Home' Domain South Coast Register : January 13th 2010 Contents 4 - Wednesday, January 13, 2010
Domain.com.au supplement to the SOUTH COAST REGISTER
My wife will be 63 this month.We have
$100,000 each in super and have a
mor tgage of $300,000 on our home
valued at $700,000. Our combined salar y
is $140,000.We under stand there is a way
we can reduce our mor tgage quicker
through a scheme that we pay into and it
pays us a pension.We'd like to be debt-
free when we retire at 65. Our plan is to
travel for a year, rent our house out, then
downsize.What do you recommend?
You're talking about a transition to
It involves salary sacrificing a chunk of your
gross salary into super and at the same
time star ting an account-based pension
from your super fund to compensate for
the reduced income.
This can boost your retirement finances
but you'll need to get an adviser to do the
numbers as the benefits differ from one
per son to another.
I'm concerned about renting out your
house and travelling after you retire
because you could well lose 10 per cent
of the proper ty's value when you move
your furniture out and the tenants move
A better option may be to sell your
house, place the money on term deposit
and go travelling. If you're concerned
prices may go up in that time you could
buy another home, live in it for a shor t
while before renting it out.This will
maintain your CGT exemption.
Q I bought a proper ty 14 years ago and
have recently sold it. I had tenants in the
house for four year s then I moved in. I
under stand I need to pay pro-rata CGT.
What can I claim against this amount?
Ongoing expenses such as rates and
maintenance should have been claimed in
your tax return once it was rented out
and should have reduced the tax payable
on the rents.
Capital expenditure is added to the base
cost and will reduce the amount of CGT
payable when you sell. Ask your
accountant to do the sums for you.
How can I reduce capital gains tax?
To calculate capital gains on the sale of
shares, are capital losses deducted before
the 50 per cent concession is applied ---
assuming all shares are held for more than
12 months? To reduce CGT, can I sell 50
per cent of my solely owned proper ty to
my wife, wait 12 months and then both
sell the entire proper ty?
Unfor tunately the capital losses are taken
off before the 50 per cent discount is
Suppose a person had $50,000 of capital
losses and also made a taxable capital gain
The $100,000 gain would first be reduced
by the $50,000 of capital losses and then
the balance of $50,000 would be subject
to the 50 per cent discount.
You should always seek advice from your
accountant, and possibly obtain a private
r uling, before transferring assets between
In these types of transactions there is
always a possibility of challenge by the Tax
Depar tment under Par t IVA and any
transfer by you to your wife would be a
disposal of the asset and would trigger
CGT in your name.
SOME people would rather chew off their arm than
spend time doing research.
And who can blame them? The very word 'research' is
dull enough to make watching paint dr y look like fun.
But all buyers need to do research if they want to buy
well, and ideally for under market value . A well-
researched proper ty buyer is likely to know more
about the future direction of house prices in a
par ticular location than economists (especially since
economists get it so wrong!).
How do you research proper ty to predict future
booms or busts? Read on ...
Buying proper ty that you will live in for 20 or 30 year s
as a family home is more about researching the
qualities you need in a long term home than
deciphering the market. But if you're a first home
buyer or investor, research is more impor tant
financially, to ensure you don't get caught out if the
proper ty cycle star ts going backwards. Knowing the
length of time you will live in a home, whether you
are likely to have kids or not have them, change
employment locations or have a need to be close to
other things like recreational spaces like the beach or
cultural spaces like galleries and cafes are all
impor tant to identify.
"Fair value" is a concept that tends to go out the
window when proper ty prices are rising quickly and
buyer s become more desperate to "get in" than take
their time to look at market fundamentals. Officially,
fair value is what a willing buyer would pay a willing
seller for an asset at any point in time. But when
things like rising interest rates, employment,
government policies like home grants and even new
infrastr ucture like roads come into the picture, it can
make buyers react more emotionally and irrationally.
The really impor tant things to research are proper ty
price, location, the potential of a proper ty and all the
market dynamics at work in that par ticular location.
Researching recent sales and auction results is
impor tant, but even more impor tant is physically
inspecting proper ties (rather than just relying on the
internet listing).You need to star t noting basics like
size, quality of the building, outlook or view, position
and how close it is to facilities.Which par ticular
factor s drive renter s, buyers and investor s in that
par ticular location? It's the subtleties of the market
that you want to understand and how the proper ty
performs under different valuation methods.
Rather than keep your options open to 10 or 15
suburbs, you are better to narrow down your
proper ty search to one or two areas and come to
research them extremely well. A Radar search on
Domain.com.au can easily show you on a map where
good infrastructure like train stations, restaurants,
shops and schools are and it's then obvious that
streets closer to these lifestyle facilities are "better
value" than streets fur ther away. But you need your
research to identify the good, the bad and the ugly of
each suburb. In some suburbs, the newness of a
house and the size of the garage is more impor tant
than being close to a train station. In others, a bush
view is more sought after than being close to a
school. Only detailed research can tell you this and
turn you into a smar t buyer who can spot value
quickly and immediately.
Real estate agents are smooth talker s and great
negotiator s, and you need to understand how they
work so you can negotiate the lowest price possible
to attain fair value when buying property. My per sonal
advice is never to reveal your real price buying range
to the agent, who will be working hard to qualify your
buying range and negotiate with you to pay right to
the ver y top of your price limits. It's also impor tant to
read up on the different sales methods for proper ty -
for example are ver y different to private treaty
Talking property with domain.com.au
5 must-know proper ty research tips: predict booms or busts
L J Hooker's top sales team
By Melinda Higgins
L J HOOKER Nowra recently
received the award for Top
Sales Team for the South Coast
Region at the LJ Hooker South
Coast Cell Awards.
Principal Tina Fernie said she
was proud of the team's
achievement and hoped to
continue with such successes
well into 2010.
"2009 was a roller coaster year
for the proper ty industr y and
this award is proof that the
team has the experience to
successfully deal with ever y
cycle of the proper ty market".
With an upbeat view of what
the year ahead will mean for
the local proper ty market Ms
Fernie said solid sales indicate
it is on the way up, in line with
predictions about the rest of
Ms Fernie said buyer
confidence was also taking a
turn for the better in the local
market with one of LJ Hooker s
recent auction nights
concluding with a 100 percent
clearance rate .
"It's a great time to get
preparations ready for a sale in
2010" she said.
Ms Fernie said realism, honesty
and hard work are the keys to
"We help customers set
realistic goals and then focus
on the hard work to make
"Ever y single proper ty is
precious and often represents
the owners life savings and
hopes for the future".
"We are for tunate to have
customer s who come back to
us and even do us the honour
of recommending us to their
families and friends. We value
their trust and put honesty and
integrity before any sale," she
The L J Hooker's award winning sales team. Back row, left to right:
Kellie McGrath, Rochelle Haworth, Alison Stewart. Front row: Karen
Woszatka, Tina Fernie, Leah Hollier.
Introducing the Inspection Planner
Domain.com.au's Inspection Planner is a handy new
tool to help proper ty seekers set up their own
The tool allows users to select the proper ties that are
of interest and set up a personalized 'open for
inspection' list. Inspection planner then plots these
proper ties on a map and gives directions between
each destination according to the time proper ties are
open for inspection. Inspection Planner is a handy
time saving device for any serious proper ty seeker.
Visit www.domain.com.au to see how
Inspection Planner can work for you.
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