Garden Flats (47)

Having been in the landlord class of property owners a couple of times in the past, it takes a bit of investment capital to get started and then there are the ongoing maintenance concerns and no-respect tenants who often make it unviable. My brother and a cousin are invested heavily in housing over the years as their superannuation schemes (both self-employed).

Every 6 months, the no-respect tenants move on leaving weeks of repainting, repairing holes in walls, clearing rubbish from the yard, etc. And no income but still outgoings. When you work on a GROSS return of 10% on borrowed capital, it sometimes is not worth doing. Only the long-term capital gain (now heavily taxed) was the main benfit.

During my studies in the 70s, we did a subject called Valuation. Part of this was on rental return. Back then, a 10% return on the value of the property was the norm. Now, a gross return of 5% is the norm. Add in any financing (say 10% these days) and repairs and most sensible landlords are getting out of the system. My brother and cousin are now selling off as it is not even breaking even these days. This leaves the slum-lords who do nothing.

$250 a week rental for everything. Sounds cheap to me as this is what the caravan parks are charging for mouldy leaky boxes. And you can hear the neighbours fart. Plus have a walk in all wether to the showers ($1 for 3 mins) and $3 for the washing machine and $3 for the dryer. They do have clothes lines but you have to sit there and watch it dry because it might just "blow away in the wind," never to been seen again until somebody forgets where they acquired it.

Hey wash, on a property that was subject to capital gains tax, does the tax still apply after 12 years, if you have been occupying it?

Funny thing is that Capital Gains on property owned for less than 12 months has always been there. If you buy and occupy a property to live in and do so for more than 12 months, there is no Capital Gains UNLESS you have derived an income from it. eg, declared tenants, business claims and similar. If you have lived in it for the whole time without any 'taxable' income being derived from it, no Capital Gains applies.

Then comes the hard bit. Date of acquisition and date of sale. I spent 3 years going through a mighty battle with the ATO over this one. It was pre-Capital Gains and was on an investment property in Qld. They said that between my date of physical ownership (title signed over) and the date of signing the contract for sale (not title sign-off) was less than 12 months and therefore I had to pay tax.

My winning arguement, after a 3 year battle, was that they had shifting goal posts regarding when property was bought and sold and that the goal posts needed to be fixed. That it, contract for sale or title ownership at each end. They finally accepted this as the next step was going to be taking me through the courts, and there was no way they could win with their shifting goal posts. Their loss would most have resulted in them having to go through all their records and pay back millions to those they had robbed over the years.

Trouble is, they keep their beady little eyes on me all the time now and question nearly every tax return. But I make it hard as I make sure I can back up everything, and only do it every 3 years. Gives them hell trying to sort that out all at once.

so the tax would still apply. Best is to sell after retirement then no tax applies, thats according to the last accountant I spoke to.