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Real Estate - June 2006

Tax Deduction Strategies – Company Title

June 30th 2006 01:57
In Australia the maximum company tax rate is 42% while the maximum personal tax rate is 47% so for those that are in a higher tax bracket, the use of a company structure to purchase property may be a financially better option. Rent is the major income stream from an investment property and it is subject to taxes. In single, joint or trust titled investment properties the income from the property my be distributed among the beneficiaries which is when the government enforces its slice of the pie with income taxes. One of the advantages with a company structure is that companies do not pay income tax on undistributed profits. Unfortunately, the company structure does not allow much flexibility in the way and distributed profits are shared amongst the shareholders and beneficiaries.


Say you set up a family company to purchase a property. At the time of establishing the company, each party is allocated a percentage of the company – a percentile shareholding. This shareholding will dictate what percentage of the distributed profits will go to each shareholder. So, as circumstances change and members of the company shift through different tax brackets, it is not possible to redirect profit distribution to those in a lower tax bracket.
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Tax Deduction Strategies – Family Trusts

June 29th 2006 00:42
The word "trust" is a technical legal term which refers to a relationship, based on confidence, under which property is held by and formally vested in one party, who is known as the "trustee", as its legal owner, but on behalf of other parties who are entitled to the fruits of that ownership - the "beneficiaries" (or "objects") of the trust. A family trust works in much the same way as a deceased estate, except that it is set up while the instigator is still alive. Typically family trusts invest in shares, property and fixed interest securities in the same way as individuals. Some family trusts are used to run a small business. The advantages of purchasing a property under a trust come into play during tax time. If the trust is a discretionary trust then the tax consequences can be one of the factors taken into account when deciding which distributions should flow to which beneficiaries each year.


Clearly, the greatest collective tax minimisation occurs, quite legally, when distributions are made to beneficiaries on low or zero marginal tax rates. The ability to use the low income taxpayers' rebate may constitute an additional advantage. In some cases the trustee's ability to make distributions within the tax-free threshold to one or more low income beneficiaries can lead to significant overall tax savings. The more persons in such a position that are available to receive trust distributions the greater the total tax savings would be - although, of course, there may be non-tax features to such a scenario which make it unattractive. No tax savings at all will occur when all the beneficiaries are already in the highest marginal tax bracket.
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Joint Names on Title Deeds

June 28th 2006 00:18
Joint tenancy is one of the most popular forms of property purchase. It is one of the most secure forms of purchasing a property as a partnership. This is because no one joint owner can mortgage or sell the property. Furthermore, each party has an equal share and right to the property. Should one of the owners die, ownership is immediately passed onto the surviving owner or owners. In the case of a title deed held in a single name, the property becomes caught up in a deceased estate scenario and taxes are withheld should the property owner die.

More than two names are eligible to be put on a joint title deed. Tenancy in common is usually the way joint ownership of property is handled within Australia. Tenants in common are eligible to sell or mortgage their share of a property. The inheritance of the tenants in common title deed is passed through a will. Tenancy in common is a good option when there are children from a previous marriage or you wish to isolate assets and define financial benefits to those in your will. Basically, if you own an asset, such as real estate with another person you can only own it in two ways: Joint Tenants or Tenants in Common.
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Single Name Title

June 27th 2006 00:50
Owning a property under a single name can often be used as a way for a couple or partnership to lower taxable assets whilst sharing in the profits. Individual property holders have the best course plotted for long term negative gearing. Often couples with multiple properties will look towards a combination of single and dual property ownership to best manage their assets.

A single name on the title deed means that sole ownership is legally recognized to be held by that single person. This owner has sole legal responsibility for the property. This means that should a legal issue arise, this sole owner will be exposed to litigation. Litigation can arise in a number of circumstances. A tenant may sue you for not complying with building codes, standards or tenancy acts. If someone injures themselves on your property they can potentially sue. Whether guilty or innocent legal proceedings are expensive, stressful and time consuming. One way of personally protecting yourself from litigation is to purchase the property under a company. The company is regarded as a separate entity which means that personal possessions will be somewhat protected from any legal scenarios.
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Tax Deduction Strategies – Title Deeds

June 26th 2006 00:56
A Certificate of Title or often referred to as a Title Deed is a document issued by the Land Titles Office detailing the owner, a legal description of the property and any other interests, such as mortgages, in the property.

