cobran20

Jennifer Hawkins cuts profit hopes to slimmest margin

17 posts in this topic

Another who tought that prices only rise!

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The Coogee home of Jennifer Hawkins, the former Miss Universe, television personality and swimwear designer, and her fiance, Jake Wall, has now been listed with a $2.3 million asking price.

It was passed in at December auction on a $2.5 million vendor bid through McGrath agent Adrian Bo and then listed with a $2.6 million asking price.

The 2003-built Coogee property, with three bedrooms and three bathrooms, cost Hawkins $2.27 million in late 2008.

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hmm, there's no net profit at all, only a loss. There might be a capital gain over the buying price, but she would have to pay tax on that as well as taking the loss on all the expenses of buying and selling:

- stamp duty -- about $100K at a guess

- conveyancing solicitor, mortgage duty, etc -- $2-5K?

- selling agent's fee -- maybe 1% for a premium property -- $23K -- could be higher up to say $35K

- property sale advertising costs -- maybe $20K

- value of money loss due to inflation -- about 9% over 3 years -- a wacking $207,000 -- although the 50% CGT concession at least more than allows for inflation when being taxed on property transfers in the short term

- interest paid on any leverage she may had on the property -- let's say just a $1M loan cos she had the rest in cash from walking about -- $210,000 over 3 years

- maintenance on the pool, body corporate expenses, council rates, etc -- $20K?

That's a potential loss of $595K for owning for 3 years, assuming she gets her $2.3M back sometime soon.

Even if she paid cash for the place, expenses would have still been about $385K.

If she's lucky now, she will make $30K on the last sale price, on which she would have to pay around 25% tax, thus reducing the cap gain to $22,500. Offset against her expenses, 3 years of ownership would have cost her anywhere from $360K – $565K net, none of which is redeemable via tax as an owner-occupier. (Marked in red as a loss!)

Funny how that esteemed business journal the 'Property Observer' fails to mention any of those expenses in the article. I suppose they are only observing.

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hmm, there's no net profit at all, only a loss. There might be a capital gain over the buying price, but she would have to pay tax on that as well as taking the loss on all the expenses of buying and selling:

- stamp duty -- about $100K at a guess

- conveyancing solicitor, mortgage duty, etc -- $2-5K?

- selling agent's fee -- maybe 1% for a premium property -- $23K -- could be higher up to say $35K

- property sale advertising costs -- maybe $20K

- value of money loss due to inflation -- about 9% over 3 years -- a wacking $207,000 -- although the 50% CGT concession at least more than allows for inflation when being taxed on property transfers in the short term

- interest paid on any leverage she may had on the property -- let's say just a $1M loan cos she had the rest in cash from walking about -- $210,000 over 3 years

- maintenance on the pool, body corporate expenses, council rates, etc -- $20K?

That's a potential loss of $595K for owning for 3 years, assuming she gets her $2.3M back sometime soon.

Even if she paid cash for the place, expenses would have still been about $385K.

If she's lucky now, she will make $30K on the last sale price, on which she would have to pay around 25% tax, thus reducing the cap gain to $22,500. Offset against her expenses, 3 years of ownership would have cost her anywhere from $360K – $565K net, none of which is redeemable via tax as an owner-occupier. (Marked in red as a loss!)

Funny how that esteemed business journal the 'Property Observer' fails to mention any of those expenses in the article. I suppose they are only observing.

i don't understand your reference to CGT. if this is her PPOR then no CGT is payable (or loss claimable, as is the case here).

if i was her accountant i would be looking at ways to have this place deemed NOT her PPOR so she can claim capital loses to be offset against current, or future capital gains. if she managed for this property to NOT be her PPOR and she had received no rental income from it all the costs (and some) you mentioned will increase the cost base and therefore the capital gain she can claim.

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Pretty certain she'd have an accountant who could get Swanny and Co to pick up a good portion of her speculative loss. Health care is means-tested. Property loss is not.

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oops

http://www.dailytele...r-1225878911729

Jennifer Hawkins property empire worth $5m and rising

  • By real estate writer BRONWEN GORA
  • The Sunday Telegraph
  • June 13, 2010
    "Raine and Horne prestige agent Michael Pallier said last week Hawkins had cleverly put her money into blue-chip properties."

aren't you a "CLEVA" Property "INVESTA"

Edited by minimumtrade

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i don't understand your reference to CGT. if this is her PPOR then no CGT is payable (or loss claimable, as is the case here).

if i was her accountant i would be looking at ways to have this place deemed NOT her PPOR so she can claim capital loses to be offset against current, or future capital gains. if she managed for this property to NOT be her PPOR and she had received no rental income from it all the costs (and some) you mentioned will increase the cost base and therefore the capital gain she can claim.

