FAQs

Frequently Asked Questions

Questions about Deb and Ted’s Renovating

Do you do most of your renovations close to where you live?

How did you get into renovating in the first place?

How long does one renovation take you on average?

Why isn’t everyone doing it then?

Do you believe in today’s real estate market that renovating is still viable?

Questions Regarding Taxes, Structuring & Grants

Would I be able to get the First Home Owner’s Grant to purchase my property to renovate?

What is the best structure to buy a property in?

Will I have to pay Capital Gains Tax when I sell my renovated property?

Will I have to pay GST?

Questions about Deb and Ted’s Renovating

Do you do most of your renovations close to where you live?

Answer:

We definitely think it’s easier to renovate properties close to where we live.  We’ve actually lived in a few of the properties we’ve renovated (mainly earlier on) so you can’t get much closer than that!  If you are going to do a lot of the work yourself it just makes sense to do a renovation close to home.  If you are contracting out the work then you can go further afield.  It’s much easier to keep costs down if you can get to the property more often to keep an eye on things.

How did you get into renovating in the first place?

Answer:

Deb probably got her renovating bug from her Mum and Dad as they “did up” a few properties when she was a kid.  We bought our first home together in 1987 – a 3 bedroom brick home on 24 acres in northern Tassie for $85,000.  Click here for a peek.  We pulled up the carpets and sanded the floors, wallpapered and painted it and cleaned up the block and sold it in 1991 for $110,000.  We loved every minute of it and we were hooked!

How long does one renovation take you on average?

Answer:

It’s a bit hard to say, as our renovating has worked around the rest of our life as opposed to the other way around.  We did the Levy Road renovation in about 3 months part-time whereas we did Ogden St in just 1 week!

Why isn’t everyone doing it then?

Answer:

Why isn’t everyone doing it? Great question!  Although a surprising number of people are.  I guess it takes a certain type of person to do a renovation.  You have to be pretty organised and you have to be willing to get your hands dirty.  That’s not everybody’s cup of tea but it’s our thing and we love it!

Do you believe in today’s real estate market that renovating is still viable?

Answer:

Yes we do.  Around 70% of Australian’s own or are purchasing a home.  It’s still the “great Australian dream” which means that there will be continuing demand for ordinary homes for ordinary people, which is our target market.  There is currently a housing shortage, our population is increasing and there are low vacancy rates for rentals.  Interest rates are still low and rental yields are high.  There is still massive demand for property in Australia, despite the global financial crisis.  People’s lives are getting busier and busier and generally, they just want a nice home to live in with nothing to do to it.  That’s what we aim to provide.  With our system we make sure that we don’t buy a property to renovate unless it will be profitable.  And there will always be properties to buy that are unloved, untidy, unwanted and under our maximum purchase price.  It’s really just a numbers game and the more properties you look at, the more likely you are to find one that “fits the bill”.

Questions Regarding Taxes, Structuring & Grants

Would I be able to get the First Home Owner’s Grant to purchase my property to renovate?

Answer:

It’s really important that you abide by the rules and regulations of the FHOG scheme which can be found here: http://www.firsthome.gov.au/ where you can check your eligibility.  Providing you are eligible and you abide by the rules about living in the property etc this could be a great way to:

a)  Purchase your fist home and add value to an established property in need of renovation, and/or,

b)  Start building up some equity to use to fund other renovation projects in the future.

What is the best structure to buy a property in?

Answer:

The best structure to use (ie. sole trader, company, trust etc.) differs according to your individual circumstances and financial situation.  Check with your accountant or financial advisor as to what is best for you before purchasing your property.  Choosing the right structure is not only important from a tax perspective but it’s also really important to make sure your assets are properly protected.

Will I have to pay Capital Gains Tax when I sell my renovated property?

Answer:

You can read all about Capital Gains Tax by clicking here.

In very general terms, Capital gains tax is paid on the net sale price (sale price – selling costs) of your property less the total cost of purchasing and renovating your property less any capital gains discount you are eligible for.

When it comes to buying, renovating and selling there are a couple of things about Capital Gains Tax that are especially good to know:

  1. Capital Gains Tax is not payable on the sale of your Principal Place of Residence (ie. on the sale of your home) provided you own it in your own name (ie. not in a trust or company name)
  2. Companies can’t claim a CGT discount
  3. No Capital Gains Discount is able to be applied if you sell your property less than 12 months after you purchased it
  4. You must use the contract date for the purchase date and sale date of your property, not the settlement date, for the purposes of calculating Capital Gains.

Bear in mind that if you are doing renovations as a business to make profit, CGT won’t apply; rather, any gain made will be eligible for straight income tax and the 50% discount wouldn’t apply.

There are always exceptions to every rule and everyone’s individual circumstances are different so make sure you get your own advice for your own situation.

Will I have to pay GST?

Answer:

All new residential properties purchased after 1 July 2000 attract the GST (Goods and Services Tax) on the cost of the property and other purchase costs providing the purchaser is registered or required to be registered for GST.  However, no GST applies to the purchase cost of ‘established’ residential properties.  Established properties include houses that were constructed several years ago or a new house purchased after the builder has completed it.  GST can also apply if a house has undergone a substantial renovation whereby it is deemed to be a new residential premise.  GST will  apply to any land you might subdivide off and sell as well.  Make sure you check out your individual circumstances with your accountant to be sure about your individual obligations.  The ATO have recently created a comprehensive GST & Property Guide and a really useful GST property tool you can use to work out your GST obligations.

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