Forum Replies Created
As per what Jamie said.
Being an IP, it's a business decision and you shouldn't ever get emotionally attached to a property where you end up paying over the odds. Do your research and come up with a figure that you're comfortable with.
It doesn't also hurt to come in with an initial lowball offer either. You may be surprised at what may be accepted in this market.
Cheers
Tom
There is no harm in selling a property if you think that there is no scope for getting your money back on a negatively geared property through equity or rent. You don't want to keep on losing money year after year.
In the end you need to decide if by selling will make your next move more fruitful.
Cheers
Tom
Boshie, your Westpac advisor has given you the wrong advice (not surprisingly).
First off refinancing your loans and credit card into the one loan means you will will a mixed purpose loan. You will need to segregate your loans into deductible (PPOR loan which will become an investment) and non deductible (credit card, etc). The deductible loan becomes IO, the non deductible as P&I with offset account linked to this non deductible loan as well. Any excess funds to be put into the offset account.
This will allow you to maximise your deductible debt while paying off your non deductible debt quicker, and allowing you to save money for your future PPOR.
On another note, if you are only gone 5 years as you suggest and sell your house when you get back to buy another one then you are eligible for CGT exemption.
Cheers
Tom
Hi Boshie, the reason people purchase property that is initially negatively geared is if there is potential for capital gain where in time the gain will outweigh the initial income losses.
Yes, you are correct in that a negatively geared property can offset against high incomes come tax time, however in your case since you already own the property and are renting it out, if there is the chance to positively gear it for that particular property, then that's what you should do.
What's more beneficial? Losing money through negative gearing and getting only a potion of it back at tax time, or making a profit through positive gearing and paying some tax?
You can then use the profit to save for another PPOR purchase down the track.
Cheers
Tom
It's not like they are trying anything that hasn't been tried before. All they are doing is charging upfront costs, which depending on the size of the loan may or may not land you a profit after the upfront rebate, and they still get to keep the trail commission, so I doubt they are going poor.
Going through their website, it seems they are hung up on best financial rate deal, and nothing to do with loan structuring. This could cost more than than any rebate one would accumulate.
Also interesting to note that they only partially refund any upfront fee if the lender declines a loan application. To me that suggests they aren't too versed in credit policies or don't ask enough questions.
The thread topic heading is a bit hyperbole in my opinion. Is this proposal a game changer? Nope. Will brokers be needed in 2013? Yes. Will this impact my business and clientele? Not one iota.
Cheers
Tom
I thought that it was the case too Steve. You need to declare any foreign income such as overseas IP rent on your tax return, so any expenses used on the property should be able to be deducted from this.
Cheers
Tom
Yes, it can be done via a self managed super fund (SMSF).
Simplifying it, the SMSF contributes the funds for deposit and buying costs, the remainder is a loan against the investment property. Loan is repaid via rent from the property, super contributions, investment income.
Both the SMSF and the trust holding the investment need to be setup correctly.
You would need to seek professional advice.
Cheers
Tom
Hi RM,
You can confirm with your tax accountant, but from my understanding you would be able to claim pro rata from the point it becomes an IP.
i.e LMI is $5K total, PPOR becomes an IP at the end of year 3, you should be able to claim $1K in both year 4 and year 5.
Cheers
Tom
And you're half way to the 50% CGT discount as well
Just on the finance side of things, you need to be aware a lot of lenders won't unconditionally approve a loan this far out as their maximum period is 90 days.
Cheers
Tom
If you are intending to change Hughesdale into an IP down the track, stick with IO on the loan for the whole amount, and place any excess cash you save into a linked offset account. That way you're paying the same amount of interest but when you end up purchasing a PPOR, you can use the offset funds on the new PPOR, and maximise your deductibility.
As for the deposit, looking forward how much cash do you intend to have for your future PPOR? If it's only 10% or so then it would be better to park your current funds in the offset account and use it later on to drive down the LVR on your future non deductible property.
Cheers
Tom
Agree with Catalyst's comments above. You need to make sure the loans are structured correctly at the start to save heartache later on down the track.
I would ask if you intend to live in the old house permanently or is there an intention of making it into an IP down the track? If there is a chance of turning it into an IP, you should leave the loan as is and place the excess funds into a linked offset account.
Cheers
Tom
I take it you're talking about IP related stuff.
If you are using a property manager, they should give you a yearly statement of your rent and management expenses which you can use. Also if you are claiming car expenses for visiting the property, I keep a list of dates that I visit and the purposes of the visit, so it makes it easy to work out the kms.
Cheers
Tom
Pardon my ignorance as I have never come across a sale that is lower than an outstanding loan before, but how is there still a loan to claim interest on after a sale of the security?
If there was still money outstanding, wouldn't it be a default and the LMI pay out the lender, and then the LMI would chase the vendor?
Cheers
Tom
Jamie, I consider myself as a pretty easy forgiving bloke, nothing really ruffles me, but I'm with you on this one. The thing I detest most is clients who you form a trust with and then blindside you and go direct themselves.
I do have a broker friend who when he gets a client who comes back with their tail between their legs, gives the client the benefit of the doubt, by advising them that if they require his services again it is no longer gratis and they will be charged an exorbitant fee. Has the same effect as a FO.
Cheers
Tom
JacM is correct, you don't want to utilise all you funds on the one IP property, the higher the LVR you feel comfortable with the better. This will allow you to use your funds for multiple IP's with capital growth potential.
Even if you are looking at only purchasing the one IP property in the short term, the excess money would be better sitting in an offset account where you would still make the same interest repayments, but would give the advantage of allowing you to use the funds for personal use (such as for the purchase of a future PPOR).
Cheers
Tom
