Forum Replies Created
- AimHigher wrote:imugli wrote:IMO you should start by getting the current IP to CF+ status – set up an offset account linked to the IP and dump everything in that. THEN start looking at your next one.
Imugli
But how do I get the IP CF+??? We're in a bit of a bind in terms of tenants. The ones we have now are excellent. Always on time, treat the place well and they have taken two increases on the chin. Two previous lots were just horrendous and I don't even wanna go there. My husband NG's on his wage but we're still short a fair bit. Is there something I'm missing with ways to make it CF+??
Thanks for your advice…keep it coming. I'm open to it all!
Cheers
A couple of ways…
Increase the rent, probably not an option given the 2 increases already…
Reduce the interest you're paying, but this would obviously affect the tax deductions available to you.TBH, probably best you listen to Richard over myself, he's far better versed in these things
Thanks Kyla.
Everyone here was new at some stage (I still am) – it's all good
A couple of tips you'll see around here are Read book after book after book on the subject and learn different people's strategies and how they implement them. I also read up a lot on structures (trusts, tax etc) so that when I speak to my accountant, we're on the same page (it ends up costing less because you're asking your accountant less questions and his time is your money
.Is the property in both of your names? If so, A. You've now both lost the FHOG (I assume you knew that though) and B. here's where an accountant may have come in handy before purchasing…
If the property is in both names 50/50, I believe half the income and half the interest has to be attributed to you and your husband i.e if you pay $30k per year interest (for example), 15k has to be attributed to both of you. Now, obviously if you're looking at reducing your taxable income, having the property in your husbands name alone would have more benefit – for every $1000.00 reduced from your husban'd income, he reduces his tax bill by $400.00 if he stays in that bracket. You only reduce yours by $300.00. Of course that would have been dependent on one of you being able to service the loan individually, so it may not have been relevant…
You CAN redraw the extra deposits you make, but the interest incurred on the investment loan by the redrawn amount won't be deductible so take this into account when deciding. Of course the advantage is you've effectively earned the same rate of return as your mortgage interest rate tax free by saving that much. Also, make sure you do your sums before contributing extra, as this will (perhaps permanently) affect the ability of the loan to reduce your taxable income – the less interest you pay, the less you reduce your income by.
We can theorise all we want here, but you really should speak to an accountant and / or financial advisor before going either way
See, I had your situation wrong all over
and mine is completely different Kyla, care to divulge any further re your situation, stragey etc?
I actually agree with you JRr, but we're obviously in the CF+, debt is only good if someone else is paying it group
Different mindsets and different situations, neither being incorrect, just different.What IS kyla's financial situation and what strategy has she decided upon? Without knowing this I thought it best to put as many cards on the table…
As duckster has demonstrated, paying down the loan CAN be beneficial in a CF- situation, also demostrating just how important it is to have a clear idea of your own financial position and your objectives before jumping in to the investment game.
My situation is different again, as is my structure so I would do things differently again
kyla wrote:thanks Imugli,
I realise now that we should have chosen a loan with the option of an off set account but unfortunetly it doesnt come with the fixed rate loan so until it changes to a variable rate in 2 years time, what should we do with the extra funds?? I also realise that we should have gone with a variable rate from the start too! Hind sight is a wonderful thing!!Sorry kyla, your initial thread said IO (Interest Only) loan. Fixed Interest (FI) is obviously a different kettle of fish and I read it as WITH an offset option not WITHOUT – apologies…
2 years fixed probably isn't that bad a bet. Depending on your circumstances, fixed interest may work better for you. For instance, you may get a benefit out of prepaying the interest on the loan and bringing the deduction forward. Talk to your accountant about that though… There's also the certainty of knowing exactly what your payments will be – just because the RBA has said it's going to lower rates, there's no guarantee the banks will follow them. Heck if the funding markets don't open up a little, we may still see banks RAISE their rates.
As you can see by Richard's post count – he da man. From what I've gathered so far, if he doesn't know it when it comes to financing and structuring, it's probably not worth knowing.
Spicy wrote:Also, I didn't say that she was breaking any privacy practices, I just said I wasn't happy that she posted that information and I thought is was very un-professional.
Spicy,
National Privacy Principles are laws that have been put in place for a reason. Whilst I'm glad (for Premium's sake) you haven't taken it as a breach, the fact remains it is.
I haven't used these people, haven't even heard of them before this forum but that alone would be enough for them to lose any chance they had of my business.
Whichever way you choose to go, I wish you luck
Spicy wrote:Kylie71, I hope your company is a bit more professional than you are, as your approach at disclosing MY personal infomation on this forum is very un-professional.
I suppose you thought it would be funny to post my name to inform me that you knew who I was. Well, I was not for one minute trying to hid who I was. As I am sure that there aren't any other people travelling down to visit your company in that time frame with a 3 yr old. But you had NO right to post that information here.
NOT HAPPY.And you're still going to do business with these people?
Kylie, do the words National Privacy Principles mean anything to you? You know, those laws that make it illegal for you to divulge any of your customers details to anyone?
Here goes with my crystal balling…
I'm 28 now, wife is 36…
Next ten years I'd like at least 1 property every year (1 in Fiji) with one or 2 paid off completely in that time. I'd like to be in a position whereby my wife can scale back her work commitments should she want to.
I'd like an island in the Bahama's by the time I'm 55.
I've got my first one now and am looking for number 2, so I'm on the way
Now let's see how this holds up in 10 years time
The first one is the hardest Marl
Ask questions, research research research, and use brokers and accountants for all you can get from them. You may have to pay for their services, but they'll save you more than they'll cost you in the long run.
Good luck!
ummester wrote:BTW – I am over 30 and am well funded enough to enter the housing market. However, I refuse to buy something for more than I think it is worth. I also believe that by not buying I am doing a small bit to assist with a needed market correction, if I did buy I would be adding to the problem. I will buy when I believe the market has sufficiently corrected. If it doesn't, it is no skin of my back, I will just continue to rent and save. I am happy with my financial situation, I am just not happy with Australia's.Let's all thank ummester for his sense of national duty…
Something's value is what someone is willing to pay for it – what they perceive it to be worth. What is stopping you from putting in bids of what you "perceive" to be a fair price for a property, then walking away when the vendors perception turns out to be above that? What would you lose?
and mine is completely different 
