This week we continue our series looking at capital city suburbs with the longest hold periods, focusing on two suburbs in Melbourne. And in our tax tip of the week, we look at the tax treatment of transferring real estate to family or friends.
NewsIn property news, stable interest rates and slowing house price growth appears to have lured home buyers back into the market. The number of home loans approved by banks and other lenders rose slightly in July, but still remained close to their lowest level for almost a decade.
The Australian Bureau of Statistics reports there were 46,974 loans to owner-occupiers approved in July, up 1.7 per cent, seasonally adjusted. The number of loans approved in June was 46,717 – the lowest since March 2001. While the value of loans to investors fell 2.3 per cent, the total value of loans to both investors and home-buyers lifted by 0.7 per cent.
Suburb In FocusIn our suburb in focus, we continue a series looking at suburbs with the longest hold periods in capital cities around Australia. This week we look at two suburbs in Melbourne.
First let’s look at the housing market in Ivanhoe East, located around 12.5 kilometres north-east of Melbourne’s CBD.
According to figures from RP Data, properties in Ivanhoe East are held for almost double the amount of time than the average hold period in Melbourne, with properties held for 16 years. Melbourne’s average hold period for houses is 9.6 years. Ivanhoe East also has the longest hold period of any suburb in Australia.
The suburb’s population in the 2006 census was 3,784. Ivanhoe East is a leafy suburb surrounded by parklands along the Yarra River. Despite being a small suburb, Ivanhoe East has two primary schools, a church and a strip of shops including a bank, bakery, fruit store, butcher and supermarket.
Turning to the figures, the median house price in Ivanhoe East in the year to May 2010 was $1.25 million. RP Data says from May 1994 to May 2010, prices in Ivanhoe East rose from $250,000 to $1.25 million. The average hold period for a house in the suburb is 16 years. 25 properties were sold in Ivanhoe East for the 12 month period.
Our next suburb is the house market in Essendon West, located over 17 kilometres north-west of Melbourne’s CBD. RP Data figures reveal that properties in Essendon West are held, on average, close to 15.5 years before being sold.
With a population of 1,363 Essendon West is bounded on the west by Steele Creek and in the south by Maribyrnong River. The suburb has a mix of residential housing from inter war Californian bungalows, to post war dwellings, to more modern homes. Essendon West is catered for by Tram, train and bus that connect the suburb to the city.
Taking a look at the figures, the median house in Essendon West for the year to May 2010 was $745,000. The average hold period for a property in the suburb was 15.4 years with 21 properties sold in the 12 month period.
Tax TipAnd now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists.
This week we take a look at the tax treatment of transferring real estate to family or friends. If you have sold or given away any real estate to your family or friends, you may need to find out the market value of your real estate or property for capital gains tax purposes. This includes houses, units, apartments, flats, holiday houses, vacant blocks of land, rental properties and hobby farms.
Selling or gifting property is a capital gains tax event. For most CGT events your capital gain or loss is the difference between your capital proceeds and the cost base. However if you receive nothing for your property, for example if you give it away as a gift, you are taken to have received the market value of the property at the time of the CGT event.
You may also be taken to have received the market value if you and the new owner have not dealt with each other at arm’s length in connection with the event – such as where property is transferred between family members.
For example Dan has $120,000 left owing on the mortgage of a rental property he owns. He decides to sell his rental property to his son and daughter in law for the balance owing on the mortgage. Dan obtains a market valuation from a professional valuer. It shows the value of the property at the time of transfer was $250,000. Despite Dan selling the property for less than market value to a family member, the $250,000 market value is his capital proceeds when calculating his capital gain or capital loss.
And remember to always consult a tax accountant or tax professional before making any tax related decisions.
