Jump to content

Sell or hold investment property
wwyd?


  • Please log in to reply
42 replies to this topic

#1 back*again

Posted 19 April 2012 - 10:16 AM

After some opinions on this, I've taken all figures out.

We own an investment property in a mining town (obviously this is a high risk investment).  Rents were sky-rocketing up until a couple of months ago.  We have made other financial commitments with the assumption we would be receiving at least $AA/week in rent.  It would appear now this isn't going to happen.

The housing market in this town tends to fall quickly, and rise just as quick.  After the GFC hit it was less than 12mnths before it was booming again.  Things affecting the price of housing at the moment; over supply of houses, local industrial action and employers capping the rent subsidy to employees (the rent is quite large, just about every one in town is provided housing by their employers).  I don't know how long this could last for, or how low prices can go.  I have enough savings for about 12mnths, if prices don't come back up by then, we're in trouble.

We put the house on the market, although it isn't peak time.  While I do believe prices will come back quite quickly, I don't believe they will sky rocket as much as they did before.  I ran some figures, we need $x amount to sell the house, pay off the mortgage, pay the REA, and cover the expenses the high rent was going to cover.  Or we need $y amount to cover all that, plus buy another IP somewhere more stable.  The REA initially told us she could get $20k more than $y, but called yesterday with bad news.  At this point it doesn't look like we could get $y, although $x is still achievable.

DH doesn't want to sell an IP and not be able to buy another, as that would be moving backwards.  I tend to agree, but in the back of my mind; what if houses prices fall badly and we're stuck with a house that's not worth a cent, thinking we could have walked away with enough to cover all our debts and financial obligations?

So, would you hold out for $y, or settle for $x?

Edited by back*again, 19 April 2012 - 10:17 AM.


#2 threelittlegems

Posted 19 April 2012 - 10:26 AM

I don't ever believe in selling an IP and not buying another one.

I also don't really like mining towns as investments because they are volatile.

If you have a plan of where to reinvest the money, and you can get out without losing money I would consider it.

But not if you don't have a plan on where to reinvest the money to achieve your goals.

I will also send you a PM with something to think about.

#3 back*again

Posted 19 April 2012 - 11:14 AM

QUOTE
I also don't really like mining towns as investments because they are volatile

Not really the point, but the house was bought to live in years ago when we moved out here.  After we moved out of the house we thought we might as well take advantage of the high rents for a few years before selling.....now just have to decide when to sell.

QUOTE
If you have a plan of where to reinvest the money, and you can get out without losing money I would consider it.

But not if you don't have a plan on where to reinvest the money to achieve your goals.

Yes, if I got enough money to buy another house, I do have a plan on what to do with the money.  However, as I said above, it doesn't look like I can sell it for enough money to buy another place.  I can get out of it debt-free though, just wondering if I should take that option.

#4 Ruf~Feral~es

Posted 19 April 2012 - 11:41 AM

Have you factored in Capital Gains tax?  If you are making a large profit, it may be a considerable amount which, when combined with the stamp duty of buying a new property, may make it worth holding on until prices go up?



#5 Feralishous

Posted 20 April 2012 - 02:00 AM

personally if this town is fairly cyclical Id wait until prices went higher then sell, to cover costs and buy another investment properties.

#6 TwiceTheWoman

Posted 20 April 2012 - 02:28 AM

Be honest with your appraisal of the situation - what are the chances of rental demand going up?
As above, don't forget capital gains tax when you sell + stamp duty when you buy.
Although I'm not wild about investing in flats or units/apartments, it may be worth your while picking one up close to a major CBD, with as low a number on the block as possible - that's if your cash will allow.

Try to get out of debt (bravo if you are!).  We're holding our breath over Spain and continue to watch China.  Luckily China's demand for our commodities, helps keep our economy buoyant.


#7 daisydo

Posted 20 April 2012 - 02:57 PM

Difficult decision OP.

Depends on who you talk to about the real estate values. Some say up and others say down. If only we had that crystal ball!


QUOTE (TwiceTheWoman @ 20/04/2012, 02:28 AM) <{POST_SNAPBACK}>
Try to get out of debt (bravo if you are!).  We're holding our breath over Spain and continue to watch China.  Luckily China's demand for our commodities, helps keep our economy buoyant.


