i need advice on the best action to take in organising a loan for an investment/future residentual property. i currently have a house loan in joint names with my husband and anticipate paying off this loan within the next 7-8 months. we are looking into buying another property with the view to rent it out for at least 5 years and then we will move into and renovate whilst still keeping our current house for rent or possibly sell and reinvest. my questions are then, should we try and pay off our existing loan before we buy another house ?? and who’s name should the next house go under for maximum tax advantages ??
any advice will be greatly appreciated..!
regards, D RobertsHi there
Firstly i will assume that the loan you are paying off in the not too distant future is your current PPOR and is likely to be for the next 5 years or so so has no current tax benefit attached to it.
Remember if you do rent it out and move into the new property you will have NO interest to be deucted so it before you repay it might be an idea to consider re-structuring it to cater for your future decisions.
It also sounds to me like you havent decided yet what the property will actually be used for and therefore probably need to link the restructuring of the first loan into the 2nd loan application at the same time to ensure your loans are working for you and not the ATO.
Now what name is an interesting one as we havent any details of Tax rates i will just make an assumption or two.
If you buy the property in the highest tax payers name then you will be able to claim any deductions at this marginal rate. However if you sell the property and make a capital gain then the CGT will be calculated using the applicable Tax rate in the year that the Contract is signed. (Ignoring the 50% CGT rate for properties kept for 1 Year and 1 day between the respective Contract dates).
If you buy the property in the lowest tax payers name then you may benefit in CGT when you come to sell the property but initially loose out.
If you buy the property in Trust then you maybe able to distribute the income to the beneficiares at the end of the end of each year giving you flexibility as well as giving you Asset protection along the way.
You do not mention whether either of you are self employed or open to any potential litigation action so giving a full answer is difficult without more information.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
100% Finance on selected properties in the USA.
Email us to be added to our mailing list.
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Very sound advice here from Richard but I think you need to talk with either a Solictor or Accountant as each persons personal situation differs and its impossible to really determine here all the circumstances.
Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
You must be logged in to reply to this topic. If you don't have an account, you can register here.