All property investors are interested in reducing the taxable value of their property and seek ways to minimize the overall bite from the taxation department. There are many ways of trying to legally get ahead of the tax department. One such method is using negative gearing which has been discussed in previous posts. Another method is to look at the official ownership of the property and whose name/s goes onto the title deeds. When it comes to purchasing properties there are several options for how you establish the ownership of the property. You can buy in one name, joint names, as a company or through a trust fund. It is very important to think through all the issues of property ownership through thoroughly. When the title deeds have been handed over after the sale, the names that appear on the title deeds are relatively concrete. They can be changed but this involves a costly and lengthy process of paying stamp duties, valuation costs, legal conveyancing fees and possibly land tax issues.
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Preventing Cracked Brickwork

June 23rd 2006 00:03
There is not too much that the average home owner or buyer can do about poor design, freak events or structural inadequacies when it comes to the prevention and preservation of masonry and brickwork. One contributing factor to cracking brickwork that home owners can strive to minimize is in the garden. Often homeowners will plant cute little trees and shrubs in areas about the home without any consideration to the maturation and impact the plant will have in coming years. I remember my parents planting a cocas palm right by our backyard pool. For years, provided a great little backdrop to the outdoor entertainment area. Five years later and the palm grew into a disaster. In those five years it grew to an extraordinary height and the bulb of roots at its base swelled to start forming cracks in the inground pool and surrounding sandstone paving. Not only did the end result look ugly, it turned out to be a costly lesson. Felling the tree was done by professionals, the pool had to be drained and resurfaced and the paving need a good patching up job. All this resulted due to little planning and forethought.

A great looking, lush garden can do wonders for your property, but before you plant anything, be sure to do a bit of homework before hand. If necessary, hire a professional gardener, landscaper or horticulturalist. You can also get great free advice from your local nursery. Be sure to draw a plan of your intended garden and planting regions. Mark out any below and above ground services and runs. Things like your cable tv, power lines, waste water, storm water etc. Marking in where you intend on planting and also marking in a radius region equal to the average expected height the tree/shrub will grow to when full matured. This circle represents a guide for the extent of the tree’s root system. If this radius intersects and building structure or below ground piping runs, be expecting some trouble in the future. Look for alternative ways of setting out the garden so as to avoid any potential trouble with the growth of your plants.
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Fixing Cracked Brickwork

June 22nd 2006 00:21
So time for some remedies. If the cause of the cracking is due to tree damage it is essential to get to the root of the problem before making any fixes to the home’s walls. Why? - because any remedies are going to be short term. The cause of the problem is not resolved. Now how do we solve the problem of tree damage?

Trees can suck an amazing amount of water out of the surrounding soil system. An averaged sized tree can gulp up several hundred litres of water out of the surrounding soil daily. When there are sufficient wet spells to keep the water hungry tree at bay, there shouldn’t be any problems with ground shrinkage. When there are extended dry periods (like the drought conditions experienced in NSW at the moment), the soil can become dehydrated, the foundations will move and the brickwork may crack.
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Cracked Brickwork

June 21st 2006 00:53
Cracking in brickwork can be a shocking discovery by any home owner. Immediately thoughts of extensive structural renovations or horrible home collapses jump to mind. In many cases, cracking in brickwork is not as sever a problem as the home owner will assume. According to the Australian Royal Institute of Architects, the majority of cases of cracking brickwork is not structurally serious and can be solved with cosmetic treatment. This is important to know as professionals can play of the fears of uninformed home owners and recommend unnecessary and expensive treatment options. Before you commit to any form of brickwork cracking remedies is it important to seek the advice of a professional, independent authority. There are three options for seeking professional advice, a local council inspector, an Archicentre Inspector or a structural engineer.

The next few posts will be dedicated to the rather commonplace problem of cracks in brickwork. For the jargon enthusiasts, cracked brickwork is also referred to as fretting.
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Housing Styles – Fibro Cottage

June 20th 2006 00:30
A fibro cottage
Also known as a weatherboard style, the fibro cottage style of architecture was commonplace in the 1950’s as a cheap method of housing construction used by the Housing Commission in large scale developments. Typically, fibro was used for housing developments in the outer suburbs and brick was used in inner city developments. The method of construction typically featured a timber frame with cut roof framing. Fibro homes were often constructed with corrugated asbestos cement. Due to the cheap design, fibro homes typically did not take best advantage of the block and little attention was paid to aspects such as views, natural light and orientation. The layout of fibro homes usually consisted of boxy rooms leading off a central hallway.

It is now know that asbestos is an extremely dangerous material and extreme caution must be taken when renovating to ensure dangerous asbestos fibres are carefully disposed of. Professional services should be consulted for the safe removal and disposal of any asbestos used in the house. Fibro is still a construction material used today, however, the dangerous asbestos components have been replaced by wood fibres.
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Housing Styles – Federation

June 19th 2006 00:03
Federation Style Home in Rockdale
After the recession of the 1890’s, Federation style housing became a popular form of Australian architecture. Weath allowed greater freedom in style and more elegant designs. New suburbs appeared with the extension of rail, tram and ferry services, and terraces gave way to single storied detached houses or the semi-detached pair of houses.