My thoughts were that the Chinese economy is slowing. I am sure I read something about that a couple of weeks ago in the Southern Chinese paper.

#8 Guest_Retro_Mumma_*

Posted 20 April 2012 - 03:02 PM

Depends on what mining industry and what town.


#9 howdoyoudoit

Posted 20 April 2012 - 03:10 PM

My hubby sells to the mining industry and overall they are on a downturn. Not a boom right now and a lot of companies working staff on min hrs etc.... hard choice but I wouldnt have an investment prop in a mining town,way too volatile

#10 TwiceTheWoman

Posted 20 April 2012 - 03:12 PM

QUOTE (daisydo @ 20/04/2012, 02:57 PM) <{POST_SNAPBACK}>
My thoughts were that the Chinese economy is slowing. I am sure I read something about that a couple of weeks ago in the Southern Chinese paper.

^^^We're watching overseas postings closely as we trade our own super fund and are currently heavily in the international market.  The GFC isn't over yet.  We are not prepared to be complacent and are concerned over Spain with 50% unemployed under 25yo.
It still may pitch over to us with the domino affect coming from other countries.
.........all hinged on the Glass Stegals Act being repealed.  I recall watching the pomp and ceremony and thinking what the heck are they applauding for?  This is not good!  Hence sub-prime collapse - guaranteed inevitable disaster. Yadda, yadda.
I'm telling all my children (all in late 20's), stay out of debt for now, save as much as possible and put into high yield accounts.


#11 whydoibother

Posted 20 April 2012 - 05:31 PM

capital gains tax is something to consider.

#12 back*again

Posted 20 April 2012 - 11:35 PM

Thanks for your thoughts original.gif  I have considered all buying and selling and holding expenses in my calculation.  Due to the 7yr rule, we won't be paying CGT.

#13 PlatinumFF

Posted 21 April 2012 - 07:55 AM

QUOTE (back*again @ 20/04/2012, 11:35 PM) <{POST_SNAPBACK}>
Thanks for your thoughts original.gif  I have considered all buying and selling and holding expenses in my calculation.  Due to the 7yr rule, we won't be paying CGT.


I am of the understanding that no capital gains are paid on a principle place of residence. CGT is in deed paid on investment properties. The 7 year rule means that you have 7 years whereby you can claim the house as a PPOR to some point. CGT will need to be paid for the period that the property is classed as an investment. Ie you purchased the house in 2000 and it was a rental from 2000-2008. Any capital gains made during that time will trigger CGT. From 2008-now the house is a PPOR, you would need to have had the house officially valued and any gains made from 2008-now would be excempt. If the property is held for over 12 months, you get a discount on CGT.

I would strongly suggest that you speak with your accountant as I think your comment about 7yr rule and exception of paying CGT is incorrect. Your accountant should be able to explain the CGT rule with you, specifically relating to your circumstances.

#14 whydoibother

Posted 21 April 2012 - 09:58 AM

agree with PP.

ETA Just found this CGT calculator too http://www.yourmortgage.com.au/calculators...ital_gains_tax/

and you have to have paid land tax at some point as well.

Edited by IAmCal, 21 April 2012 - 10:08 AM.


#15 back*again

Posted 21 April 2012 - 10:03 PM

QUOTE
I would strongly suggest that you speak with your accountant as I think your comment about 7yr rule and exception of paying CGT is incorrect. Your accountant should be able to explain the CGT rule with you, specifically relating to your circumstances.


Thanks, but I am fully aware on the in's & out's of CGT.  I did not post this thread asking for a finance lesson.  I went out of my way to leave figures and dates out of the equation.  I'm asking for general opinions on risk level and what we should be happy to "get out" with; i.e. cover debts and obligations or also be able to buy another place.

QUOTE
and you have to have paid land tax at some point as well.


wrong again

#16 Wyn99

Posted 21 April 2012 - 10:16 PM

Tricky. Obviously noone can predict the future but I would get out now, debt free, then borrow to invest in a more stable location.

PS. OP people are only trying to help,
QUOTE
I did not post this thread asking for a finance lesson


#17 back*again

Posted 21 April 2012 - 10:21 PM

QUOTE
Tricky. Obviously noone can predict the future but I would get out now, debt free, then borrow to invest in a more stable location.

