My Reno Plan. Is it Possible / Reasonable

I want a change. I can't work inside an office for much longer, or I am going to loose it!

Yes I am new to renovations and investments, and I am ready to learn and put in lots of hard work.

I also have a trade background with trade connections.

I plan to do this as a living, so i would like to make around $60 000 - 70 000 PA

I bought a house 3 years ago $265 000. Plan to do quick / basic reno. Sell for approx $300 000. With the amount i have already paid off that gives me $100 000 to play with. No CGT as it is my primary residence.

I plan to use that $100 000 to finance my first project, which i intend to live in the whole time. I want to have it completed within 9 - 12 months.
So roughly one major reno per year. No CGT as it will be my primary residence.

I want to quit my job, but i am reaslistic and have thought it may be best to just go part time.

Like I said i'm not looking for huge profits, more a lifestyle change and a reasonable living. $60-70 grand profit would be suffice

I'm not going to jump into this, im planning this over the next 6 months, research, reading, legals, professional advice.

Just seeing if this sounds feasible. Am I missing anything?

I'm 24
 
Just seeing if this sounds feasible. Am I missing anything?

You are missing something - yes. If you do one of these a year, the ATO will consider that you are running a business, so you will be liable to pay tax on profits.

Good news about this is that it won't be CGT you pay but PAYG (although CGT is paid at your own PAYG rate in any event).

Also if the market moves against you (i.e there is some pullback in price, then you stand to make no money, or lose money that particular year).

Plan well.

Also have a read of this thread where the same Q was asked: http://www.somersoft.com/forums/showthread.php?t=62910
 
Your drive and determination is admirable! But these numbers concern me (being for your first reno):

I bought a house 3 years ago $265 000. Plan to do quick / basic reno. Sell for approx $300 000. With the amount i have already paid off that gives me $100 000 to play with. No CGT as it is my primary residence.

How much will that quick/basic reno cost? Assuming $5k, you have basically made $30k in 3 years. Factor in holding costs, stamp duty, buying and selling costs (eg. legal costs)....... doesn't really seem like you've made a profit.

Is there a misprint somewhere? Or have I misunderstood?
 
I would do some serious sums.

$100K is not going to go far when you allow for:

initial deposit
purchase costs including stamp duty
loan repayments for 9-12 months even at interest only
living expenses for 9-12 months
and
renovation costs
selling costs.

This is without considering the tax implications that Propertunity outlined.

Marg
 
main thing to consider is cashflow you will have the mortgage, living costs, draftsman, council/ engineers/ consultants fees, multiple invoices coming from suppliers and subbies which will need to be paid at end of each month

with zero money coming in till you sell will be hard unless you can complete the scope of works with the 100k youve got, or like you said work part time to have some regular income
 
Thanks guys.

Like I said I'm just starting off so I do appreciate this.

Thanks Propertunity, Im reading that thread now.

Anyway around the buisness taxes? If I dont ask I will never know.

Tess85 alot of that 100g will be an investment on my behalf. I only owe 180 000 on the house worth 300 000.

Marg - They are all the things I was hoping the 100 may cover - might be a bit of a stretch...
 
Anyway around the buisness taxes? If I dont ask I will never know.

Yes, ask an accountant about the best structure to use. Even if you purchased in the name of a Pty Ltd company (not advice), then each house you purchased would be considered a trading stock.

The company would only pay tax on the profit (after all expenses, one expense of which is your wages) at the low company tax rate of 30% (or whatever it is at the moment.....my head still swimming after all those election promises :confused:).
 
Continuing on this topic, I have recieved advice that it is possible to renovate a house over a year whilst living in the property.

The advice is that you will not be liable for any CGT, nor will the ATO recognise it as a buisness, therefor not liable for any company tax.

Is this a unmentioned renovating business plan that some people have worked out?

Again I'm not in this for mega profits, more a lifestyle / work change
 
Sounds like a lot of effort for not much marginal upside to be honest... as mentioned earlier if market moves against you you're in big trouble too.
 
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