Borrowing to buy land
- Thread starter crackaton
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I have no real world experience with home loans, but provided the land is located in a area with a decent amount of demand and recent sales to compare the subject land with, I dont see why it wouldnt be the same as a home loan. Are you planning to build on it?
Think of all the people who would borrow to get the vacant land at the new land release sites in western sydney
I'll watch this thread with interest
Think of all the people who would borrow to get the vacant land at the new land release sites in western sydney
I'll watch this thread with interest
GreatPig
Pigs In Space
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I don't believe any of the other costs would be deductible either (rates, etc).
GP
GP
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You need a larger deposit as their is more risk involved in owning land, than a house and land. You may also have building requirements placed on you by the council or by the developers, meaning that you may need to build a property on that land within a specified period of time eg 1 or 2 years. That includes landscaping etc.
Buying land for short term investment at the moment is useless in this current environment of higher interest rates and de-valuing house prices, not unless you intend to purchase in specific pockets/suburbs in Darwin or Perth.
There is also no deductions in terms of taxation, so its usless to be paying a massive loan on a piece of land that is idle and not earning an income.
You will also not qualify for the First Home Owners Grant, due to it being land only.
Buying land for short term investment at the moment is useless in this current environment of higher interest rates and de-valuing house prices, not unless you intend to purchase in specific pockets/suburbs in Darwin or Perth.
There is also no deductions in terms of taxation, so its usless to be paying a massive loan on a piece of land that is idle and not earning an income.
You will also not qualify for the First Home Owners Grant, due to it being land only.
123enen said:
GreatPig said:
Howdy, if the vacant land is purchased for future income producing purposes, you maybe able to claim tax deductions.
Check out TR 2004/4 on the ATO legal database.
Basically, if you take out necessary steps to make it income producing, you can make a claim.
However, if its main residence the answer is no, although these items can be added to the cost base for cgt purposes in some cases.
If you are looking at it being used for future income producing purposes (ie rental property) get taxation advice from someone qualified, or write to ato for a private ruling to see if you can make a claim.
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Strongly suggest you go to the following website:
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Regards
Sarah
http://www.somersoft.com.au
Register
Its free
Enter the forum.
Everything and anything you want to know about property is in this forum.
Ask a question and you will get a response almost immediately.
Check out the following websites, also
1/ www.chrisbatten.com.au (Sydney)
2/ www.gatherumgoss.com ( Melbourne)
Regards
Sarah
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like stop-the-clock said - lvr's are probably the main difference - i.e bigger deposit usually required for land vs house+land depending on location (the banks have different lvr requirements for different categories of location - rural, cbd, regional etc.). Servicing requirements are same as for a standard home loan as far as I recall.
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Be aware that the local council may have something to say about this. Depending on the area you may not be allowed to build anything other than a house and even then the council has a lot of say as to style etc and may even impose a minimum size for the house. Just building a garage without a house might not be allowed.crackaton said:
Personally I'm not keen on councils - they do too many pointless things IMO - but when it comes to building you have no real choice but to do as they say. CHECK what the local planning laws are BEFORE you buy the land.
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most banks will require a 20% deposit if the only security is the land you wish to purchase. If it's off a second mortage, you'll be fine with a lower or no deposit.
You can in fact claim expenses on vacant land if sold for a profit. You will incur CGT in that instance. In one obscure ruling you can even forgo the CGT. Check with ATO on all this.
IMHO vacant land is an excellent asset to be holding at the moment hence my reason to sell most of my share holdings in the recent months. Land appreciates, bricks and mortor on the other hand are a liability. That being said, it gives you somewhere to live and maybe a rental return. There are plenty of pockets of good quality land with coastal views to be had in the state of QLD. Crackaton, You in FNQ aren't you?
If you can pick a good location, by the time you are ready to build, your valuation may have grown and will help with the house purchase.
Check with the local councils about rejuvenation plans for some regions..Some FNQ councils are about to spend big...
cheers,
You can in fact claim expenses on vacant land if sold for a profit. You will incur CGT in that instance. In one obscure ruling you can even forgo the CGT. Check with ATO on all this.
IMHO vacant land is an excellent asset to be holding at the moment hence my reason to sell most of my share holdings in the recent months. Land appreciates, bricks and mortor on the other hand are a liability. That being said, it gives you somewhere to live and maybe a rental return. There are plenty of pockets of good quality land with coastal views to be had in the state of QLD. Crackaton, You in FNQ aren't you?
If you can pick a good location, by the time you are ready to build, your valuation may have grown and will help with the house purchase.
Check with the local councils about rejuvenation plans for some regions..Some FNQ councils are about to spend big...
cheers,
Stan 101 said:
Would you be able to tell us the number of the ruling?
To be honest, never heard of being able to avoid CGT as an individual selling land.
Only main exemption for CGT i am aware of if i is a pre-CGT asset or the main residence exemption.
Although small businesses have active asset CGT rollovers concessions.
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I'll check it up. I gave to an accountant and they shook their head and said "I'll get back to you on this."
I'll post it when I have it handy..
cheers,
I'll post it when I have it handy..
cheers,
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Lol. My settlement just went through last wednesday on my Block of land. The only thing I'd like to add is that while during owning the block (without it making any money) nothing is tax deductible.
Upon sale of the block, as long as you kept records, any costs involved with purchasing the block are tax deductible (including interest and loan approval, etc) and hence can be offset against any Capital Gains
Upon sale of the block, as long as you kept records, any costs involved with purchasing the block are tax deductible (including interest and loan approval, etc) and hence can be offset against any Capital Gains
tech/a
No Ordinary Duck
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WARNING.
I have seen property with no Power and No Water and no Sewer being pedelled very cheaply in FNQ,but not cheap enough when you find out the cost of having services hooked up!!
That was 4 yrs ago but be very wary.
I have seen property with no Power and No Water and no Sewer being pedelled very cheaply in FNQ,but not cheap enough when you find out the cost of having services hooked up!!
That was 4 yrs ago but be very wary.
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If purchasing vacant land as an investment then only buy quality blocks.
Since there is only capital gains to be make a profit then this is vital.
Don't buy the first block in a new 100 lot subdivision.
Buy one with ocean views or close to beach or close to transport or in a good suburb with limited vacant land or other attributes (position, position, position!). Even if you have to pay a little extra - pay it!
Buy a lot that can be subdivided or will take unit development.
Cheers
Dutchie
Since there is only capital gains to be make a profit then this is vital.
Don't buy the first block in a new 100 lot subdivision.
Buy one with ocean views or close to beach or close to transport or in a good suburb with limited vacant land or other attributes (position, position, position!). Even if you have to pay a little extra - pay it!
Buy a lot that can be subdivided or will take unit development.
Cheers
Dutchie
