Hi All,
Need some general advise.
My partner and I want to get into the housing market as soon as possible. My ultimate goal is to purchase as many investment properties we can afford over the long term and end up with a nice looking port folio by the time we want to retire.
I am 24 years old and working full time and have a great interest in property as an investment option. My partner is 21 years old currently studying for a teaching degree and working part time.
We don't currently have the means to save for a deposit (without it taking a 2-3 years) and have asked for the assistance of the inlaws using their equity to purchase a property.
The inlaws also want to purchase another investment property and have offered to purchase a property which we would live in paying the majority of the mortgage. We would then receive 70% of the profits (capital gain) when we decided to sell in say 2-7 years depending on the market environment and our ability to move on and purchase our own property.
My ideal situation would be to purchase their 30% from them, i.e. purchase the property from them using our 70% however we would then have to pay stamp duty and I don't see this as the most cost effective way… unless we just moved on and purchased a different property.
The inlaws want to help us and if they can get a small return out of their investment (equity as security and help with payment weekly in terms of the difference between what we pay as 'rent' and the mortgage payments).
What is the best option for parents to help their children & respective partners using their equity?
Hi Achawk
Hate to say the issue is not that simple.
They cannot have the Title in their name and you pay the mortgage unless they can support the entire loan themselves thru their serviceability.
If the property is then sold in say 2-7 years they would incur the CGT on the partial or full sale to you.
You could look at a Rent to Own situation even if it was an investment property.
Must admit we are getting more and more enquiries on our Rent to Own property from investors who wish to buy with no money down and then rent the property thru a head lease.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard
Sorry let me clarify.
Parents will purchase an investment property in their name (they can definitely service the loan themselves) myself and my partner will live in that home and pay 'rent'.
When the house sells the parents will hand over 70% of the profits for us to use as a deposit for our own house.
Basically I want to know what the best option is for parents to help their children enter the property market.
Achawk wrote:parents will hand over 70% of the profitsI'm lost. Where are these profits coming from? If there's any profit at all how much are you projecting?
Achawk wrote:Thanks RichardSorry let me clarify.
Parents will purchase an investment property in their name (they can definitely service the loan themselves) myself and my partner will live in that home and pay 'rent'.
When the house sells the parents will hand over 70% of the profits for us to use as a deposit for our own house.
Basically I want to know what the best option is for parents to help their children enter the property market.
The trouble with this is
1. The parents would pay CGT on any increase.
2. You have not used your CGT main residence exemption. If property was in your name it could be CGT exempt.
3. Parents could change mind
4. Parents could go bankrupt
5. You could divorce
etc
etcWhat if you just borrowed a deposit from the parents?
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
Terryw wrote:The trouble with this is 1. The parents would pay CGT on any increase. 2. You have not used your CGT main residence exemption. If property was in your name it could be CGT exempt. 3. Parents could change mind 4. Parents could go bankrupt 5. You could divorce etc etcWhat if you just borrowed a deposit from the parents?
This would be my ideal situation however they kind of wanted a small return out of it if they could however their number once motive is to help us out. It was also going to be there 'entry' to the investment property market as they are not massive risk takers… scared other rents wouldn't pay, damage the property etc
Additionally they would also help out with repayments as they would pay 100-150 per week to cover the difference in what we could afford for rent and the mortgage repayments. this would be a massive help as my partner is still at Uni for another 2 years (working part time at the moment).
Thanks for your help
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