Hi All,
I've been reading the posts on this forum for a while now and have found some of the members and thread topics quite useful. I am a FHB and am currently considering the benefits of a Trust (read the Trust or not to Trust thread – Which was brilliant!) compared to the Grant I will receive.
Currently, I have put an offer of $485,000 for a property in Inner Sydney, and have had informal approval for an 80% LVR ($388,000) with 20% ($97,000) of my own money up front (this would include $14,000 from the Govt). My girlfriend and I were planning to move out of our rental apartment and into the new place for a short period (3-5 years) but realised we would not be able to claim Tax on the Loan interest as a result. We are currently renting closer to the city but now believe we would be better off staying put as we could get more rent per week using our Investment Property anyway.
If I was to structure my loan a little differently say to 90% LVR, than we would only need $48,500 of our own money and could afford the additional $14,000 lost through the FHBG and roughly $20,000 in additional stamp duty costs. Our overall strategy is to buy and hold for as long as possible as this would (hopefully!) be the first of many property ventures, however would the long term future Tax benefits of a Trust including Land Tax concessions outweigh the short term loss of the FHBG and Stamp Duty for my situation at this point in time? Finally if a Trust would be the way to go, what trust structure would you consider to be the best for our situation now and in the future? (It’s a bit cold to describe in this way, but we would be looking to have a child or 2 probably 5 years from now).
Apologies for all the questions, but I would be interested to hear your thoughts.
Kind Regards,
Craig ElliottHi Craig
The FHOG and stamp duty concession adds up to a lot of money. You will also not get a CGT exemption on the property if it is owned by a trust.
Have you considered buying in your names and moving in for 6 months and then out again. This way you get the FHOG and can keep the property CGT free during an abscence of up to 6 years and claim negative gearing benefits. When it turns cashflow postive move in again.
There is only one sort of trust that is worth buying a property in and that is a discretionary trust.
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
I am with Terry you wont get a second opportunity here so would try and maximise it.
Look at a 95% interest only loan with a 100% offset account so that when you move out you maximise the deductible interest.
Richard Taylor | Australia's leading private lender
Terry / Richard,
Thanks for your help. I spoke to Shakuri Barbari from Property Tax Specialists (recommended on this forum) and another accountant who both echo your sentiments.
We are in a fortunate position in that we have enough for a 20% deposit up front. However, I think I definately need to consider holding on to some of it through a 95% interest only loan.
We are waiting on formal approval on the BankWest, Rate Tracker Ultra Home Loan where we have been advised to take advantage for the first 3 years, before moving on to another without paying any early exit fees.
I think I have my answer.
Terry, where are you based in Sydney?
Will let you know how I get on.
Regards,
Craig
hi Craig
I am retired – no more going to an office, but i still do the odd loan or 2.
I think you will find with the ultra rate tracker they now only go to 90% LVR. If you want 95% you will need to chose the mortgage shredder at a much higher rate.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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