PS. OP people are only trying to help,


Not an option.  We cannot sell the place for enough to cover the deposit, buying and holding costs else where.  It's either hold and  hope, or sell and forget about it.

I realise people are trying to help, but firstly their advice is wrong, secondly irrelevant (even if it was correct).  I never asked about land tax or cgt

#18 *Chyloe*

Posted 22 April 2012 - 09:39 AM

I would probably sell it for X.

I am of the opinion that the CGT rule is 6 years, not 7.

#19 PlatinumFF

Posted 22 April 2012 - 02:41 PM

QUOTE (back*again @ 21/04/2012, 10:03 PM) <{POST_SNAPBACK}>
Thanks, but I am fully aware on the in's & out's of CGT.  I did not post this thread asking for a finance lesson.  I went out of my way to leave figures and dates out of the equation.  I'm asking for general opinions on risk level and what we should be happy to "get out" with; i.e. cover debts and obligations or also be able to buy another place.



wrong again


Thanks for the condescending post and on that note, I hope you get hit with a lovely tax bill!

For the record, a very close friend is a chemical engineer in the mining industry and has close business relationships with mining execs but as if I would share that information with you, of all people.


#20 whydoibother

Posted 22 April 2012 - 02:47 PM

well the place mustn't be worth much then as most states will hit you up for land tax for a place that is not your primary residence.

I think you are just a tight wad who doesn't want to pay for financial advice.

#21 Lees75

Posted 22 April 2012 - 03:00 PM

QUOTE (IAmCal @ 22/04/2012, 03:17 PM) <{POST_SNAPBACK}>
well the place mustn't be worth much then as most states will hit you up for land tax for a place that is not your primary residence.

I think you are just a tight wad who doesn't want to pay for financial advice.


The property could be worth a fortune. The OP is still able to claim it as her PPOR for 6 yrs, provided she hasn't purchased another property that she lives in.

Edited by Lees75, 22 April 2012 - 03:02 PM.


#22 kez71

Posted 22 April 2012 - 03:37 PM

id sell it and cut my losses..there are still cheap areas to buy another property..i live in gippsland Vic and theres plenty of houses less than $200,000..even some less than $100,000..my area is on the up due to RAAF and TAFE expansions..a good area to invest

#23 back*again

Posted 22 April 2012 - 04:47 PM

QUOTE
For the record, a very close friend is a chemical engineer in the mining industry and has close business relationships with mining execs but as if I would share that information with you, of all people.

WTF?   blink.gif  Why do I care who your friends are??


QUOTE
well the place mustn't be worth much then as most states will hit you up for land tax for a place that is not your primary residence.

Maybe before responding you should check out land tax laws in different states.  For example, there is NO land tax in NT at all.  In Qld, you only pay land tax when the unimproved value of the land is over $600k.


QUOTE
here are still cheap areas to buy another property

Thanks, but as I said before that simply isn't an option.  We cannot afford the buying and holding costs for what the place will probably sell for.

QUOTE
The 7 year rule means that you have 7 years whereby you can claim the house as a PPOR to some point. CGT will need to be paid for the period that the property is classed as an investment.

Curious about what on Earth you mean??  In your opinion you can only claim a house as your PPOR for 7yrs, even if you live in it?  

Although, as other PP pointed out, it's a 6yr rule, I hit the wrong key earlier.

#24 back*again

Posted 22 April 2012 - 04:54 PM

QUOTE
I think you are just a tight wad who doesn't want to pay for financial advice

Oh this one made me literally  roll2.gif

I NEVER asked for financial advice, and after the responses I'm seeing here I worry about anyone who does try to get it here.  I never brought up CGT, a couple other PPs.  I never brought up land tax, another PP did.

Try reading the OP again.  I left out all figures and date in a deliberate attempt to avoid financial advice.  A simple question of how much risk/reward would most people be willing to accept.  Hoping for a few different opinions with this.  Instead, people have ignored the OP, tried giving wrong advice regarding tax laws and repeatedly told me to invest elsewhere.  I clearly stated I had done ALL the calculations, and cannot avoid to buy elsewhere atm.

