Forum Replies Created
From the responses it looks like Wellard would be easier to sell than Nilgen. If you are happy with the profit on Wellard it may be time to lock in the profit even if it leaves something there for the next person.
If its an emotional decision then choose one and then toss a coin to confirm – seems odd but you’ll soon realise which one you want to keep and gut feel is often a good way to decide things.
best of 3, no! 5, no 7…..
Phil
Sound like a good solution Terry. I missed out on the FHOG because the first place I bought was an IP and it still hurts me. Have to think if the government is going to give you money to buy a property then “grab that cash with both hands and make a stash” – some old Pink Floyd lyrics there – ok i’m showing my age!
Here are my thoughts – however its best to check your own solution with a good accountant/lawyer that specialises in Property…
– The things about tax deductability for IP is on my undestanding is that you can only claim the deduction on the mortgage interest costs on the mortgage before it is first rented. So if the property is worth $250K you really want a mortgage at $250K even if you can afford some equity. Put the equity in you PPOR so that the mortage there is less (as its not tax deductable). I think this is why LOC mortgages are good as they allow you to move funds around.
If you remortgage once it is an IP say for an additional 40K then if these are used for improvements then this is tax deductable – if you used the cash for a new car or to pay down your PPOR loan then this amount is not tax deductable.
I would suggest that you get a valuation once you have finished the property and before you have made it available for Let. Then structure your loans so that you IP has the maximum possible mortgage and your PPOR has the lowest amount – try and add some flexibility so that you can move things around if you need to.
Now I’m also thinking there are other ways to do things using Trusts (Hybrid Trusts) but you would need to get specialist advice on that.
hope that helps
phil
I think it would depend how you have set up the mortgage on the IP. If it was set up as a line of credit and you have paid some off then there is no problem redrawing to the original LOC. If you want to remortgage then the interest on the new additional amount would not be tax deductable.
Phil
Andy,
Sorry cant help you in Perth. Although Trust deeds are pretty standard. It was simple for my account in Sydney to arrange to set up a Discretionary Trust and Trustee Company (would recommend that as you can then control what the trust invests in rather than Trustees). Two resources you can have a look at are:
http://www.incorporate.com.au
http://www.chrisbatten.com.auTrust Magic by Dale Gatherum-Goss is also an elightening read and I would recommend it even if it just ensures you ask the correct questions when speaking to the person setting up your trust.
Good luck.
Phil
There are a couple of things that occur to me here:
1/ If you buy a PPOR and live in it for a period of time (6 months/2 years?) then you can move out and rent the property and its still your PPOR for CGT purposes for 7 years and hence no CGT is payable when you sell provided you havent bought another PPOR.
2/ You potentially could use a Hybrid Trust structure where you don’t own the property directly rather through a unit trust that you control (through a trustee company). You then, in theory, can claim the tax deductions on the investment units you have bought but live in the property paying rent to the trust. You can also sell some/all the investment units to someone else even your own superfund!
My thought is – buy the house you want to live in next as your investment property (you can borrow more as your income has increased by the rental income) and live more modestly for the next few years until you are ready and afford to move into it. Try and use a Line of Credit or Offset mortgage so you can reduce the mortgage but dont have tax implications if you want to reuse the money you have paid off for another investment.
Phil
DHA is a balance of risk and return – low risk and low return. But then – no maintenance, prompt payment, a good tenant and a long term lease – but is it worth the double digit management fee?
Steves point about Superfunds is a good one. No real harm having a small exposure to this in a well balanced super fund.
