Why buy Negatively Geared Properties? I think the calculations are wrong

[HiEquity]

Perhaps a contribution illuminating this opinion sometime during the 180 posts and 5000+ views to this thread, rather than debuting at the death, may have carried a bit more weight.

Thanks anyway but no soup for you.

Not particularly interested in carrying weight but thanks for caring!

The multiple contradictions of himself by the chief protagonist, as already pointed out by many others, as well as the blanket claims about the best investing structure for everyone, should (IMO) have sealed the lack of credibility of this thread well before now. I was just expressing my amazement that it had gone on for so long... I shouldn't need to elaborate!

 

[manoj]

None of the shares named above offer dividend yield of 8% check www.tradingroom.com.au except perhaps TLS and that is also due to recent drop in share price. Try another 3, further some of them do not offer full franking (please no one replies to this issues - till they have checked the Div yields).

Further, Dividend yields are in high 5's because in calculations, we consider past 12 months dividends with the current price = which means that future dividends are not assured or could be lower.

There are no contradictions.....Just the plans suggested are defective.. or are we plucking things from the air....


We are also waiting for Steve to tell us how "by never selling" he is going to save CGT - i think the idea is to hold IP's for future generations who will keep the equity for the family for ever (how is that going to happen, only he knows) and divide the rent among grand children and their current and ex-spouses etc -I do not know how that game plan work?

BTW the trustees of testamentary trust can, if all beneficiaries agree can dilute the trust, hence the idea "to never sell", may or may not work.

By ignoring CGT altogether and assuming that we cannot access super before preservation age (when we can), is naive.

Those who want to borrow more than 70% in super - should read below -

There are now products being offered by non-banks who will lend up to 80% for commercial and 90% for residential for SMSF borrowing. Think carefully, we are missing out on a structure which offers no tax on income and no CGT on sale (if sold in pension phase).





"Investors and SMSF will have the option of 2 exposures, Berkshire Hathaway (Warren Buffett’s investment company) or S&P ASX 200.

The Berkshire Hathaway investment is the only one of its kind in Australia providing your clients with a unique opportunity to obtain exposure to one of the great investment managers of our time, Warren Buffett.

Both exposures provide investors with 100% borrowing through a non recourse loan (suitable for SMSF) @ 4.95% p.a. fixed for three years, with 100% capital protection".

Matt Davis Senior Investment Manager
Wholesale and Structured Investments
JB Global

 

[steveadl]

None of the shares named above offer dividend yield of 8% check www.tradingroom.com.au except perhaps TLS and that is also due to recent drop in share price. Try another 3, further some of them do not offer full franking (please no one replies to this issues - till they have checked the Div yields).

...

We are also waiting for Steve to tell us how "by never selling" he is going to save CGT - i think the idea is to hold IP's for future generations who will keep the equity for the family for ever (how is that going to happen, only he knows) and divide the rent among grand children and their current and ex-spouses etc -I do not know how that game plan work?

Mate, if you want to change the goal posts when you're caught out, then go waste someone else's time - you asked for 6% yields, not 8%. I've come to the conclusion you're just here to spam and push your own agenda - you won't last long around here, have a nice life, not spending anymore time on a waste of space.

 

[JIT]

Manoj,

Which lenders offer 90% LVR for Residential SMSF loans?

That makes it much more interesting for those of us with low super balances.

Thanks.

Also, can you please elaborate on how you can access super before the preservation age?

If you can, it would make super far more attractive for some here.

 

[joanmc]

Manoj,

Which lenders offer 90% LVR for Residential SMSF loans?

That makes it much more interesting for those of us with low super balances.

Thanks.

Also, can you please elaborate on how you can access super before the preservation age?

If you can, it would make super far more attractive for some here.

I would also like to know how to access super before preservation age.

I am not in financial hardship so that one's out, I don't have a terminal disease, so that's no good, i am not applying for newstart (manoj's last suggestion) because i am not looking for a job. I have net assets that put me way over the line that qualifies for help.

Maybe if I sold all my assets and blew all the cash and then applied for the dole I could access it. I am 41 so it is preserved for another 19 years for me.

So how do I access it ??????

 

[Joe D]

I believe if you intend to leave the country permanently then you can get access to the funds. (or at least you used to be able to do this)

Have an extended overseas holiday and then return. Intentions can and do change for a variety of reasons .....

