All Topics / Help Needed! / RENT or SELL?

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  • Profile photo of jemandijemandi
    Member
    @jemandi
    Join Date: 2011
    Post Count: 1
    May 5, 2011 - 4:13 am

    Hi

    This is my first ever post anywhere, so bear with me.  Also, i am not an expert by any mean on investment properties, but am trying to learn! 

    My husband andI rented out our fmaily home (which we lived in for 10 years) in Sydney's inner west about 6 months ago for a tree change.  We only have a small mortgage of $80,000 on the property and recieve $610 per week, it is valed about $750,000.  This extra rental income takes us into a high tax bracket (positivley geared?) ontop of our regular income. 

    We are curently renting in a rural and are now thinking of staying here and would like to maybe buy in this area for about $500,000 mark?   

    My question is, how can we work it out where we can increase our mortage on our Sydney property to buy a property here in Goulburn and then minimse my tax.  Or do we need to sell that house and incvest in another property to just get a higher mortgage on it?

    Hopefully this all makes sense?

    Thanks
    Kate.

    Profile photo of Kent CliffeKent Cliffe
    Participant
    @kent-cliffe
    Join Date: 2011
    Post Count: 110
    May 5, 2011 - 6:46 am

    Hi Kate,

    Firstly, I would like to say congratulations on paying down your mortgage.

    You can’t get tax concessions for an owner occupier similar to the ones of a negatively geared investment property. From my experience in the industry, I have seen one way some people have done it.

    They have purchased in a trust and then they have applied to rent the property own by the trust. Their own trust has decided that they were the best tenant for the property.

    For these people in the past, it made sense (for reasons more important then tax to purchase in a trust). Their reason was for asset protection. They had to make sure all rents and loans were at market rates and the property was managed through a property manager. This effectively created a firewall between the trust and their personal affairs.

    Coincidentally, it worked out beneficial for them as they were able to negative gear their business profits against the trust loss.

    Now to setup a trust structure you should always seek the advice of an accountant or lawyer. This is not personal advice.

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