The Federation style of housing was influenced by the Art Nouveau movement which had become popular at the time. The curved forms and floral motifs of this style in plaster, leadlight, wood and wrought iron enhanced the doors, windows and verandahs of many houses. The style was modified to utilise Australian decorative themes by incorporating native flowers and animals.
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A Guide to Housing Styles – The Californian Bungalow

June 16th 2006 01:58
Image from Finderskeepers.com.au
Built between 1915 and the 1940’s in Australia, Californian Bungalows were based on the American bungalow design. The style was hugely popular in Australia during this time and resulted in Californian Bungalows being a common site across Australian suburbia. A typical Californian Bungalow is reasonably sized, generally with three bedrooms and a separate living room that faces East or South, away from the summer sun. Generally the kitchen, dining room and laundry were placed towards the rear of the home, with little access to natural light. Californian Bungalows are easily recognisable by a number of identifiable characteristics. The style can almost instantly be recognised by the columns holding up a front veranda area. They are usually single storey with a two to three gabled roof style with terracotta tiles and large pillars supporting the famed front verandah.

The structure was built low to the ground and today many still feature the original fittings and finishes such as stained glass windows, ornate ceilings and painted gables with battens or shingles. Californian Bungalows were often made out of a dark brick and commonly used building materials on the walls and columns include sandstone, face brick, painted render and pebbledash. Darker colours were originally used, however, as the years went by, new brighter paint served as a welcoming change to open up the spaces and brighten up the homes. Stone, Brick and Timber, earthy construction materials were used.
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A Guide to Housing Styles – Terraces

June 15th 2006 02:29
Over the next few days, I’m going to review a few of the styles of houses typically found throughout Australia and especially the large cities. I’ll provide some background information and as provide some advice for potential buyers to look out for when considering investing in a residential property of the particular style. Today, I’ll start with Victorian terraces. Over the coming days I’ll review Californian bungalows, Federation, weatherboard, Tudor, Art Deco, Post Modern and more.

Victorian Terrace
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Excellent Real Estate Article

June 14th 2006 00:40
I've found this brilliant article on Domain regarding the State ofAustralia's real estate market. I suggest it is a valuable read for anyone interested in investing in the Australian property market. It comprehensively goes through the state of the property market in each State of Australia, provides a good overview of the principles of a real estate market cycle and explains where each state is positioned in relation to its real estate cycle.

This is a portion of the article which covers the propertymarket analysis of Sydney, Melbourne, Brisbane, Canberra, Perth Adelaide, Hobart and Darwin.
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Real Estate Terms and Definitions

June 13th 2006 00:38
These are some real estate terms commonly used by agents, vendors and auctioneers and property inspectors in Australia. I hope they provide a better understanding for people new to the real estate market and give a little refresher to anyone familiar to some of these terms.

Community Title:
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Investing In Australian Real Estate

June 12th 2006 01:03
Ok, so we’ve constructed this hypothetical situation of a share market bust. With this forecast, we’ve identified that just prior to the bust is the time to invest in the real estate market on the thought that it is undervalued and will gain value after the share market bust. We’ve decided that investing in the larger cities of the Eastern coast of Australia are going to provide a safe investment haven, but as these properties are already currently expensive on a national scale, there is potential to make greater yields from other areas. So where else should real estate investors be looking for great property returns?

The capital cities of the other States provide some great investment potential. Perth has been ear marked over the past few months as a brilliant property investment prospect. The region is seeing a lot of urban development, the populations are increasing and industry in the area is booming. Now even though analysts have been advising to buy up in Perth, few have been heeding their own advice. Why, because the share market is still delivering sound returns which outweigh the real estate prospect in Perth. Once the share market falls, Perth real estate should become one of the nation’s leaders in terms of investment real estate return.
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A New Boom for the Real Estate Market?

June 8th 2006 01:00
Take a look at the history books and it appears that the Australian share market and the real estate market are intrinsically linked. Typically when one is up, the other is down. In recent years, the Australia share market has been a profitable enterprise for Australian investors. The returns of stocks have far outweighed the yields provided by the property market so naturally, stocks are where the average Australian has invested their spare cash. During the boom time of the share market, analysts have advised that investors place their money in shares rather than property.

Currently the shares market is enjoying a sizeable resources sector boom. Traders are split between forecasts. The sector has shown signs of slowing and the pessimists believe the ride for resource investors is nearing an end. The optimists believe there is still a bit of wind in the sails. Eitherway, its quickly becoming a shaky time for the share market and there is talk of a bubble bursting in the near future. Some investment analysts are starting to suggest Australians look offshore to protect their investments. It appears the share market is starting to be considered overvalued compared to local and global standards. Australia has definitely enjoyed a strong economy over the last decade and its prominence on the world stage has increased.
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Property Buying Tips - More Location Factors

June 7th 2006 00:58
I thought I’d add some more ideas about what determines if a property is situated in a good location.

