Hey guys!
I’ve just been made aware of the potential of property investing, and given I’m in the perfect situation to start, I want really want to start up now [shades]
Currently living at home, and looking to buy my first investment property. Went to a couple of seminars and read a couple of books, and from what I’ve picked up it’s pretty important that if i’m doing this for the long-term (which I plan to do) I need to set up the right financial structures ie some sorta of trust. Also it seems i get some tax benefits as well.
At the same time i’ve also been told instead it would be better that I purchase the property and live in it for 6-12 months so I can get the first home owners grant (then later on I can change it into an investment property?). I was told buying the property using a trust would mean I won’t get the 1st home owner’s grant, plus I’ll never be applicable for it later on as well
I’m in the process of foraging the net and people for extra information on this and property investing in general, anyone able to shed any light for me (or know of books / sites covering this sort of thing)? I’m feeling the trusts are the right way to go, but at the same time, just seems a shame to give up a free 10G!
Reponses much appreciated!
Thanks!
Aaron [thumbsupanim]Hi Aaron
$10K FHOG you must be in Vic.
If the loan is structured correctly you can have your cake and eat it.
The requirement of the FHOG is that you reside in the property for a period of 6 months continously and enter in the first 12 months.What is stop you taking out an interest only loan at 95% using an offset account applying for the FHOG and then in 6 months and 1 day renting the property out and claiming the relative interest and associated benefits as a deduction.
Admitedly you will not qualify for the FHOG if you buy in Trust but you can always subject to Stamp Duty switch the property into Trust at a later date if you so desired.
The other alternative is to purchase an IP first up and as long as you never occupy this or any other property you purchase as your PPOR you will still qualify for the FHOG down the track. Maybe not 10K but likely to stil be with us.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Hi Richard thanks for that info
Jus had a query, If I have bought an IP through a trust can I till be eligible for the FHOG and buy omething to live in.(Im in Vic)regards
Sunny
Yes you certainly can as long as you have never lived in the property or occupied any other property that you have purchased as your principal place.
Structure it correctly with your offset account and put in as little as possible as deposit. Hope this helps.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Thanks Richard
Sunny
Hey Richard, thanks for the response!
Didn’t realise that i’m still eligible for the FHOG given that any property I have purchased I haven’t occupied at all, that’s sweet [smiling] Yep I’m in Vic! [thumbsupanim]
As an option you suggested switching the property into the trust at a later date given I went for the FHOG initially with the property. Doesn’t this mean I would be subject to the CGT and all the other fees, from what I know it’s pretty much like selling the property? You also mentioned it’s subject to stamp duty, does that I would have to repay another stamp duty fee?
Your suggestion to put as little into the deposit as possible, is this to maximise the leverage component of loan? I somewhat remember been explained this concept, and it definately sounded good! I was actually thinking of putting a 10% deposit , I heard any lower and the insurance becomes quite high?
Thanks again Richard!
AaronAaron
Yes if you sell the property then it will be subject to stamp duty against on the Transfer value.
CGT will not be payable as it is your prinicpal place of residence and is exempt for upto 6 years (a consideration before you do sell it into Trust).
A 5% deposit is possible on interest only (a nil deposit is available also but comes with slightly higher charges) and LMI can be capitalised.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
I am think peopel generally should have one proeprty in their own name so that they can claim CGT exemption (main residence exemption). CGT can be huge, so giving this benefit up can be costly.
You also never know when the FHOG scheme will end. It probably won’t be around forever, so getting it while you can may be a good idea.
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Richard,
If i was in a situation where i was considering transferring the ownership of a property from persoanl name to a trust what would it cost me? If the property is currently worth about $150k. Could u please provide me with some sort of indication of how i would calculate this.
Thanks heaps Richard,
rcrick[biggrin]
2 initial costs
1) Stamp duty payable on the Transfer value. This will vary from State to State so you need to have a look at Office of State Revenue website in your state.
2) CGT maybe payable if the property was originally an IP. The calculation can be difficult to put in black and white and would need a lot more information. If it was originally a PPOR then no CGT payable.Other than that not a great deal more.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Plus legals, plus exit exit fees and application fees etc
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks everyone you guys answered numerous questions before i even asked them thats why i love this website and everyone that is a part of it [grad]
Antoni
Use your FHOG another day if the investment side of things lines up just the way it should.
Plus legals, plus exit exit fees and application fees etc
Terry i think these are waived at the Commonwealth
Richard Taylor | Australia's leading private lender
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