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¿ SHOULD I SELL IN GLADSTONE?
QI have a property in Gladstone,
Queensland, which I purchased for
$400,000 three years ago. With the
downturn of construction work in the area
at the moment, do you still see Gladstone
as a good buy and hold investment area,
which will bounce back in times to come?
Do you know of any new projects in the
area, which may see strength return back
to the market in the near future? I’m
finding it hard to receive any information
from my real estate company, as my
property is now vacant.
AYou’re currently experiencing a
dilemma many investors face at
some time or other during their
investing journey. Should I hold or sell?
Is this a dog or a diamond in the rough?
There’s little comfort in knowing that
you’re not alone. This issue is specifically
in some of the towns that we saw grow
quickly, due to having been directly
associated with the resources sector, and
more particularly, the development/labour
intensive stage of new projects.
We’ve been closely monitoring valuers’
comments on the valuation reports and
Gladstone and Port Hedland have both
been receiving similar comments over the
last few months; “Great reduction in sale
data... risk of extended sale timeframe
due to less demand... risk of fluctuations
associated with the changing economics
of the associated resources operations”.
So where does this leave you, hold or
sell? If you sell, then there’s a likelihood
your property won’t be worth what you
bought it for or it may have just held
its value. However is there any hope?
To answer your question I called a few
experts to see where they thought the
market was going.
Based on Residex predictions there’s
up to a nine per cent per annum growth
over the next eight years expected in
metro Gladstone, this is lower in west
and south Gladstone, at eight per cent
per annum. Compared to Brisbane metro
at five per cent per annum over the
next eight years, there’s some upside.
However, this growth I believe will be
linked to another development phase and
according to another property expert,
“The overdevelopment of the area and
subsequent oversupply will see the
market further decline. There are major
future projects in the pipeline, but the
timing isn’t confirmed”.
One of the key considerations for you
should be: Is the property limiting you
from growing your portfolio in the current
growth cycle that most of Australia is
experiencing? If it’s eating up borrowing
capacity or even costing you more due to
lowering rents, then selling now may be a
If, however, you look at this as a blip in
the long-term buy and hold strategy then
there could be a silver lining for you as
demand picks up when the new projects
Without doubt, if you buy or sell, make
sure you have a back-up plan for the next
purchase you make, so there’s not just
the one major economic driver for the
community you’re purchasing in. Make
sure that you do the leg-work so the next
one will just strengthen your position.
Send me an email at
email@example.com and I’ll
send you the supporting research to this
question. It might help you make the right
decision. All the best.
¿ CAN WE SAVE ON STAMP DUTY?
QMy wife and I currently own a property
in Brisbane. We bought it three years
ago and received the stamp duty ‘discount’
for buying it as our principal place of
residence (PPOR). We would now like to
buy an investment property in Brisbane.
If we move into it can we also claim the
stamp duty ‘discount’ again, or would this
mean we might have to pay capital gains
tax if we sell our PPOR? If we moved into
the investment and claimed it as our PPOR
it would save initial stamp duty costs, but
I’m not sure if it’s worth it and what the
tax consequences might be?
AThe answer is no, moving into the
investment property will allow you
to be able to choose which property
you cover with your main residence. You
don’t have to choose until you sell, so you
can pick the one with the biggest capital
gain. This is utilising section 118-145,
Income Tax Assessment Act (ITAA) 1997,
which allows you to cover a property that
you’ve previously lived in for up to six
years while it’s a rental.
The only catch is that if you move out
of your current home and rent it out then
API experts answer questions from readers
This information is of a general nature only and does
not constitute professional advice. You must seek
professional advice in relation to your particular
circumstances before acting. This information is also to
be read subject to the disclaimer on page 6.
section 118-192 will reset its cost base
to the market value at that time. This is
usually a good thing. There are lots of
little tricks and record keeping that can
make the most of this opportunity, so you
should discuss this in detail with your
accountant if you decide to move into the
Section 110-25(4) allows you to increase
your cost base by anything associated
with the home that hasn’t otherwise been
claimed as a tax deduction, though you
can’t include expenses from before the
cost base was reset. So these would be
expenses when you move back into the
original home, such as interest, rates,
insurance, repairs and maintenance.
The latter is a gold mine right down to
light globes, lawn mower, fuel, cleaning
You’d need to keep good records for
both properties so you have the option of
choosing which one. There are also things
to consider, like if you’re going to stay in
one of the properties in your old age, then
there’s no need to cover it with your main
residence exemption until much later in
life. If it’s your home when you die, all
previous capital gains tax liabilities are
forgiven and forgotten.
The reset of section 118-192 is
compulsory, so will apply when you move
back out of the investment, which in this
case would be a bad thing. Considering
purchasing costs, the market value is
probably less than the cost base plus
interest etc. while you’re living there.
The resetting of the cost base when you
move out may be so bad it isn’t worth the
stamp duty saving but that depends on
when you intend to sell the house.
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