"The Week That Was: 8-14/12, 1999"

From: Mike .


Hi All,

No records to speak about this week with only 4 threads and 16 posts in total.

Topics Included: Body Corporate Fees, Growth Rates, Falling Property Values, Claiming Interest if Renting PPR.

Quotable Quotes:

From Les: "But you could check out some of the other entries in this forum - a recent one "Increasing portfolio" could have some pointers that you could use too, and there have been several others over the months."

Me: We still see these type of gentle reminders to research the database, today. Will things ever change?

From John Millar: "Based on that I anticipate a downturn after the Olympics in Sydney followed by the peaking of the next cycle around 2008 -> 2010. That's about the time I am hoping to cash out and permanently go fishing!"

From Brian " Are there any experts out there who can tell me if this is anything to be concerned about?"

Me: Brian, please don't regard anybody who posts on this forum as an expert. If in doubt about the accuracy of statements made then seek independent advice from a qualified practitioner.

From Andrew: "Falling property values are never fun."

Me: I dunno about that, Andrew. I think some of our Flippers are laughing all the way to the bank.

From Sue: "If you are having no problems tenanting it smile every time you get the rent and keep it for the long term knowing that it WILL increase in time. How many houses do you know that are the same price or cheaper than they were 20 years ago. (Just ask any senior citizens!)"

From Gee Cee: "Dear Sue, What is this Senior Citizen's bit? I bought my first I.P. over twenty years ago and I am only 400."

Me: We'll have to carbon-date you soon, GC. Actually, GC is a young 40. Somehow that extra zero found it's way on the end of the 40. Sorry about that.

Me again: Are there any senior cit's on the forum that can confirm Sue's query?

From Sue: "And don't you love the way whenever they (ATO) say you CAN do something its peppered with words like "generally" and "or part of" but when they are saying you CAN'T do something the words used are a definite "cannot claim" or "will not be allowable". Keep up the good work and Merry Christmas and a Happy New Millennium to all our forumites. Sue

From Les: "Sometimes "the obvious" can be interpreted differently by different people - like the road rules that apply to a dual-lane roundabout !!!!"

Me: What do you mean by "interpreted differently", Les? In Sydney, they're not interpreted so much as IGNORED!.

From Les: "Hope my "blinding flash" helps to turn on the light for others, too - and my apologies if my previous thoughts were misleading (but they DID create a stirring discussion, eh, Sue?)."


Classic Post:

Les, your "blinding flash" also created this week's Classic Post. Maybe your son should take some of the credit, though. Thanks, anyway, for clarifying that confusing point. Looks like Sue "dobbed" on you.

Here is Sue's question:

"It was mentioned (actually by Les) in a previous posting that you "can't" claim the interest on a mortgage on a house that you previously lived in as your principle residence. Are you absolutely sure of this? Because we are currently doing just that with the help of our Accountant!

We lived in another state for 8 years and when we decided to return home to Qld we decided to rent out our house (the mortgage was very low) and buy another cheap house in our new location. We did this because our first house was in an excellent location and we thought we might return one day, and because we could manage another mortgage on the next house if we had tenants paying for the first house. We have been claiming the interest on the rented house (our previous residence) for three years.

My understanding is that the purpose of the loan has to have been to purchase the house you are claiming the interest against, whether or not you originally intended to rent it is irrelevant. From memory Jan and Ian's first few rental properties were purchased in this way and I understood that they were considered investment properties from the day they were made available to be rented, along with all the associated tax rebates and depreciations etc.

Please feel free to comment as I am finding this very disconcerting. (Thank goodness the interest involved in my case is very small!) Sue"
 
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Reply: 1
From: Les .



G'day Mike,

Thanks for including this one as a Classic - to my mind, it certainly was. If you read the whole thread (how DO you get to include these in the current forum?) you'll see that I was as convinced in my ignorance as Sue was in her knowledge.

My ignorance had come from assumptions made from hearing Noel Whittaker and other "guru's" saying "Don't rent out your old home - SELL IT, and buy another as an IP". My assumption was that there must have been some real hairy legislation just waiting to trip you up. As it turned out, nothing could be further from the truth.

But, thanks to Sue, I learned a heap from my very own "Blinding Flash of the Obvious" - even if it took some weeks to hit me ;^)

And, you're right - my son should get some of the credit too. We talk quite a bit about IP's and things - and this BFO stemmed from one of those chats.

Anyway, gotta agree - a Classic, it is.

Thanks, and regards,


Les
 
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