Forum Replies Created
Have you read books by Margaret Lomas. If not then I suggest you start there. They cover the type of structure you are seeking.
Given your position I would also look at her company Destiny for a mentor role.
I have met with them and got a few ideas about strategy structure etc. And I am considering joining them in the future given the unbiased access to markets all over Australia. I have not used them up until now because I have only invested in markets that I am very familiar with.Regards
BrettThanks Richard and Terry,
I have done the calcs based on my wife selling her share to me and the interest deductions would be about $10k per annum but cost $12k in stamp duty.Therefore would save money a little after 12 months.
I have not looked into a trust structure because my understanding is that losses cannot be claimed against personal income. Therefore, the loan interest could only be used to offset income from the property but not to save income tax if it is negative geared.
Have either of your heard of a special tax ruling that allows you to withdraw equity if you can prove that you are moving because of work or a transfer. I paid an accountant about $500 about 12 years ago for info relating to a similar situation. I have lost contact with the accountant because I moved and I have not found anyone else that has heard of it.
regards
BrettHi Terry,
I am in a simliar position to Jo and I am wondering what you would suggest.My PPOR is valued at around $750k in the South West of WA and I have no debt attached to it. We own in joint names
I have 3 IP's all +ve geared that I financed at 100% ( around $2.3M total ) at the time of purchase, which have grown in value so I now have about 10-15% equity due growth ( interest onlly loans ) – This may have no bearing on the problem but thought I would include it just in case.Now I have been offered a job that is 2500km away in the North West of WA.
I am purchasing a block in joint names and plan to build a house worth appox.$900k once complete to live in.Do you know if I can transfer the equity from my current PPOR in the South West to my new PPOR in the North West without selling it my property in the South West?.
My current interpretation of the ATO website on deductible interest appears to say that this is not possible.
A friend suggested that my wife could sell her half of our current PPOR to me, thereby making about $375k deductible.Any other suggestions ??
Regards,
BrettThe decsiion to expand your portfolio is a personal one that depends on your end goal. If you can afford to expand your portfolio and have done your research then go ahead and purchase another IP. However, if your are still unsure then I would put the $100k into an offset account attached to one or both negative geared properties in the meantime to reduce the interest you are paying ( possibly 7% ). This will have a short term benefit of saving you interest, however, once you find another property you will be able to withdraw the money straight away and be in a good position to secure the next IP.
Good luck,
BrettHi there,
I had a simliar problem a few years back with properties that were held in joint names with my wife. Our salaries were below the FTB thresholds. However, when the negative gearing was added on to our incomes then it put us over the limit and we had to pay back thousands. I argued that it was not fair and that we were just trying to get ahead and that the investments were long term and the government should be encouraging us to invest for our future and not penalise us for doing so. The reply from Centrelink was that the losses that we were reporting could be carried forward to future tax years when my wife returned to work and even though we were not recieving the income that year, we would benfit in future years when her tax was reduced. Therefore, we had to repay all of the overpayments.
Therefore, with your situation you probably need to asses if you will be returning to work anytime soon. If so, then you need to work out the benefit of reporting the losses to the ATO ( so you can carry forward the losses ) versus you payment from Centrelink, especially with the IP that is just in your name.
I suggest you talk with your accountant about your individual circumstances.
Regards,
BrettAdam,
there are a number of risks in property just like any investment. Rather than trying to develop just one equation I find it much more powerful to set up a spreadsheet with all the known variables eg. Int rate, occupancy rate, rent, projected growth etc.
This is allows me to model the outcomes for different scenarios ie what if interest rates go up 2% or cannot rent for 2 months etc.
I used to do this for each property but now just have an overall spreadsheet (model) for my portfolio.
I also have figures such as ROI, projected Net worth etc. To check that I am making good decisions and on target
Hope this helps.
BrettI have just re-read Steve's book " From 0 to 260+ properties in 7 years" and I am also interested in how I can use a trust structure ( with corporate trustee ) to increase my borrowing ability. Chapter 9 pg 144-146. Steve states that the key is to " carry the investment debt as a guarantor rather than in your own name". If anyone can shed some light on this idea it would be much appreciated, or does anyone agree with Terry that the book in incorrect.
My Situation
I own my PPOR ( $750k) and have used that equity to leverage into an IP portfolio of around $2.5M with a positive cashflow of around $80k per annum. When combined with my salary of around $130k, I have total income of around $210k per annum but I am constrained by maintaining a LVR below 80% with the bank ( to avoid LMI). Therefore, I am forced to sit back and wait for my properties to go up in value / or contribute more savings before I can borrow more to maintain the LVR.Options I am also considering include
1. Vendor finance for up to 20% of the purchase price.
2. Paying LMI on individual properties ( huge if applied to portfloio ) to allow me to go above the 80% LVRRegards,
Brett