oops, you're right -- she gets to keep all her $30K gain against her $500K loss -- assuming she sells the place for that much in the end. Otherwise it might be possible to have bought it into a company, and the expenses could be written off in tax against earnings. But I think the ATO frowns on buying a place into your company and then renting it from yourself for tax deductions, I've seen a ruling where this is seen as a 'scheme' under Part IV of the Tax Act and prosecutions ensue with penalties etc etc -- once this idea came to be mass-marketed by 'wealth seminar gurus' to relatively ordinary folks the ATO started cracking down on it in particular. Not sure what creative tax advisers for the mega-rich have come up with most recently however. She may be able to count it as some sort of 'entertainment expense' given her job and offset it against her professional earnings, but the ATO simply says you have to live somewhere, you cannot 'rent' your place from your own company and then claim deductions for any losses. Regardless of the tax breaks, though, a loss is a loss -- it's only mitigated by the tax break -- admittedly it could be of the order of a 50% deduction for high earners -- but I'm just guessing at her creative tax accountancy...

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oops

aren't you a "CLEVA" Property "INVESTA"

how did you get the vanity plates from my matching Ferraris, have you been staking out my Point Piper residence?

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even if she is an aussie icon, she must sure like losing money.

If I were her, i'd hold on to the property, keep living in it and sell later on when the market picks up again

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If I were her, i'd hold on to the property, keep living in it and sell later on when the market picks up again

Bollocks. If you were her you would touch your boobs for a few hours and then continue in a world of sycophants that wanted to touch your boobs and feel all powerful.

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Bollocks. If you were her you would touch your boobs for a few hours and then continue in a world of sycophants that wanted to touch your boobs and feel all powerful.

You do have a knack for cutting through the crap, Tor. :laugh:

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If I were her, i'd hold on to the property, keep living in it and sell later on when the market picks up again

What, and sell when she's about to kick the bucket?

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Bust 1890s

"The crash began in 1891. Land values fell to levels around one half their boom levels. In addition ... data on individual suburbs are available. In Prahran, prices peaked at an average of over £1,000 per property in 1888 and fell to £520 by 1898. Similarly, in Brighton, average property values peaked at around £950 in 1888 and then fell to around £400 in 1893 and £300 in 1898. A comparison of these data to the accounts in Cannon (1966) suggests that the picture is fairly accurate but may understate the speed of the bust. For example, Cannon writes that, 'by the end of 1891 the bottom had completely dropped out of the land market ... In Collins Street, sites for which £2,000 a foot had been rejected a short time before, were now being offered for £600 a foot - and could not find buyers even at that price' (Cannon 1966, p. 18)" (John Simon, Three Australian Asset-price Bubbles, rba.gov.au, 2003, pp.22-23).

Bust 1920s/30s

"The world depression found Australia unable to meet her repayments, and the boom was rapidly translated into a disastrous slump. The average price of a house in Sydney fell from the 1925 level of £959 to £668 in 1935, but this was a bonus only to those who had money... for the years 1931 to 1934, building in Sydney came to a virtual standstill" (M.T. Daly, Sydney Boom Sydney Bust, (Sydney, George Allen & Unwin, 1982), p.169).

Over ten years, from 1925 to 1935, average Sydney housing prices fell 30.3 per cent.

http://members.optushome.com.au/futurewatch/id99.htm

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"The crash began in 1891. Land values fell to levels around one half their boom levels. In addition ... data on individual suburbs are available. In Prahran, prices peaked at an average of over £1,000 per property in 1888 and fell to £520 by 1898. Similarly, in Brighton, average property values peaked at around £950 in 1888 and then fell to around £400 in 1893 and £300 in 1898. A comparison of these data to the accounts in Cannon (1966) suggests that the picture is fairly accurate but may understate the speed of the bust. For example, Cannon writes that, 'by the end of 1891 the bottom had completely dropped out of the land market ... In Collins Street, sites for which £2,000 a foot had been rejected a short time before, were now being offered for £600 a foot - and could not find buyers even at that price' (Cannon 1966, p. 18)" (John Simon, Three Australian Asset-price Bubbles, rba.gov.au, 2003, pp.22-23).

A very rough guide to these prices... one pound = one sovereign = 1/4 ounce of gold (not 100% but close enough for a guide).

1880s/90s:

Prahran fell from 250 to 130 ounces.

Brighton fell from 240 to 100 ounces and later to 75 ounces.

Today:

Melbourne median house price peaked at around 400 ounces... now much closer to 300 ounces... and I doubt the bottom has been reached yet.

Wulfgar may have more accurate statistics. IIRC based on his research Melbourne median hovered between 125-150 ounces over a long period, and has shot up to around 250 ounces since negative gearing was introduced.

It is possible the median may drop below 100 ounces in the low point of the cycle, it is not unprecedented, but that is questionable given current taxation policy.

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sheeesh thanks for the numbers sure puts it all into perspective, old crashes priced in gold, and then compared to modern times.i'll have to keep saving for my 100oz, though Adelaide id expect 50 oz should get you a place.

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