Join Australia's most dynamic and respected property investment community

blocks of Land

Discussion in 'Other Asset Classes' started by Darlinghurst Boy, 13th Jan, 2016.

Tags:
  1. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    866
    Location:
    Darlinghurst Sydney
    What are the negatives in buying a block of Land in a residential area?
    I know im still up for Rates, water bill too I think ?
    I think also having it mowed every 2 months will be costly.
    No income either.
    Just holding it for Capital Gain.
     
    Last edited by a moderator: 13th Jan, 2016
  2. Tony Fleming

    Tony Fleming Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    530
    Location:
    Sydney
    My main negative would be no cash coming in. Even a studio apartment would get some income in your account.
     
  3. Perthguy

    Perthguy Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    4,671
    Location:
    Perth
    - Having rubbish/junk dumped on your block that you have to remove at your cost.
    - Squatters.

    It's not.
     
    Propertunity and JacM like this.
  4. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Having to pay for mowing every 2 months, definitely.
     
  5. JacM

    JacM VIC Buyer's Agent Business Member

    Joined:
    12th Jul, 2015
    Posts:
    1,106
    Location:
    Melbourne, Australia
    Also keep an eye on the fence-line. There is some weird law that says if the fence is in the wrong place for 2 years it becomes the new boundary. Wouldn't want the neighbours to shift the fence over a bit and pinch some of your land...
     
  6. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Hmm, we had some neighbours in QLD who were getting the fence moved a small way off their property.
    I was only renting at the time, so didn't care too much.
     
  7. JacM

    JacM VIC Buyer's Agent Business Member

    Joined:
    12th Jul, 2015
    Posts:
    1,106
    Location:
    Melbourne, Australia
    @Azazel always let your property manager know so they can alert the landlord of such things
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,544
    Location:
    Sydney or NSW or Australia
    You can't claim deductions until it gets sold or is rented - the longer that you hold it, the less these deductions are worth (in the future).
     
    legallyblonde likes this.
  9. legallyblonde

    legallyblonde Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    685
    Location:
    TAS
    Agree...If it is no income producing.. Costs aren't deductible.
     
  10. JacM

    JacM VIC Buyer's Agent Business Member

    Joined:
    12th Jul, 2015
    Posts:
    1,106
    Location:
    Melbourne, Australia
    Technically it doesn't have to be "rented" but demonstrated as being "available for rent" . Available for rent is generally considered to be "actively advertising for a tenant".

    Expenses you can claim | Australian Taxation Office
     
  11. jaybean

    jaybean Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    981
    Location:
    Melbourne
    I've been thinking about this recently. I've always thought that land is a big no no because there's no income stream. But it occurred to me - if the gross interest is identical to the net interest in a negatively geared property with a house on it...what's the difference? Ok sure you can add value and boost the rental income in the latter, but it's not as bad as I once thought.

    Over time though, rent increases. So there's that. But it seems to me that if you had a strong stream of income then one shouldn't write it off completely.
     
  12. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    2,942
    Location:
    Perth
    If he intends to build an IP on it and rent that out then you can claim deductions when it's vacant. I believe that was the whole premise behind Steele vs ATO - the intent to rent.

    Of course just holding for CG and no intention to build then no deductions until selling.
     
    JacM likes this.
  13. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,544
    Location:
    Sydney or NSW or Australia
    It's a bit more difficult to lease raw land which doesn't have a DA. Once the owner or tenant has received planning consent for a particular use, possibly also gone to the expense of erecting a fence then you could take it that the owner is serious about getting the land leased. Land without approval to carry on an activity (even storage of builders plant) cannot be utilised - unless it is a conforming use for the zoning.
     
  14. bob shovel

    bob shovel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,373
    Location:
    Somewhere in the land of Oz
    Can Moshe mow it? Extra cash for him to feed the pokies
     
    Perthguy, York and pinkboy like this.
  15. JacM

    JacM VIC Buyer's Agent Business Member

    Joined:
    12th Jul, 2015
    Posts:
    1,106
    Location:
    Melbourne, Australia
    @Scott No Mates you are correct it is harder to lease empty land, though some people do seem to do it. eg leasing it as space that someone can erect advertising signage, or leasing it for someone to store animals or a vegie garden on. But normally folks would cop it on the chin that nothing is deductible, wait till a house is on it and the moment it's being advertised for rent, start claiming.

    Of course precedents of intent may come into it as mentioned by @Westminster
     
    legallyblonde likes this.
  16. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Nah, none of my business.
    I wouldn't want a tenant bothering me with such trivialities ;)
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,544
    Location:
    Sydney or NSW or Australia
    I know a few German backpackers who migh be interested
     
    bob shovel likes this.
  18. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Backpackers are into a different type of grass.
     
  19. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,299
    Location:
    Perth, Melbourne, USA
    Dumping rubbish on your block, this does happen I know this one.

    Another negative is if you buy land and there is too much land in the area, this may impact on growth.
     
  20. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Lawn waste is not too bad.
    It's the big heavy stuff that is difficult.