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

[wylie]

This is where it gets interesting. If we ever sell this house, we would dump $450K into super (I think we can do that) so the tax would not be at hubby's rate. Hubby's rate may be zero soon as we are pondering his future in the paid workforce.

Unless forced to sell, we would pick very carefully when to sell to minimise tax.

I will use your calculation and substitute my figures and see what I come up with.

To me though, if he is putting up the challenge he could do the figures, using correct ones, not made up ones.

I'll get back with what I arrive at. I've given up on HIM doing it . He must be too busy opening new SMS funds.... but he's retired isn't he?

 

[wobbycarly]

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 (?)

I think manoj wants to see you deduct your net holding costs over the ownership period as well - unless your $40k covers that?

 

[jaycee]

After rent, I had to chip in $30k to pay for shortfall in expenses to maintain the proeporty - eg. interets / rate / property manager / fixing airconditioner.

I upped the figure to $40k, as the $30k actually came from my nett pay, guessing $40k as the gross amount.


Wylie, how the hell can manoj work out your profit / losson any particular property you own / have owned when no one but you has the figures relating to your investment ?

 

[wylie]

Wylie, how the hell can manoj work out your profit / losson any particular property you own / have owned when no one but you has the figures relating to your investment ?

Simple.... he could ask me for them.

 

[jaycee]

Oh, I see, you're just being a smart **** not actually adding to the debate and discussion....

 

[joanmc]

No different to manoj declaring I can access my super before 60, not saying how it can be done, and then calling me naive for not seeing his wisdom.
I'm still waiting for him to explain it as I would be very interested, but having spoken to a couple of super professionals who say it can't be done in my case, I think maybe he has realised that he is making sweeping generalizations that don't apply in every case.

 

[Aaron Sice]

i think there are PLENTY of ways to retire without using an SMSF.

cashflow is what you need. how you attain said cashflow is the moot point.

think commercial, CF+ property, option selling...... and that's just property.

i uses my SMSF as a self funding wealth store, not an profit investment vehicle. any profit realised by the SMSF is a beneficial by-product, for me.

 

[Rolf Latham]

Hi BC

Agree 100 % and I think thats one area where a lot of thinking gets stuck

retirement isnt about age, its not even about money per se,...............its about having the choice to work or not to work

ta
rolf

 

[joanmc]

i think there are PLENTY of ways to retire without using an SMSF.

cashflow is what you need. how you attain said cashflow is the moot point.

think commercial, CF+ property, option selling...... and that's just property.

i uses my SMSF as a self funding wealth store, not an profit investment vehicle. any profit realised by the SMSF is a beneficial by-product, for me.

but that still doesn't tell me how to access it before my preservation age....
I have super and will probably convert mine and hubby's to a SMSF in the next year or so and I can see a lot of benefits in using super....but

my question was how can ONLY investing in super (as monaj suggests) allow me to retire in my 40s? So far the only way to access it as far as I can see is to be terminally ill, or in financial difficulty and I am neither. Manoj suggested applying for newstart, sorry, I don't qualify unless I sell all my assets!

So using his strategy - how can I retire in my 40s? I am seriously interested to know this.

 

[wylie]

Oh, I see, you're just being a smart **** not actually adding to the debate and discussion....

Not at all. He made up figures that were wrong. He could have asked me for the correct ones, but didn't.

P.S. Is joanmc a smart **** too for asking for an answer to her question, or is it just me?

 

[bene313]

So using his strategy - how can I retire in my 40s? I am seriously interested to know this.

I think you know the answer already. Some passive cashflow outside of super is required.

 

[joanmc]

Not at all. He made up figures that were wrong. He could have asked me for the correct ones, but didn't.

P.S. Is joanmc a smart **** too for asking for an answer to her question, or is it just me?

yes I am!!!! lol

I have asked and asked different people in the super industry and now I am getting really curious as to how manoj does it! no one has been able to tell me. So if it is a legal and valid strategy to release your super before preservation age I am all ears. I seriously want to know how he is doing it!

 

[wylie]

yes I am!!!! lol

I have asked and asked different people in the super industry and now I am getting really curious as to how manoj does it! no one has been able to tell me. So if it is a legal and valid strategy to release your super before preservation age I am all ears. I seriously want to know how he is doing it!

Don't hold your breath .

 

[jaycee]

Not at all. He made up figures that were wrong. He could have asked me for the correct ones, but didn't.

P.S. Is joanmc a smart **** too for asking for an answer to her question, or is it just me?

You know the answer to your own question - you have the figures and can work out if you made / lost money... So you can't be asking the question in order to find the answer out

Joan is still waiting for a valid answer, manoj did imply (maybe more than imply) that it worked for all and sundry, but hasnt shoed how somoene in joan's postion could.

 

[wylie]

I don't know the answer actually. I have been too busy to do the maths.

I think we will just have to agree to disagree on this one Jaycee.

And manoj seems to have "left the building".

 

[JIT]

yes I am!!!! lol

I have asked and asked different people in the super industry and now I am getting really curious as to how manoj does it! no one has been able to tell me. So if it is a legal and valid strategy to release your super before preservation age I am all ears. I seriously want to know how he is doing it!

I think I just found the answer to this after reading a technical investment publication called the Saturday Herald-Sun in Melbourne today on page 76... !

An SMSF can do a related party loan to a company or trust that is connected with the member, but not to the member directly.

It can be for up to 5% of the funds assets, must be on commercial terms/interest rates, and for genuine investment reasons.

How's that... ?

I think I might be able to get about 2k out of my planned new SMSF now!!!

 

[joanmc]

hmmm, that's interesting. I don't know that I would have had enough in my super though to make it worth while up to this point though. And I would be wanting to live off the money if I am trying to retire not invest it. maybe with some creative bookwork? lol.

 

[Rolf Latham]

Not that Im a big fan of industry funds but the below article is some form of balance to the SMSF is the "solve all"

Global financial services group Mercer has told the Cooper Review that the rules around the operation of self-managed superannuation funds (SMSFs) need to be strengthened, including ensuring they are appropriate for particular consumers..

Full story here

http://www.financialservicesonline.com.au/news/news.php?id=2506&sid=3113

ta
rolf

 

[Pedro61]

Dont know if this is relevant to the argument anymore, but I accessed (Cleaned out) my super back in the '90s after many years in the military.

It was actually quite simple. I produced a one way ticket out of Oz, a letter of employment offer from overseas, Proof of having sold property (real estate, car, tv etc). All relatively easy to produce.

Of course I was single with no family then so all these things didn't cause me any angst. In the end I didn't even leave the country, just forfeited a small admin fee to get my Airfare refunded. If there had been any questions asked about my non-departure, my plan was to play the "my circumstances have changed" card. My guess is, that its probably not that easy now.

Sure, there were a couple of porky pies in there. Was it legal? Probably not, but I didn't hurt anyone, and it gave me the kick start in RE Investment that I needed. And I now have built my super up again to quite a healthy figure through my current job. Naturally I'd like Real Estate to me my REAL Retirement fund, but the Super is there to keep me sane.

 

[manoj]

All those who purchased investment property outside of super will pay tax on income and will pay CGT if they sell and if they decide not to sell - their kids will pay CGT

Last chance to learn how to save this tax...

Seminar 8th November 2011 6PM
Penrith RSL Club
IPA Discussion Group
Cost $20
Presenter: Manoj Abichandani
To book : www.trustdeed.com.au/seminar