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Brenda Irwin

Brenda Irwin

Bought a house in Western Qld for $30K. Nothing wrong with it.
Rented immediately $95pw. House pre 1983 but council search turned up that house was moved to block Sept 1988.
Unimp land = $3200
QS report = $11,410 Depreciable items
$22,450 Left on Spec build w-off (relocate costs)
$ 2,405 Furniture
Total Value= $39,465
QUESTION 1 - How much is the house value?
QUESTION 2 - Can I write off in tax, more than I paid for the
place?

Cheers Brenda
 
This IP is putting money in your pocket so, if you don't have any other IP been -ve then, you'll pay tax based on your personal income. Unless you are using a trust or company structure for this transactions. In which case you would have to check whether you are making or loosing money (on paper).
Well done!. James.
 
QUESTION 1 - How much is the house value?

Very strange Brenda. Assuming the capital works value started in 1988, I calculate the 1988 value of the house and relocate costs at $35,920. Since you purchased at $30,000 15 years later you either got a bargain or there has been little or no growth over that time.

QUESTION 2 - Can I write off in tax, more than I paid for the place?

If you held the place for another 25 years you would actually write-off more than you paid. This is because the write-off value is based on the construction cost of the house and relocating cost which is not the same thing as purchase price. I think you got a good deal so enjoy the feeling but I wonder whether the value of the property will go up much in the future. If not, at least there won't be much capital gains tax to pay come time to sell.

Currently, your rental yield is 16.4%. Combine that with some nice tax deductions and you have a very nice cashflow property, assuming you can keep it tenanted.

Regards, Mike
 
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If she puts the rent all into the mortgage and pays the property off faster, then cg is irrelevant. Well done, Brenda! Just out of interest, what was the population of the town you bought in and how did you go with finance?
 
brenda,

Looks like you've made a good buy - and plenty of depreciables too!

The real house value is one of those unknowns that lets us investors actually make money on property.

You can follow the market worth approach and get an appraisal done by a professional valuer, or go for a consensus of local real estate agent educated guesses.

Or you can go for the replacement value approach & have a quantity surveyer work out the precise cost of replacing the current house at today's costs.

Mostly houses are not the most valuable component of real estate as they are not in short supply (ie: easy to build a new one if the current one gets destroyed). However, of course, people actually live in and get emotional about this bit and that adds much more than the mere replacement value.

The land is the really valuable bit as it IS in short supply, you can't get build some more (yet).

Cheers,

Aceyducey
 
Sounds like you got a good deal on the house.

Is there anything wrong with the land that may cost you $$'s down the track ? (playing devils advocate)

For all I know the land is OK but I have read of houses in Alice Springs being built on Aboriginal Land. The owners were up s**t creek without a paddle. Does the land have any toxic chemicals that may cause your tennants problems ?
 
House was cheap as it was a little 2br forestry workers house, moved into a little country town. It is the most modest house in the best street (neighbours were REAL thrilled to have it between their grand highset Qld'rs... not). Land is 1/4 acre & most ULV's are cheap. One draw back is no car accom so am getting carport erected now. Will then get bank to revalue. Got QS to drive 2 1/2 hrs to do report, only charged $220 inc GST per house (have a few over there).
Median price 12mths to Dec02 = $54,000.
Borrowed $40K with NAB on 30yr P&I @ 5.91 variable. Repayments $237.71 per month.
Cheers Brenda :D :D :D
 
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