You want to make sure that your property is in an area of high demand… or even better, forecast to be an area of high demand. Any area which is in low demand is going to be hard to sell and a vendor will be in a position of lowered bargaining power when the time comes to sell. Be aware that areas that are currently in low demand may change to high demand with time. A great example is the inner city suburb of Redfern. Once upon a time, Redfern was considered a dangerous place to live and not a preferred residential or investment area. It was a hub of crime, drugs and there were often news reports of trouble in the area. In recent years, this has totally changed. The area has become popular for its bohemian qualities and caters to the culturally minded. There’s an assortment of local galleries, playhouses, artists, live music venues, specialty shops and niche industries. Combined with the proximity of the city, Redfern was a property investors dream waiting to happen.
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Property Buying Tips - Location

June 6th 2006 00:07
Experts will always harp on about the importance of “location, location, location” and for good reason. If there’s a serious problem with the house, this can be fixed. Albeit, an unintended capital investment in house renovations, restorations or fixes may not be ideal in terms of investment return, but at least it is a fixable situation. Once you’ve purchased a plot of land, its location is final. There’s no way of working with or fixing a property in a bad location. In this sense, location is the most important consideration when it comes to purchasing a property. So what factors dictate a good property location?

There are many factors which affect what determines a good property and it really depend what are of the country you are in the type of people that area attracts. For inner city locations, good transport and local urban facilities are essential. A low crime rate is highly regarded too. Properties with view are often preferred and fetch greater prices. When it comes to purchasing a property with views, be aware of the surrounding environment and lots. That nice council plantation may look pleasant now, but be aware that in a several years, those trees may grow to obscure your million dollar view of the oceanfront. There have been several cases of property owners attacking and poisoning trees and bushland on council property which is hindering a great view. This is highly illegal and attracts huge fines. Poisoning Council trees is a risky business, not to mention a very selfish act. It is best to avoid any tree growing disappointments and identify if this is a possibility before you invest in that million dollar view.
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Property Buying Tips - Services

June 5th 2006 00:32
If you are not banking on some major renovations or costly modifications one important aspect you should check is the state of utilities and services within and to the property. There are some areas of metropolitan and regional Australia that have notoriously older style housing which may also means old electrical wiring and plumbing. If you are not savvy with regard to cabling, wiring and plumbing, this is where the expertise of a building inspector is a highly valuable investment. Rewiring a house is expensive and a major overhaul so you want to make sure you know exactly what you are getting financial roped into before you settle on a purchase. Of course, if you are banking on rewiring the property, there are some brilliant products and advice on the market to ensure you’ve got your house well configured for the present and also for future technologies. Anyone considering some extensive renovations should look into including rewiring. Visit SmartWired to get all the latest information and advice on networking your house for the future.

These are some basic tips and techniques for rewiring property so as to protect the wiring network against future technologies.
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Property Buying Tips - Bathroom and Laundry

June 2nd 2006 00:19
Bathrooms and Laundries:

Do not underestimate the value of a private internal laundry facility. It is only after moving out to an apartment complex that I have truly gained the appreciation for a private washing and drying facility. Wash clothes is one of those crappy never-ending chores. For anyone that has a few clothing items that need special washing or drying care, having your own washing machine and drying area is a godsend. Nothing shreds your precious threads like an industrial washer and drier and for some clothing items, a laundromat is not appropriate. The only option left is expensive and time consuming trips to the dry cleaner. Honestly, the liberty to wash and dry your clothes at your own discretion can not be over emphasized.
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Property Buying Tips - Amenities and Features

June 1st 2006 01:18
Property Amenities and Features:

Offstreet and secure parking can be a distinct advantage in making a property investment. In built up urban areas, parking can be highly restricted so having a guaranteed parking space can be highly attractive. A secure form of allotted parking is an added bonus. Cars are expensive assets so the added protection of off-street, secure parking is attractive to any buyer. If possible seek multiple car spaces. Many families or couples own multiple cars so a single car space is not necessarily facilitating their needs. A heavy roller door, internal access garages and automatic door systems are smaller features which can really add to the value of a property. Lock-up garages are a good property feature as they are associated as a good storage space. A property can never have enough storage space, especially anything offering multiple bedrooms. Ensure that access to the parking space is good and can be used by a variety of makes of cars. Large SUV’s and four wheel drives have become popular so consider how these will fit into the allotted parking space. Older style garages may not have the height or width clearance to accommodate modern larger vehicles.
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