S.I.S I’d like some help

hello rolonation

I know your letter wasnt addressed to me but I thought I would give you my opinion. I am not much older than you at 24 and if I was you I would keep your ppor. You say that you should get about 80k when you sell it, it may be a better idea to keap the house but borrow against it using the equity that has amassed. As for getting started I am only new to this website myself but would suggest reading books such as rich dad poor dad, 0 -130 properties, property millionaire and other such books in that section of your local book store. You can also get good info from like minded people in your area so look for a club there seem to be a few advertised on this site. And last of all just keep asking questions, the people here seem real friendly (most of them) are willing to help a newbie. Hope it all works well for you.

Scott

“Together we combine our strenghts and eliminate our weakness”

Hi guys,

Great to see many young people my age on here, first up i would agree with strw23. You can keep your place and use the equity, though for me personally, if you have the availability to live with family and dont need to live at your PPOR, i would sell it or turn it back into a IP (i mean rent it out), reason being is that you, PPOR what real tax benefits can you claim.

Sounds like your off to a good start Rolonation, at your age and 80k to spend, i like it.

Alrighite guys, to be honest, ive done it the same way most people have, but i just took it a little step further and tweaked some investment strategies.

I use a strategy called Offset Gearing.

This is how it works.

Purchase a property that is going to go boom or appreciate in value, (a property that is in your affordability range). Most likely it will be a negative geared property. Let the propery go boom and appreciate in value. (This you will have to research and work out for yourself, but if you study the market, you will learn quickly which area is most likely to boom and appreciate)

With what equity you have and what you can play with buy an IP that is going to be positively geared. But not just positively geared but enought rental income to cover both property expenses, so they offset against each other.

eg.

+ve + -ve = 0 (no cost at all to you)

Divide your properties into 4 categories.

Passively Geared – Enough Income to Offset another property, or too much income, that is taxable
Positivly Geared – The property has enough rental income to look after itself.
Neutrally Geared – Negative geared property that becomes positive after a tax return/rebate……Or a property that is positvely geared, but due to, too many expenses and vancies becomes negativly geared
Negativly Geared – The rental income is not enough, so you have to subsidse out of pocket expenses.

Work out which type of property invesment you need in order to buy to keep all costs offseted against each other.

If you do this right, then your income from your job, will not be affected, allowing you to further save more dollars or have more opportunity in spending your work dollars.

As for getting the cash up, i dont have any savings in the bank, any money i save, or from work or i put aside is put into shares or managed funds reason being is, you can quickly liquidate this money when you need it and beats the interest return you get from the bank.

But my real success is, in studyin the market, the guys that know me on here, will tell you i spend alot of time every day just studyin and lookin at property. Other thing too is i have an accounting background, so this sorta helps, though its not that necessary, for me personally its just being able to understand and being able to read both properties and the property market.

sorry if i didnt answer all the questions, but post them up and ill try to help out, also are any of you guys payin hecs? if you are ill show you how to avoid paying them legally through property.

cheers
s.i.s

Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”

Hi Rubbachook,

that quote is from Paul Clitheroe, that tv guy and share market expert, he is the one that hostes that television program “Money”.

i havent caculated that signature, but i know it does stand its truth, many other sayins like if you put $20 a week away and invest it, by 65 you will be a millionaire, it has the same fundamentals and gist about it as the signature.

cheers
s.i.s

Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”

Hi Shirly and to Everyone that is interested,

To avoid paying hecs, oh by the way, or pay minimal amounts, there are several ways.

To avoid paying hecs, you need to have an income of less than about $24,000.00…. To the people who have an income that exceeds this amount, you need to bring your taxable threshold below this, many ways you can do this is through claiming your depreciation, (as long as you dont sell the property or you will pay HCG Tax).

After all related expenses for property investments, that are tax deductible and partly refundable, they can reduce your tax threshold or minimise payments.

This also applies to offset gearing, because you have your properties offsetted against each other. meaning there is cashflow happening, but it is being superseded by expense and debts, you are neutralising all payables by receivables which equals = a neutral cashflow, (yet at the same time paying down and owning all properties).

Chuck in the depreciation and other little expenses that are legally claimable, you have been able to achieve a lower taxable threshold, and still maintain and own all your properties.

Though this might work now, it will catch you later if your investments do exceed the taxable threshold, but keeping control over your investments you can continue to avoid payin or minimise your Hecs debt or Hecs debt repayment.

Cheers guys – hope this helps

s.i.s

Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”

Hi Chan$,

nah i dont use trust, for PI at the moment…lol, im trying to achieve a income tax threshold of under $6000….. Reason being, so i dont pay tax,[][][]

but yeah of course, ill be at Sydney Forum Meeting this Thursday. This Thursday Meeting, i think there is going to be some talk about Hybrid Trust, different types of trust and their pros and cons.

cheers
s.i.s

Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”

Hello,

I am paying HECS at the movement, and have a similar background to you. But I thought the HECS repayment works off the Taxable Income excluding the losses from the properties.

J

Greetings all

I would just like to say what a fantastic thread. I am 39 and learning from people nearly half my age! I think this is fantastic.

Keep up the good work, and who knows I may be attending your seminars in a few years time []

Regards Bear

SIS, I agree with Julie. For HECS income calculation it is your assessible income plus any losses from property. So if you negatively gear and get a loss this can’t help you reduce your HECS payment, but can help reduce income tax. That is my understanding anyway-from a few years ago now.

Terryw
Discover Home Loans
North Sydney
[email protected]

sis,

It’s not quite true that you can “avoid” paying HECS. You can *defer* payment, but you will still have to pay it at some stage in your life- when your income goes to a repayable amount of income. The new higher Education Bill just went through parliament. The following will now occur:

A HECS repayment threshold of $35000 in 2004-5 and $36184 in 2005-6. This ups the original repayment threshhold from the amounts mentioned of $25348.

If people don;t repay HECS now, you will have to repay it at some point, and inflation is added to it. This meant that, a couple of years ago, when CPI was 6% (following the introduction of the GST), your HECS bill added 6% to your bill. You can’t avoid paying HECS unless you die, or live overseas- forever.

A better solution, if possible, is to pay HECS upfront- you get a 15% discount on the amount if you pay it upfront.

kay henry

Fair enough Peter :o)

It’s usually only the reasonably wealthy who can pay HECS upfront anyway. You can pay it off upfront before you study, or you can also get benefits if you pay off lump sums throughout the lifetime of the loan.

I was lucky in that I did my undergraduate degree when it was free education- no HECS! It wasn’t that long ago :o(

kay henry