home expenses

House-hunting expenses and how to minimise them (part 2)

by Chris Lang on December 14, 2012
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Expense: Property reports. There are many reports available: recent house sale prices per area, house history, information about suburbs, etc. Once you’ve decided on a house, you may want to check how many times it was sold in the past, when and for how much.

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House-hunting expenses and how to minimise them (part 1)

by Chris Lang on December 12, 2012
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Not too long ago we have discussed various real-estate related expenses (be that renter’s, home buyer’s or home owner’s). There is one more set of expenses left to cover: the house-hunting expenses.

Home-buying is (usually) a long, nerve-racking process that on average takes about 6 months: 4 months of searching and, assuming you’ve found your dream home and your offer was accepted, another 2 months before the settlement occurs. During the months when you’re actively searching for a house, there are inevitable expenses that will eat away at your budget.

Here they are:

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Exchanged contracts? Get insurance!

by Chris Lang on November 8, 2012
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When your offer has been accepted and the contracts have been exchanged, it is so tempting to finally relax. You deserve it – you’ve worked hard, searched and found the right house, negotiated a great price and feel kind of proud of yourself and exhausted at the same time. Sorry, the celebration will have to […]

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Expenses you must know about when buying a house

by Chris Lang on March 14, 2012
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When people are planning to buy a house, often the first question they think of is “Do we have enough money for a deposit?”. This is a good place to start, but the expenses involved in buying a house don’t just end there – in fact, there are many more costs people should know about […]

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Transfer of Title – another hidden tax?

by Chris Lang on January 3, 2011
Transfer of Title - another hidden tax?

I wrote many times about how expensive buying a home is. Even not considering the price of the house, there are many other things to pay for that add up and form a big, big expense. We often forget to include in our budgeting things like the stamp duty or council rates. These amounts change […]

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Co-owning a house – things you must know (part 2)

by Chris Lang on October 23, 2009
Co-owning a house - things you must know (part 2)

Joint TenancyIf you’ve read my last post, you know that there are 2 ways to own a house, one is called “tenancy in common” and the other is called “joined tenancy”. Why do you care? Because choosing one over the other could mean that you leave no inheritance to your dependents.

Joint tenancy

Joint tenancy means all the tenants own equal shares of the property. As a direct consequence of this it’s impossible to divide the ownership, for example, seventy-thirty – which is not good in a situation where 2 owners haven’t invested equal amounts of money into the property.

Another interesting thing to know about joint tenancy is what happens to the property when one of the tenants dies. His or her share automatically passes to the other tenant, or if there is more than one, is shared equally between them all.

Co-ownership agreement

This document is a must-have for any kind of joint tenancy. It should list all the potential problems, all the disputes that may arise between the owners and ways to settle them. To give you an idea of a dispute, it could be that one owner wants to refinance and the other one doesn’t, or one owner defaults under the finance and the others get affected by it.

How to choose

The main reason to choose tenancy in common over a joint tenancy would be control. If you want a complete control over your share of the property – go for tenancy in common. If you want to make sure that your share passes on your heirs when you pass away – choose tenancy in common. And remember that you need a valid will that specifies who you’d like to have it.

Another consideration is financial risk. If you are exposed to a greater financial risk than your partner (and you are buying a house together), consider making your share smaller in case your creditors go after your house.

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Co-owning a house – things you must know (part 1)

by Chris Lang on October 18, 2009
Co-owning a house - things you must know (part 1)

HousematesAccording to the media this scenario happens quite a bit – young people can’t afford a house on their own, and friends or relatives are ending up buying a house together. This sure is a way around the lack of affordable housing, but what happens when there is a dispute?

Let’s think about this for a moment – we have a house with more than one owner, and in case the owners decide they want to go their separate ways, how do they split the house? Fifty-fifty? Sixty-Forty? Seventy-Thirty?

Even in cases when there are 2 owners and they are a married couple, things aren’t simple. I have the same amount of patience for legal matters as the next girl, but these things need to be read once, remembered and acted upon correctly – or your financial future and that of your loved once can suffer.

As someone who isn’t qualified to dispense legal advice, I will just bring the issues up and then leave it up to you to think about them and decide that you’re either not interested because it’s not going to happen to you anyway – or to be better safe than sorry and ask your solicitor or conveyancer.

Let’s begin with the benefits of co-owning a house, or reasons to do this in the first place.
Buying a house with a friend (or even friends) allows you to pool money together to put a deposit down, your borrowing capacity grows, you pay only a share of purchasing costs (building / pest inspection, legal fees, stamp duty), you can split the costs of owning (council rates, maintenance costs, etc).

And now let’s talk about the ways of co-owning. Basically there are 2 ways of owning a property together with someone else: tenancy in common and joint tenancy. These boring legal terms may sound similar but there are differences and if you’re not careful, these differences can cost you a lot of money.

Tenancy in common

Tenancy in common allows you to specify the proportion of the house that you own. For example, if 3 friends buy a house together and each brings a different amount of money to the table, this can be translated into them owning a different share of a house.

This is best demonstrated by an example:
Andrew, Ian and Casey bought a house together. Andrew contributed 50K, Ian contributed 100K and Casey contributed 150K. We will note in the transfer of land that Andrew’s share is 1/6, Ian’s share is 2/6 and Casey’s share is 3/6. This way transfer of land notes a fair share for every co-owner.

