Hi,
I was hoping i could get some advice on an investment home. I have bought it in my wifes name for tax benefits)
She earns $185,000k year. This will give us an extra $12k towards it in the first year.
We bought thge home for $440k and it is getrting $300 week rent. We are going to spend $25k -$30k doing it up and then rent it for $420 per week. It is a long term investmnent.
I just want to make sure we are doing it right. Ant suggestions would be great.
also we plan to do 5 -10 homes in the next 10 years. Any ideas of structuring to protect them.?
Thanks
EricHi Eric
Any structuring ideas are probably a bit late now if you have already bought the first property.
Personally i always like to have the Title held as Tenants in Common even if you as the lower marginal Tax payer only has 1% of the shares in the property. If circumstances change down the track i.e your wife gives up work or reduces her income etc etc it is a lot easier and in some States cheaper to change the Title.
Depending on what your wife does for a living you might want to consider a Discretionary Family Trust however remember you cannot negative gear within the Trust.
All in all as long as the loans are separate and not cross collateralised you should be fine.
I am assuming that your used equity in your PPOR or similar by way of an LOC to fund the first IP.
Richard Taylor | Australia's leading private lender
Hey Eric,
Discretionary Family Trusts do tend to offer the best asset protection, especially when they have a non-trading company as the trustee. But like Richard said you can't negatively gear them.
You can always restructure the title of the home later down the track, when you are becoming successful as an investor, but it can cost a lot of money. It is good to get things right first.
With the amount your wife is getting paid it looks like you guys probably have a fair chunk of disposable income, but it still might be an idea to look for positive cash flow properties to balance out your negative gearing so you aren't too out of pocket.
There are so many strategies such as wraps, renovations, positive and negatively geared, subdivisions etc. None is the be all and end all of investing. Learn as much as you can about the different strategies and choose the one that seems right for you.
ps. This is not financial advice, always seek the counsel of a professional financial advisor.
Ryan McLean | On Property
http://onproperty.com.au
Email MeExcuse my ignorance Ryan, but what is a wrap? I’m new to the game too, but have only seen that phrase used a few times and haven’t yet figured out what it means.
Thanks,
Stacey.
A wrap is a wrap around mortgage where the vendor offers to fund the sale by allowing the purchaser to make payments to him instead of his Bank until the loan is paid off.
The Seller retains Title to the property during the period although the purchase has possession.
Richard Taylor | Australia's leading private lender
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