the tax you pay on a capital gain. It is not a separate tax, just part of your income tax. Selling assets such as real estate, shares or managed fund investments is the most common way you make a capital gain (or capital loss).

Gotcha - I got totally confused by the way you worded it

 

[Scott No Mates]

You could always live in it as your ppor for the period & pay no CGT ie CGT exempt

 

[MTR]

The sub $450k market is strong. I tend to buy in the same price bracket and it's tough.

Yay Girra-Doola-Roo

Haha, like that.

Its a tough market and what I am finding is it is really difficult to deal with some of the agents, they would sell their mother if they could.

Cheers, MTR

 

[MTR]

Hi Guys
Just an update, looks like a $30K drop, no profit to be made here, only losses.

http://somersoft.com/forums/showthread.php?t=31772

MTR