Government's Latest Move To Curb Property Speculation

[bepgof 20]

  tweety3334 said:

For pte,

If I am going to stay in pte and rent out hdb, then use additional cash to repay pte.

If I am going to rent out pte and stay in hdb, then use additional cash to repay HDB or for other investment.

The reason is that for property with rental income, it is preferred that there is more interest expense for tax deuctible purpose but it also depends on the interest rate for your hdb and pte. Currently interest rate for pte is low and HDB higher so better repay HDB loan....need to reassess after 5 years.

Worth mention here, IRAS got this "owner concession" rebate for property tax, it is "more logically" for owner to stay at one with higher annual valuation (so can enjoy 4% property tax), the other one will lower AV will be at 10% of AV.

Examples:(~119sqm)

HDB AV=9000, 4%=360, 10%=900

Pte AV=15000, 4%=1500, 10%=6000

You have 2 choices: either 360 + 6000 =6,260 (stay hdb, rent out pte), or 900+1500=2,400(stay pte, rent out hdb). "Wrong" decision costs to pay difference of 6260-2400 = 3860 = $321/per month over property tax issue, don't play play.

Anyway, AVs have been revised this year and increased and property tax rate calculation methos also will be changed next yr.

Edited October 8, 2010 by bepgof

[Warrior88 0]

  bepgof said:

Examples:(~119sqm)

HDB AV=9000, 4%=360, 10%=900

Pte AV=15000, 4%=1500, 10%=6000

You have 2 choices: either 360 + 6000 =6,260 (stay hdb, rent out pte), or 900+1500=2,400(stay pte, rent out hdb). "Wrong" decision costs to pay difference of 6260-2400 = 3860 = $321/per month over property tax issue, don't play play.

Anyway, AVs have been revised this year and increased and property tax rate calculation methos also will be changed next yr.

Bro .... you type too fast le ...

HDB AV=9000, 4%=360, 10%=900

Pte AV=15000, 4%=600, 10%=1500

(360+1500) - (900+600) . Difference $360 ... don't scare me le haha

[Jgal 0]

  tweety3334 said:

Ya lor, difficult to repay in 5 years. I personally will use CPF for HDB. Save cash for downpayment for pte 5 years later.

For pte,

If I am going to stay in pte and rent out hdb, then use additional cash to repay pte.

If I am going to rent out pte and stay in hdb, then use additional cash to repay HDB or for other investment.

The reason is that for property with rental income, it is preferred that there is more interest expense for tax deuctible purpose but it also depends on the interest rate for your hdb and pte. Currently interest rate for pte is low and HDB higher so better repay HDB loan....need to reassess after 5 years.

Good times, good rental income.Even dun rent , property also appreciate.

Bad times, make sure you can hold , you may not be able to rent out any. Remembering also, muz cater 3-4 of your yearly rental to your mthly maintance , sinking fund , agent fee , repairs and also in between tenants.

If HDB loan , 400-500k also cannot pay finish within 10 yrs. I see it as a big risk to buy condo.. and "pray" that everything continues to go up. Also to remember , singapore city ,>20% of the residences here are non-singapore citizen and close to 30% of the pte pty owners are foreigner. That means, if times get bad, they will return to their hometown and selling their property here is likely. Then there will be a surplus of house. I wont be surprise that prices will drop by 30-40% in value. The likelihood that you could keep you high paying job also are in question then. So make sure you have enuff CPF or cash to make payment every mth for at least 2 yrs.

For me , 32 , this year, with 2 young children depending on me and my hubby, I will rather play it safe.

- Buy anything not loaning more than 50% of current worth.

- As per bepgof suggest , CPF shld be able to cover fully mthly installment + surplus every year.

- I probably wont hop to another hdb/ec.. because of the 5 yr lock-in i.e. MOP.

Why ? because I want to be able to sell when i see sign of danger... If i hop to EC and the bad times comes during MOP, i will be like being skin alive. Imagine, see the prices of hdb drop and yet cannot sell. I am now in the situation of seeing the prices of condo goes up but cannot buy.. ha haha

[estella83 0]

for me, i will continue to stay in HDB and rent out the extra rooms even after buying pte. Currently renting out the rooms at $1230, pte rent out maybe ard 2k? accumulate all the passive income and aim for 3rd property after i get married. 10 yrs later sell all the properties n migrate to other country. good? feasible?

bought a 3 room hdb flat from the govt at <$120k 5 yrs ago, now can fetch ard $350k. OS balance $60k plus, mthly mortgage $300 plus. hehe

Edited October 8, 2010 by estella83

[Warrior88 0]

Rental Income for Income tax purposes, better keep good records of

Property Tax

Mortgage Loan Interest

Fire Insurance

Maintenance Fee

Repairs & Maintenance

Agent's Commission

[bepgof 20]

  Warrior88 said:

Rental Income for Income tax purposes, better keep good records of

Property Tax

Mortgage Loan Interest

Fire Insurance

Maintenance Fee

Repairs & Maintenance

Agent's Commission

Symptoms of aging, bopian, still though my mental cal very good. Hands keying in while eye reading, mind calculating, my cpu cannot multitasking already, many thanks for the error highlighting.

Edited October 8, 2010 by bepgof

[bepgof 20]

  Jgal said:

- I probably wont hop to another hdb/ec.. because of the 5 yr lock-in i.e. MOP.

