Hi guys my mate recently got a job in my clinic and we're discussing putting our money together and invest. Here's what we want to do.
We both earn $130k net. Our jobs are safe.
I have a PPOR worth $400k, with $380k still owing. I also have an IP worth $400k with $370k owing
What we thought was that since our income's quite high and interest rates are low atm, if I put his name on the PPOR so we co own it and therefore split the mortgage with him, and i sell my IP and we pay off the PPOR asap, we worked out we can pay it off in about 4 years and 10 months. And at the same time we'll buy an IP on the goldcoast with an interest only loan and negatively gear it for tax breaks. After the PPOR is paid off we plan to buy another IP and pay off the goldcoast IP ASAP. Does this seem like a good idea? We worked out we'd save heaps of interest on a PPOR by doing it together.
what are the steps to take to have him half own my house? thanks.
Without looking at the detail in detail, I would not recommend this path without some serious consideration. Think of what you were doing 4 years and 10 months ago and how your perspective on life/business may have changed in that period to the present.
There are many variables that would need to be considered before you remotely entertained anything like this. For starters:
What happens if someone can't/refuses to pay the mortgage at some stage for any reason?
What is one party wants to sell and the other wants to hold and the one who wants to hold doesn't have the money to purchase the other out?
What happens when there is a stalemate with a decision that needs to be made, who is the determining party, and if it's a third party, who is that and what experience do they have to be making decisions on property?
What is your exit strategy and when do you decide to take a loss if that eventuates?
What happens in the case of a dispute?I could go on for a long time with these questions, however you should get the gist of what I am getting at.
I have worked with JV partners on deals and performed large developments on my own ($25-50 million deals) and had to learn through the school of hard knocks about poor JV agreements. On the surface JV's always seem a way to fast track your wealth, however reality is that many deals end up in the court rooms, which of course benefits only the lawyers. (Check out http://www.austlii.edu.au and type in joint ventures to see all the cases relating to JV's gone sour) .
Wardy
Dave Ward | Geronimo Finance
http://www.geronimofinance.com.au
Email Me | Phone MeProperty Investor, Property Investment Expert & Advisor, Finance Expert & Strategist
Here is an idea. Your Mate buys a house worth 400k and you rent it from him. Your mate moves into your house and rents it from you. You will lose the PPOR exemption (after six years if you use the 6 year rule) but you can claim negative gearing if the interest payments is more than the market rent you will receive from one another. But you must charge market rent to each other for tax office reasons.
picklesam wrote:Hi guys my mate recently got a job in my clinic and we're discussing putting our money together and invest. Here's what we want to do.We both earn $130k net. Our jobs are safe.
I have a PPOR worth $400k, with $380k still owing. I also have an IP worth $400k with $370k owing
What we thought was that since our income's quite high and interest rates are low atm, if I put his name on the PPOR so we co own it and therefore split the mortgage with him, and i sell my IP and we pay off the PPOR asap, we worked out we can pay it off in about 4 years and 10 months. And at the same time we'll buy an IP on the goldcoast with an interest only loan and negatively gear it for tax breaks. After the PPOR is paid off we plan to buy another IP and pay off the goldcoast IP ASAP. Does this seem like a good idea? We worked out we'd save heaps of interest on a PPOR by doing it together.
what are the steps to take to have him half own my house? thanks.
Doesn't sound like a good idea to me for the following reasons:
Costs
– Legals $1000 approx
– Stamp duty $4000 approxDisagreements
– You want to sell, he doesn't
– You want to borrow for another, he doesn'tRisk
– He goes bankrupt = creditors can get half of your house!
– He gets divorced = His exwife and her new boyfriend move in with you!
– He decides he doesn't want to pay anymore, so you must cover the full loan
– Death, what happens if one of you die? could be squabbles between families.Reduced borrowing capacity
You only may pay half the loan, but each is responsible for the wholeCGT exemption halved
– If you both claim the property as your main residence, that is only one CGT fee
– If you had one each as your main residence = 2 properties CGT free.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
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