Insider Tips to Help You Discover How to Succeed with Commercial Property
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THIS IS CERTAINLY a two-speed story, according to the Property Council’s most recent Office Market Report.
The vacancy rate in Perth currently sits at around 20%; with office rentals down about 40% since there 2012 peak.
Sydney saw a 100,000 sqm take-up in the 12 months to December — which is three times its historical average. And the demand for office space was also strong for Melbourne.
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A RECENT ARTICLE in the Financial Review (11 January, page 32) summarised the influx of overseas retailers, who are about to launch new stores within Australia this year.
The key locations being: Melbourne (18), Sydney (10), Brisbane (8) and Perth (4).
THE FOLLOWING is a little-known (but should be widely-known) ATO explanation on how to calculate CGT on a property that was formerly your home that you subdivide much later. And how the principal place of residence can be lost.
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Let’s go through it in some detail … for a Dwelling that was purchased on or after 20 September 1985, and then subdivided after that date.
Kym bought a house on a 0.2 hectare block of land in June 2014 for $700,000. The house was valued at $240,000 and the land at $460,000. Kym lived in the house as her main residence. She incurred $24,000 in stamp duty and legal fees purchasing the property.
Kym found the block was too big for her to maintain. In January 2015, she subdivided the land into two blocks of equal size. She incurred $20,000 in survey, legal and subdivision application fees; and $2,000 to connect water and drainage to the rear block.
In March 2015, she sold the rear block for $260,000.
As Kym sold the rear block of land separately, the main residence exemption does not apply to that land. She contacted several local real estate agents who advised her that the value of the front block was $30,000 higher than the rear block.
Kym apportioned the $460,000 original cost base into $215,000 for the rear block (46.7%) and $245,000 for the front block (53.3%). Kym incurred $6,000 legal fees on the sale.
The cost base of the rear block is calculated as follows:
Total Cost Base = $243,548
The capital gain on the sale of the rear block would be $16,452.
She calculated this by subtracting the cost base ($243,548) from the sale price ($260,000). As Kym had owned the land for less than 12 months, she uses the ‘other’ method to calculate her capital gain.
Kym will get the full exemption for her house and the front block, because they were used as her main residence for the full period she owned them.
Not a bad result. But imagine if she had bought it 10 years earlier, used it as her principal place of residence the whole time and where the value was about half of the value it is now:
That is: $350,000 purchased with a value of $120,000 for the home and land at $230,000 … which is now valued at the $700,000 10 years later.
For tax purposes, you do not use the market value — you must use the original value.
The cost base of the rear block is calculated as follows:
Total Cost Base = $135,958
The capital gain on the sale of the rear block would now be $124,042 … with no allowance for the past use as the primary residence.
Bottom Line: As you can appreciate, this can be a real trap. And yet, it is one you can often avoid, with proper restructuring before any sub-divisions occur.
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ABOUT TWO WEEKS ago, my latest book was launched on Amazon. And I gave first look at it to everyone who had bought some of my training materials in the past — as well as, to my Inner Circle. [Read more…]
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THE QUESTION IS: Have the major corporate tenants been “sold a pup”? Or have their Financial Controllers merely been focusing upon cost savings, rather than employee productivity?
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SEVERAL RECENT ARTICLES in the Financial Review have flagged a slowdown in Asian money flowing into the Australian property market.
And that is principally as a result of China clamping down on capital movements out of the country.
WITH EVERY NEGOTIATION, you always need to be thinking on your feet. And here are several simple Tips to help you do just that.
WHEN YOU EMBARK on your journey as a property investor, it can be overwhelming – with a flood of information and diverse opinions. To help simplify the process, here are five essential tips for new (and seasoned) investors.
IT DOES NOT MATTER whether you’re an investor or an owner-occupier, there are several important factors to consider when purchasing a commercial property to ensure you make the right choice.
In a previous article, I shared a handy App to assist you in shortlisting potential properties. If you haven’t already downloaded it, simply click on the HiReturn Filter over on the right, to install it on your tablet or mobile device.
THERE IS A BELIEF among many experts that a surge in the stock market typically precedes a recovery in the commercial property market by about six months. And the start of this year saw equity markets gaining some momentum.
I HAVE BEEN ASKED countless times about the secrets to a successful negotiation. And I want to share with you the key elements to help make your negotiations effective.
But first, just watch this short video to gain a quick understanding of these three essential elements that form the foundation of every negotiation.
If you’re new to investing, you might be wondering if it’s possible to manage your own commercial property. The short answer is “yes”, but only if you know what you’re doing.
It’s important to note that owning a commercial property comes with certain legal responsibilities, particularly when it comes to compliance with Essential Services requirements under current Building Regulations.
The current trends in the business have made it clear that office landlords have to cater to the needs and preferences of their tenants. Building owners and managers (who understand and meet these demands) will be able to command higher rents and reduce vacancy rates.
To expand on this, here are four key tips to help attract quality tenants.