A good thing about tenancy in common is that each tenant has a total control over their share if property. They can sell it, they can get a loan against it, transfer it to anyone, etc.

In my next post I will explain about joint tenancy, and then compare the two and their consequences for the co-owners. Stay tuned!

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8 tips to cut your home bills

by Chris Lang on September 9, 2009
8 tips to cut your home bills

Cut home billsI’ve talked all about energy efficient new houses, but the reality is most of us are living in established homes. Does it mean there is nothing we can do about our energy bills?

Of course not. Here is a list of 8 things that are easy enough to do, affordable enough to implement and worth doing to pay less for cooling, heating and water. Some of these are really straight forward and I am probably not introducing new concepts – but never mind that, they still work if you give them a try.

To save water

1. Plant native plants in your garden. They are drought-tolerant and won’t consume as much water as non-native ones.

2. Replace the shower heads to water saving ones. You won’t notice the difference in the shower – but you sure will in the bill.

3. If it leaks, fix it. All the taps, inside and outside your house, all the torn drippers, everything. Do not forget to check for leaking toilets..

To save energy

4. Replace your regular light globes with energy-saving ones. Yes, they cost more, but they last longer and consume much less power so it’s worth it.

5. Replace your lighting fittings with the ones that have a ceiling fan. It will help you save on energy in the summer as well as in the winter.

During the hot months circulating air will make the room feel cooler (as much as 8 degrees cooler!), which consequently can reduce your air conditioning bills by up to 40%.

During the cold months you can run the ceiling fan in a reverse order, to push the hot air from near the ceiling (where it normally gets by laws of physics) down towards the floor. This can reduce your heating bills by 10%.

6. Use rebates available to you to insulate your house for free. It will make it cooler in the summer, warmer in the winter and reduce your bills.

7. If your house has external blinds (most houses do), close them in hot days. Less sun will gets in, the temperature will be lower when you come home and you won’t have to run the aircon as much.

8. Finally, the most obvious (yet most commonly forgotten) tip: turn the lights off when you leave the room. Duh, you say… but if I had a coin for every time my partner had forgotten the light on, for the whole day, with nobody in the house, I would be filthy rich by now :)

Got any tips of your own to cut the cost of home bills?

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Tax time: 8 house-related expenses you can claim.

by Chris Lang on July 12, 2009
Tax time: 8 house-related expenses you can claim.

Tax file

As you know, in Australia the financial year ends on June 30 – which means that from July 1st on it’s time to submit your tax return.

If you have been working at home a part of the time or all the time, there are
8 house-related expenses you can claim:

1. Heating, cooling, lighting.
2. Repairs to home office, its furniture or equipment used for work purposes.
3. Depreciation of home-office furniture (you’ll need receipts for the desk, cabinets, chairs, phone, printer, fax and computers used for work).

4. Occupancy expenses – rent or interest on mortgage.
5. House insurance premiums.
6. Council rates.
7. Water rates.
8. Home office cleaning expenses.

And now a little bit about how to claim. There are basically 2 ways to do it and one is potentially more dangerous than the other.

Claim via fixed amount

The less “dangerous” and easier way is to calculate the amount of hours you spent working at your home office for the 2008-2009 financial year and to multiply that figure by 26 cents. To back up your calculation ATO advises people to keep a diary of the working hours.

So for example, if you’ve been working 5 days a week for a couple of hours from home, you’ll be able to claim 520 hours a year (2 hours per day * 5 days a week = 10 hours a week * 52 weeks a year = 520 hours).

In terms of money that will be 520 hours * 0.26 cents = $135.2

Claim via percentage of house area

The other, more “dangerous”, way is to claim your real expenses (provided you have all the bills and the receipts) based on a percentage.

Calculate what percentage of your house space your office takes by doing the following:

1. Measure the area of your entire house including your office.
2. Measure your office alone.
3. Divide your office area by your house area and you will get a percentage.

For example, your house area is 100 square meters. Your office is 9 square meters. The percentage is 9 / 100 = 9% of the house.

If you’ve worked the whole year in your home office, that means that you can claim 9% of your heating / cooling / lighting / water etc bills. And here is the catch – when you will sell your home, those 9% will affect the capital gains tax you will pay. Normally capital gains tax doesn’t apply when people sell their primary residence, but in this case, if you declared a portion of it as your office, it will.

So if you’ve claimed 9% of your home as your office, capital gains tax will apply to 9% of your capital gains – and this is valid for a period of 6 years. This is certainly something to consider before claiming as much as you can now, because it can make you pay later.

And over to you now – any tax tips you’d like to share?

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Expenses that come with owning your first home

by Chris Lang on February 7, 2009
Expenses that come with owning your first home

Life is full of surprises. You would think that after paying that enormous amount of money for your first home, dealing with all the lawyers, movers and beggars of all sorts that have left a deep hole in your budget, you can finally relax and start saving up for a vacation.

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Home, Mortgage, Landlords and Renters Insurance explained

by Chris Lang on January 20, 2009
Home, Mortgage, Landlords and Renters Insurance explained

There are several kinds of home insurance and I thought to give you a quick run-through to compare and explain them once and for all. It is not uncommon for people to get lost amongst these different forms of insurance, so here they are, demystified.

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