Forum Replies Created
Thanks Terry.
Terry good point!
What I meant to say was if the trust has made a profit of $13,000,(no loan ,no interest to pay)
Will tax only be applicable at 30% if I the trustee want to access that money?
Thanks for all the help everyone.
One last question
If the trust has earned $13,000 in rent but has paid $20,000 in interest,the trust wont have to pay any tax on the $13,000.
If I the trustee want to get my hands on the $13,000, will I have to pay 30% tax on it?
Padma what you are suggesting is exactly what I wanted to do. But I cannot convince her. Her argument is we both work in the city and it takes 50 minutes to commute from my place and 20 minutes from hers. It’s not a bad argument but I would of put up with the extra travel, then again I am used to it.
Derek I am strongly considering your option to rent my house and plough the rent into my soon to be wife’s property.
Steve thanks for replying. I just finished your book and I loved it. It gave me a whole new outlook on negative gearing. I am now reading Rich Dad Poor Dad. Thanks for the CGT link too.
I should have added I bought my PPOR in 1995 for $150,000.I was renting it out and negatively gearing it while I was living at home. I payed off the loan in 1999 and moved in. It is now worth over $300,000.
Before I read your book I thought negative gearing was great because I did so well from it with my PPOR. It was only after I read your book that I realised you have to make a loss in order to get a tax deduction. I now realise it only worked for me because I bought at the right time and the place appreciated so much in value.
I do like Derek’s other keep it simple option. To keep the property in my name as an income producing asset. Like Steve said I may find the tax I am saving is not worth the additional costs. Real Estate agents have told me the property will rent for $230 to $240 a week. Residex predicts 10% growth in the next 5 years.
The other option is to sell it and look for better income producing assets. What do you guys think?
Steve thanks also for recommending Mark Unwin. Unfortunately I live in Sydney. Can you recommend anyone up here?
Terry,
So I sell the home I now own to my own discretionary trust which I am the trustee.
The trust obtains a loan for say $300,000 and pays this money to me, which I use to pay off my new PPOR.
The trust now has to pay tax on the $13,000 in rent its earning from the property.
However the trust is paying $20,000 in interest on the $300,000 loan.
I the trustee have to give the trust the $7000 difference to pay the interest.
The trust and I the trustee have made a $7000 loss.
Say I earn $63,000 a year. Can I use this $7000 to reduce my taxable income to $56,000?
Have many people done this?
jhopper are you sure this is legal?
Just something additional if it applies to you. If serviceability is an issue for the loan, which it was in our case, you can have the property in your partners name, the debt in joint names and still be eligible for the FHOG.
I had had proprty before, my partner hadn’t and we still got the grant which was helpful, and legal as well!
Surrey,
What you said makes sense. Maybe I should sell the whole IP to her.
Terry,
Could you explain how a trust works?
Thanks for the help everyone.
I think I am going to go with a solid timber floor rather than a floating one.
Has anyone used Rex Flooring in Sydney?
Are they any good?
Anyone know where I can get a good price for a floating timber floor? Have about 80 m2
Sorry to be so glum but one of my investors a young guy from Parramatta was gobsmacked by a bank X guy who said 18 months ago dont buy property its too risky, told this 21 yo to take out a loan to buy shares and invest in his(surprise surprise) managed fund.
DD I think I went to this same guy in Parramatta
because he told me to do the same thing. I too ignored the advice.My parents have a good financial planner and they swear by him. He is too busy to take me on though.
Thats why I was trying to find someone good in Sydney but after what you have said I dont know if its worth it.
Thanks for the help guys.
One last question
Does anyone know how much depreciation you can claim on a 10-year-old property?
And can anyone recommend a good Financial Adviser or Accountant?
Thanks for the reply Jeff.
Yes I am borrowing $388k to purchase the other property I wish to live in.
Although if I sell the property I currently own I will only need to borrow 88k.
This is the problem.
As I said my preference is to keep the property and use the rent to help me pay the new property off.
Although I will be paying a lot of interest on the loan of $388k and I don’t know if it’s better to,
1. Pay the interest and use the rent I get after tax to help me pay off the loan.
2. Sell the property and reduce the loan to 88k
