Buying a Property Owned by our LAQC?

[lissie]

We are considering moving into a property which is currently owned by our LAQC. We are considering selling what was our home (joint names, currently rented out as we have been living overseas) and moving into a smaller property currently owned by our LAQC.

What are the issues - I know that we would have the depreciation clawback to deal with (we've owned the property in question for 4 years). I assume that we would have to buy/sell the property from the LAQC to our names and clear the mortgage on the property.

What value would we use - the GV? The depreciated value ? $1? An independent valuer? We wouldn't need to mortgage the property in our name - it would be cash purchase after we sold our existing ex-home.

Or is it all too hard and would be easier just to buy another property?

[Rosco]

How long do you intend on living in the LAQC property for?

If it is just short term, then you could rent the property from the LAQC at fair market value. The property would just operate as a normal rental. I personally think this would be OK for 3 to 6 months.

If you plan on livining in the property longer, then you need to get the property out of an LAQC. It would need to be sold across at fair market value. Normally the lower the better. So if your GV is within 6 months, that would be OK. Otherwise a registered valuation would be best. Some people get 3 real estate appraisels, but this is not as good as a registered valuation if it was ever challenged.

Watch depreciation recovered in the LAQC. It is possible that your building has decreased in value (ie land gone up) over this period so don't just recover all the depreciation, you might legally be able to just recover a portion. If you have done chattels depreciation, you ideally want to get another chattels valuation done at point of sale to establish the sale values. Generally you don't recover much depreciation on chattels as they do actually wear out.

Also have you thought about putting your new personal house into a Trust for asset protection?

Ross

[lissie]

Thanks Ross for your quick response. Yes if we did this it would be our long-term home 10+ years so renting isn't an option.

The GV's in Wgtn used to done every year - but I notice the current one is still dated Nov 07 on their website - guess they stopped updating them when the prices stopped going up! We did very extensive renovations on the property just after buying it - so we have detailed chattels val and yes a lot of those will have gone down. There is a quite a lot of value in the land - but I am out of touch with how Khandallah has weathered the melt-down :-)

I see no value in a trust - its just my partner and I - no kids - we have life insurance to cover the mortgage if either of us die - but apart from that I don't see that our assets are at risk from anyone.

Again thanks for our reply
LIs

[PropertyManagementDirect]

As above with ross

[spaceman]

Why buy when you can rent???

I don't see the need to buy the proerpty from the LAQC.

If you pay market rents, what is the problem?

Companies are entitled to provide accommodation to staff/directors.

Cheers
Lawrence

[Rosco]

spaceman,

IRD have a huge problem with this. No investor really wants to fight with IRD, as its not worth the time and hassle.

Ross

[spaceman]

I don't think so

spaceman,

IRD have a huge problem with this. No investor really wants to fight with IRD, as its not worth the time and hassle.

Ross

I would agree that the IRD have a huge problem with people selling their PPOR to a LAQC and then reamining living in it and claiming expenses ...... BUT this isn't what happened.

The IRD have absolutely no problem with companies providing housing. Yes other issues can come into play like FBT.

What is the reason that the company should sell an income producing assset?

Please tell me exactly what rule is being broken by renting from the LAQC in this case. You say yourself it would be acceptable for 3 - 6 months .... what is the rule and where is the time limit???

Cheers
Spaceman