#25 Gangnam Style

Posted 22 April 2012 - 05:17 PM

QUOTE (Lees75 @ 22/04/2012, 03:00 PM) <{POST_SNAPBACK}>
The property could be worth a fortune. The OP is still able to claim it as her PPOR for 6 yrs, provided she hasn't purchased another property that she lives in.


Surely if a property is considered a PPOR for CGT purposes, then none of the tax benefits of investment property apply? if so, then why is the OP calling it an "investment property"?

Surely you can't have it both ways?




1 user(s) are reading this topic

0 members, 1 guests, 0 anonymous users

 

Special Ticket Offer, Save $8!

The Essential Baby & Toddler Show is back this April! Save $8 off the door price for a limited time only!

Why I breastfed my son until he was three

The fact that I not only breastfed my son, but breastfed him for three and a half years, seems pretty incredible in retrospect.

Do babies and young children see ghosts?

Do babies and young children see ghosts? If you’ve pondered the question, you’re not alone.

15 years with Essential Baby: meet Therese

"Life has a funny way of giving you what you need when you need it the most."

Mum causes a stir by taking a stand against leggings

A mum has found herself the subject of debate after claiming tight bottoms cause lustful thoughts in men.

Don't set a parenting goal for 2015 - do this instead

The problem with goal setting as a parent is the measure. How do we really know if we’re succeeding?

5 pregnancy myths that just won't go away

When you're expecting, it often seems like everyone is keen to offer advice about what you should and shouldn't do in the interests of your health and wellbeing.

RPA hospital contacting mums after discovering vaccine storage fault

Sydney's Royal Prince Alfred Hospital (RPA) is trying to contact women who had babies at the facility after discovering a fault in a refrigerator containing vaccines.

'Nutella' not a baby name, French court says

A French court has blocked parents from naming their baby girl after the hazelnut spread Nutella, arguing it would make her the target of mockery.

Why I'm never calling myself 'just a mum' again

I’ve grown three human beings. I feed them, dress them, teach them, care for them and love them 24 hours a day. Yet for eight years, when I meet new people and they’ve asked me what I do, I tell them: “I’m just a mum”.

Rosie Batty named 2015 Australian of the Year

One year ago, Rosie Batty could not have imagined she'd be where she is. Tonight the grieving mum who put domestic violence on the national agenda was named Australian of the Year.

Five reasons to hug more

Hugging – some of us thrive on it, even depend on it – and then there are those who don't care for it really. So, are they missing out?

Help - my three-year-old has started throwing tantrums

My daughter never went through the "terrible twos" but began throwing wild tantrums shortly after her third birthday.

That's commitment

First peek at Sonia Kruger's daughter Maggie

"She smells so good, I could eat her," Kruger tells co-host David Campbell.

Mum assists in own caesarean surgery

A mum who partly delivered her own twins during a caesarean has encouraged other women to take control of their birthing experience.

How to handle common childhood regressions

Regression can be a natural and common part of development prompted by a variety of factors, but that doesn't make it less frustrating.

Disgruntled dad's pram ad goes viral

When buying a second hand pram, there are lots of things to take into consideration. 

Man discovers he's a dad after finding 55-year-old letter

Discovering you are about to father a baby is startling enough - never mind finding out you have a 61-year-old son.

15 thoughts mums have during a tantrum

Ranging from mild to feral and triggered by events both minor and major, tantrums certainly keep life interesting.

Natural pain relief in the early stages of labour

While managing labour pains on your own can be daunting, there are a number of natural pain relief options to help you cope until you are admitted to hospital.

Win an Octonauts prize pack

To celebrate the launch of Octonauts Live! Operation Reef Shield, a spectacular underwater adventure live on stage, we are giving away an amazing Octonauts prize pack to one lucky fan.

Download now: Essential Kids Activity Finder app

Got bored kids? Quickly find the best activities for kids wherever you are in Australia with the Essential Kids app.

 
Advertisement
 
Advertisement
 
 
 

What's hot on EB

Forgotten Baby Syndrome claims the life of toddler

One baby dies every eight days in the back of a car in the US, victims of 'forgotten baby syndrome'.

For a brief time, I was touched by an angel

For a brief time, I was touched by an angel. You stole my heart, and changed me into the women I am today.

Chinese woman gives birth to quintuplets

After six years of trying for a baby, a couple’s dreams have come true many times over after the mum gave birth to quintuplets this week.

