Hi Bron,

Thanks for your post.

quote:

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My concern is how the bank/lending authority will react to the lack of income during this time, how would you suggest we approach this and would it be best if one of us gets a job.

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The way forward might be to look for a low-docs loan where your lack of income won’t necessarily be an issue. In return you will have to leave more of a deposit though, but given your situation that shouldn’t be a problem.

quote:

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Also the money earnt from the sale of our businesses, how can we minimise the tax?

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There may be some CGT roll over relief available, but the best person to explain that would be your accountant.

quote:

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Do we sent up a new company under our trust purely for the rentals and reno’s?

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This statement seems to indicate a lack of understanding of how structuring works. The real issue is will you need to set up a new structure for your renos.

Well – what I would probably try to do (to minimise tax if possible) is to live in the property while you renovate it. That way (unless you are in the business of renovating) the gain will be tax free.

Talk about this strategy with you accountant.

Have a wonderful day.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

I’d imagine that it would be some kind of arrangement where the tenant pays a higher rent, but in return also gains an agreed percentage of any capital gains.

This might then be an incentive to add value to the property that will increase enjoyment for the tenant and also capital value.

I’ve not come across an example of this in real life… yet.

Bye,

Steve McKnight

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Hi,

I agree that the volume of traffic is picking up which is making the need to be more specific with our topics more urgent.

I’ll look at this when the forums are re-released later this month.

Thanks for your feedback.

Bye,

Steve McKnight

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Hi,

Stu is correct in that, under Australian tax law, any undistributed (ie. retained) income in a trust structure is taxed at the highest marginal income rate (currently 47% + 1.5% Medicare Levy). In this case the tax is paid by the Trustee out of trust funds.

Really then, there seems to be no benefit in holding funds back, except perhaps with any superannuation surcharge issues if individual beneficiaries are close to that particular threshold (see an accountant for more on this matter).

While you need to be very careful with anti-avoidance issues, provided there is a valid reason for establishing a company you can have that as a ‘corporate beneficiary’ and then limit the maximum amount of tax you pay to 30% (the company rate).

As always, it is critical that you seek tailored financial advice for your specific circumstance.

What I would strongly recommend is that people who want to know more about structuring seriously think about buying the WealthGuardian product that was recently released. To find out more visit: https://www.propertyinvesting.com/resources/11

Bye,

Steve McKnight

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Hi,

Thanks for your post and welcome to the forum.

There’s a few things to say…

1. Will you be owing the property as an investment and having your mother as a tenant? If so, I imagine that you aren’t too worried about the cashflow loss and will be hoping to make it up in terms of capital appreciation as values rise. To this extent my advice is to clarify your investing strategy so you isolate what investment performace criteria you are looking for.

2. An interest free loan? Hey – tell me where they are and I’ll be there in line with you!!! Do you mean interest-only? If so my advice would be to try and pay down the loan to reduce the risk should interest rates rise. It might be a little extra, but it will also eventually bring down your interest payments. Check the affordability of the repayments, and, if you can, go with P&I terms.

The last question you riasei s one about structuring. Perhaps the biggest benefit/issue to be considered here is the principal place of residence exemption. If you buy it in your name then it will be an investment property (unless you live in it) so you’ll have to pay CGT.

If it’s in your Mum’s name and she lives in it the it will be CGT free. Perhaps you could get some kind of undertaking that you mum leaves the property to you in her will in return for you helping now.

Hmmm – just remember though, if this turn sour it’s the sort of thing that A Current Affair will love to run a story on

Hope this has helped.

Bye,

Steve McKnight

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Hi,

Hmmm – seems like a bad story []

It might be worthwhile reporting this agent to the applicable State branch of the Real Estate Institute.

May not count for much, but you can at least voice your frustration.

Also, it would be wise to cc the licensed agent who owns the agency, and attach a quote for new lights asking them to make good the problem.

You never know…???…

Steve McKnight

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Hi,

Why not test out the theory for yourself? Go to:

http://www.mycreditfile.com.au/personal_information/free_credit_services.asp?CountryID=1&UserTypeID=11

It’s free, although it takes 10 wprking days.

Bye,

Steve McKnight

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Hi,

Interesting spin… I would want to appoint a manager though as from what I know, owners of B&Bs work pretty hard and have trouble taking an extended holdiay.

Another option is buying m/h-otels and converting them into blocks of units.

Good luck… be sure to due your due diligence.

Bye,

Steve McKnight

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[]

Market seems pretty hot here at the moment, although industry is still recovering from the drought.

And, at the risk of alienating my good fried AD [], banana benders seem to do things a little odd up here where 17 degrees is considered cool.

Furthermore, the latest fast train is called a ’tilt’ train. I don’t know about you, but in my mis-spent youth, when I tilted the local fish and chip pinball machine, I was chased out of the shop by the owner.

I don’t think that I’d want to be on a train going 160kms an hour where it’s normal for it to be ’tilting’.

Still, having said that, perhaps some of the smaller regions will benefit by having the increased infrastructure passing through… if you get my drift.

Well, I’m about to go and sit on an island for a few days (tough life this property investing []). I’ll see ya when I get back to civilisation.

Cheers,

Steve McKnight

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Hi,

Be happy if they fall, but be prepared when they rise.

This raises a bigger question of what is an appropriate loan mix of:

1. Interest only, and
2. P&I

and then:

A. Variable
B. Fixed

interest rates.

What do you think Stu?

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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