Why ? because I want to be able to sell when i see sign of danger... If i hop to EC and the bad times comes during MOP, i will be like being skin alive. Imagine, see the prices of hdb drop and yet cannot sell. I am now in the situation of seeing the prices of condo goes up but cannot buy.. ha haha

I think MOP is a good policy for young owners, or, comparatively less power earning sorts, keeps their "hearts" calm and less "itchy" to sell to make profit, or to "upgrade" but landed in $ trouble later on, and couple frequent quarrel, children no mood to study, and .....MBT & WKS can tell more.

Edited October 8, 2010 by bepgof

[Jgal 0]

  bepgof said:

I think MOP is a good policy for young owners, or, comparatively less power earning sorts, keeps their "hearts" calm and less "itchy" to sell to make profit, or to "upgrade" but landed in $ trouble later on, and couple frequent quarrel, children no mood to study, and .....MBT & WKS can tell more.

Can say that's true. Personally, I dun advise anymore to move solely because of profit. Sell high buy high.. worse take big big loan that cannot digest.. Alot of ppl "die" this way..

[bepgof 20]

"Eat" big & many, cannot digest (swallow in not), vomit out ALL. Suffer bodily internal injury still ok, the "mental stress" tak boleh tahan, can end one up talking/smiling to himself on the road, or, taking mrt and scold commuters $%&*# and "seow" ah.

Edited October 8, 2010 by bepgof

[tweety3334 0]

  Jgal said:

So make sure you have enuff CPF or cash to make payment every mth for at least 2 yrs.

I also scared so put aside buffer in CPF. Took higher bank loan for my HDB and balance from sales of previous flat goes back to CPF. Bank loan interest expense rate also lower than CPF interest income rate, so leave more inside CPF is better than paying down more.

[icer 0]

Ok. Thanks all.

Will continue to monitor the prices and if I find anything suitable, might just get it. Looking for a 3 room flat (corner) for own stay. Comfortable enough and bigger than many studios.

[random_username 0]

  blue_skies said:

Wow I think I cannot fulfil your above criteria! Especially the OA part and 10% cash grow per month.

If my cash can grow like grass it would be perfect

Anyway now it's also more difficult to buy the 2nd or 3rd ppty coz of 70% bank loan. Need more cash upfront - Cash is King!

i think what begpf meant by growing the OA and cash by 10% each per month is to put in a total of 20% of THP split into 10% cash and 10% cpf (this based on the example he used); not meaning growing the cash pile by 10% per month. though .... eh, bepgof, if you got secret method to ROI 10% per month please share Also, what is "DI"?

on a separate note, i personally think the 70% limit on borrowing for subsequent properties is quite prudent (just my opinion only), cos if the extra 10% cash to come up with is difficult or impossible to come up with, then any change in a person's income or change in the loan liabilities (should the property be bought with 80% loan) could be really tough.

Edited October 12, 2010 by random_username

[blue_skies 3]

  random_username said:

on a separate note, i personally think the 70% limit on borrowing for subsequent properties is quite prudent (just my opinion only), cos if the extra 10% cash to come up with is difficult or impossible to come up with, then any change in a person's income or change in the loan liabilities (should the property be bought with 80% loan) could be really tough.

That's true lah and everyone has different levels of risk tolerance. Some will set aside buffer for 6 mths no rental income while others will set aside 1-2 yrs no rental income. Guess it's all relative...

[bepgof 20]

  random_username said:

i think what begpf meant by growing the OA and cash by 10% each per month is to put in a total of 20% of THP split into 10% cash and 10% cpf (this based on the example he used); not meaning growing the cash pile by 10% per month. though .... eh, bepgof, if you got secret method to ROI 10% per month please share Also, what is "DI"?

on a separate note, i personally think the 70% limit on borrowing for subsequent properties is quite prudent (just my opinion only), cos if the extra 10% cash to come up with is difficult or impossible to come up with, then any change in a person's income or change in the loan liabilities (should the property be bought with 80% loan) could be really tough.

DI=disposable income=cost left over after clearing all the "expenses", including those "expenses" to be paid quarterly, biyear or yearly.

Meaning that has to apportion all these to "monthly based". That was why in one of the post I mention I do not like to "remember this and that" - my wife seems doesn't understand what I've tried to put across her - diamond(monthly, int free), tokong multiple-usage vacuum cleaner(mnthly, int free)and some others whereby she keeps track. I "hate" to remember all these, I created spreadsheet, agar agar keep in all these expenses and apportion them to monthly base, I scared leh. Insurance premiums lah(some monthly, some bi-yearly, some yearly), road tax, car insurance, personal mnthly expenses, children edu/food/tpt/txt/uniform/etc......

After all these, left the DI. Complicated right? Indeed, if study carefully, it is really complicated (monitoring part). Most youngsters commits things until they "forgeot" without monitoring, and when time due, hahaha, bank "ka lau".

Edited October 13, 2010 by bepgof

[random_username 0]

  bepgof said:

After all these, left the DI. Complicated right? Indeed, if study carefully, it is really complicated (monitoring part). Most youngsters commits things until they "forgeot" without monitoring, and when time due, hahaha, bank "ka lau".

oh yes, understand. thanks for explaining. ya, the monitoring is time consuming, but i do keep track of small expenses too cos they add up (little drops of watter, little grains of sand, etc etc ...) before iphone and excel i use 555 notebook. now excel and iphone app easier to keep track. it's amazing how cutting out a kopi o or 2 a day from the coffeeshop or snacks for the kids can save over a month