Chrissie Swan has reached her "sex quota"

Chrissie Swan says she and her partner have sex once a year due to her fear of falling pregnant.

Stars help save choking babies

It's an important lesson to learn, but one that busy new mums and dads might overlook until it's too late.

New Girl star Zooey Deschanel pregnant

Actress Zooey Deschanel is expecting her first child with her producer boyfriend Jacob Pechenik.

16 times 'dad reflexes' saved the day

Of course, in some cases they may be the ones who actually got their child into a precarious position in the first place, but we'll ignore that for now.

Couple's 'non-traditional' pregnancy announcement goes viral

Knowing you are not the father of your pregnant wife's baby would usually indicate a rocky relationship ahead for traditional parents.

The trials and tribulations of identical triplet newborns

Pip Donnelly is still playing spot the difference with her newborn identical triplets, Isabelle, Georgina and Frankie.

Win an Octonauts prize pack

To celebrate the launch of Octonauts Live! Operation Reef Shield, a spectacular underwater adventure live on stage, we are giving away an amazing Octonauts prize pack to one lucky fan.

Earthquake baby thriving five years on

Jenny Alexis is lucky to be alive after spending four days buried in the rubble of the 2010 Haitian earthquake, but now she's a thriving five year old.

Please don't say I'm lucky because I was adopted

On the one hand I was having a regular life with friends and sports and sleepovers and school. But I was also always wondering: Did my mother love me? What was wrong with me?

An open letter to non-parents who offer advice on child-rearing

Kitty, when you’re the parent of my child you’re welcome to wade in with an opinion – but until then, I’d prefer you to have a supportive ear and a glass of wine ready.

Couple arrested over baby gun video

A US couple faces charges after investigators say they found mobile phone videos showing the woman's 12-month-old daughter putting a handgun in her mouth.

NSW Health dumps 10-year limit on frozen embryos

A 10-year time limit on storing frozen embryos that were created with donor sperm has been dropped by the NSW government.

How my happy-go-lucky husband became a monster

Sharan Nicholson-Rogers watched her husband change from a happy-go-lucky police officer into an unpredictable man prone to violent and emotional outbursts.

Dads-to-be experience hormonal changes, too

Dads-to-be experience hormonal changes in line with their pregnant partners, a new study shows.

'They were just doing their job': mum of toddler killed in police chase gone wrong

"They were just doing their job. I feel so sorry for them. It is all just too sad."

Miscarriages to be formally recognised by NSW government

Women who miscarry will be able to obtain an optional "recognition of loss" certificate as a formal recognition of their often heartbreaking loss.

Cafe cubby house 'too noisy' for neighbours

Teenage parties, domestic disputes, or raucous late night pubs are the things that usually come to mind when you think neighbourhood noise complaints.

Dad films baby playing with snake

Most parents would not consider a snake an appropriate playmate for their baby, but a US dad who filmed his daughter playing with a python has defended himself against criticism.

Clever breastfeeding products

Check out this range of products designed to help make your breastfeeding journey more enjoyable, manageable and convenient.

 

Back to School Offer

Findababysitter.com.au

We've got you covered for this school year. Use www.findababysitter.com.au to meet local nannies now.

 
Advertisement
 
 
Essential Baby and Essential Kids is the place to find parenting information and parenting support relating to conception, pregnancy, birth, babies, toddlers, kids, maternity, family budgeting, family travel, nutrition and wellbeing, family entertainment, kids entertainment, tips for the family home, child-friendly recipes and parenting. Try our pregnancy due date calculator to determine your due date, or our ovulation calculator to predict ovulation and your fertile period. Our pregnancy week by week guide shows your baby's stages of development. Access our very active mum's discussion groups in the Essential Baby forums or the Essential Kids forums to talk to mums about conception, pregnancy, birth, babies, toddlers, kids and parenting lifestyle. Essential Baby also offers a baby names database of more than 22,000 baby names, popular baby names, boys' names, girls' names and baby names advice in our baby names forum. Essential Kids features a range of free printable worksheets for kids from preschool years through to primary school years. For the latest baby clothes, maternity clothes, maternity accessories, toddler products, kids toys and kids clothing, breastfeeding and other parenting resources, check out Essential Baby and Essential Kids.