 

[BV]

I believe if you intend to leave the country permanently then you can get access to the funds. (or at least you used to be able to do this).....

You can't do this anymore

 

[wylie]

We are also waiting for Steve to tell us how "by never selling" he is going to save CGT

I'm still waiting to hear why you believe my purchase I posted about has lost me money year in and year out?????

 

[belleran]

If you are in your late 50s and don't really have enough (say $200k) to warrant opening an SMSF in which to purchase property wouldn't an already existing DT work in terms of mimimizing CGT when you retire and are not earning an income??

 

[jaycee]

I'm still waiting to hear why you believe my purchase I posted about has lost me money year in and year out?????

He explained how he came to that conclusion in other posts quite clearly already.

 

[wylie]

He explained how he came to that conclusion in other posts quite clearly already.

I saw his explanation, using figures he was guessing (incorrectly!) and other guesstimates, which I disputed. If there is another post, since that one, I must have missed it, and would like to know what post number that was.

 

[jaycee]

That is his explanation then.

Asking for it again would only yield the sae result.

You know already his answer, why aski him again

 

[wylie]

Because he says we have lost money year in, year out. I disagree, so why can't he accept that, acknowledge it, or explain where I am wrong using correct figures so we can all see how we are losing money year in and year out?

Either that, or send me my dinner voucher .

 

[jaycee]

Work it out according to his formula & present it.

It would be interesting to see....

 

[darcy13]

why ?

I keep seeing this figure of $200k being bandied about as the magical figure that you need to start a SMSF

my question is why ?

I'm sure most people on here don't put in a 200k deposit on IP's , so why would I need that to start a SMSF ?

stuart

 

[Player]

Hi Stuart,

I agree 200 K appears a randomly chosen round figure, however to start a SMSF does need a decent chunk of cash to make it worthwhile from inception by way of running costs and compliance.

The whole of 200 K would not likely be used for an IP as if the amount used for deposit, closings, set up SMSF, set up bare custodian trust and the trustee company of the latter only just breaks even, it does not allow a decent buffer for any interest shortfall.

Not using the numbers thrown around throughout this thread, just saying be mindful that the whole of a small super balance isn't used for a warrant lend as, if buffers for negative gearing are inadequate, then finance may be difficult to secure.

Also a SMSF needs an investment plan and strategy which needs refreshing and refining yearly (or thereabouts). If one only has say 100 K or less, then the fund may be seen to have asset risk if that whole amount were used to buy just one (cheapie) IP.

 

[wylie]

Work it out according to his formula & present it.

It would be interesting to see....

He is the one wanting to prove something. Let him work it out according to his formula (and I certainly am not going through five pages of this thread to find his formula).

 

[BV]

I keep seeing this figure of $200k being bandied about as the magical figure that you need to start a SMSF
my question is why ?
stuart

The SMSF would have operating costs of around $1500

If you leave your money in an industry super fund you'll pay a similar amount in fees when your super balance is $200K

http://www.australiansuper.com/about_join-australiansuper_low-fees.aspx

If you have less than $200K you are generally better off in an industry super fund or if you have a higher balance it's the opposite.
However, if you have an accountant who gives you a package deal the smsf tax return including the audit could cost you less than $1000.

 

[geoffw]

When I opened my SMSF 10+ years ago, I had a steady employed job, and $50K was plenty for an SMSF.

I've become self employed. Compliance costs have risen. Substantially. As the ATO requires more regulation.

The only reason for keeping my SMSF open now is that I have losses as a result of the GFC. The losses are smaller now- but if I closed the SMSF I would have unrealised losses with nothing to offset them against.

When the underlying assets improve I can close the SMSF.

 

[jaycee]

He is the one wanting to prove something. Let him work it out according to his formula (and I certainly am not going through five pages of this thread to find his formula).

then you have not accepted the terms of his challenge have you ? how can he declare you the outright winner ?

Dont know if I got it right.

I bought for $231250 (inclu purchasing costs().. I chippped in $30k nett, or $40k gross = $271250 costs in gross $.

I sell for $400k (approx value today ) and pay $10k commission = $390k...

Take another $5k off my cost base (to factor in building deprecaition added back)... $266250.

$390k-$267520= $123750

1/2 that amount for tax assesability - $61875 - 40% tax = $24750 CGT

$123750 - $24750 = $99000 I think raw cash (?)