Gez it's fine to pay off your PPoR loan or save it; it's all good equity of one form or another towards your next IP. Every single dollar of equity you create by either paying off your loan, putting into an offset account or simply waiting for capital growth means that you can borrow another four towards your next IP. You'll probably be surprised…[Read more]

Sorry Gez, been away for a while. The concept is a lot more general than just one property. Borrowing to the maximum possible simply means buying as many properties as you can within the limits of your equity and debt servicing capability. You are simply trying to maximise the total capital you control. The exact percentage borrowings for each pr…[Read more]

Hi Sandy, Stuart has good info on this in his latest newsletter: http://www.prosolution.com.au/news/newsletter.htmCheers, S/C

gezzy wrote:
I'm just curious, in relation to your above post, how does borrowing the maximum amount possible give you a larger potential for capital growth?CheersGez

Hi Gez, I'll put my 2c worth in and try to answer that: Borrowing the maximum means you have the maximum possible value of property in your name. If all your properties increase i…[Read more]

It's pretty simple DodoL; you just look at your net income (ie after tax) with the property compared to your net income without it. It should be greater with the property if you are CF+. The reduction in tax you pay if you're negatively geared, or the increase in tax you pay if you're positively geared is just part of the bottom line, ie your net…[Read more]

I've been thinking about buying my next IP in my wife's name, for asset protection reasons and because I've just crossed over the land tax exemption threshold, so I've done a bit of an analysis which shows the cumulative cash flow after tax for various incomes, ie 0, 15k, 60k, and 100k, and various number of years, ie 5, 10 15 and 20. I'll paste…[Read more]

Bomis, just to give you some perspective, I've run a few numbers through my simulator. As Terry says, negative gearing isn't that negative now interest rates have come down so much, and it's nowhere near as critical to keep the property in the higher income earner's name.  Say you purchase a 400k property that you're getting 400/w rent, ie 5.2% g…[Read more]

Ty,  Investment properties are a much more efficient generator of wealth than a PPoR (due to tax detectability of expenses and income from rent of course), so if your main concern is building wealth as soon as possible, then as Terry says, keep your PPoR as cheap as possible. At least you won't be paying rent, and you'll have the security and s…[Read more]

I think the new "Green Bridge" to the uni is helping Yeronga too. Moorooka is pretty close, but maybe it's on "the wrong side of the tracks" with the Beenleigh rail line being such a big dividing line. Annerley may be a bit closer to the action, but it's already pretty expensive. I think Moorooka would be a good bet in the long…

Of course Scott, that's the whole Idea. Instead of using their shonky system to reduce the payments in the early years, you control it yourself via your offset account buffer. You let the balance run down by not covering the interest fully. It's all about making the loan more affordable for a limited period. Whether this is a sensible strategy or…[Read more]

Just one point about the FHB stamp duty exemption (it's 500k in Qld): (this is off topic, but who cares)When you build a house land package with some developers, eg Stockland they give you a separate contract for the land (with them) and the house (with the builder), and consequently you only pay stamp duty on the land and not the home. The bummer…[Read more]

Strange how the banks don't even consider your CGT liability when assessing your net worth and LVR. I guess they don't care what happens to you after they sell you up and recover their principal. The ATO just has to pick over what's left.

Just those I was referring to in my first sentence: "there are lots of people trying to package this strategy up "

Richard there are lots of people trying to package this strategy up so that is it somehow acceptable to the ATO. I'm not quite sure what you are saying (as you have a few typos) but if you're saying that interest on interest is not tax deductible, then I'm sure there are several people who would disagree, namely all those people I've just…[Read more]

duckster wrote:
Also you are using the dark side of the force. Compound loan interest !As your investment loan increases so to does the force of compounding interest work against you.

Duckster, that is a fairly common comment regarding letting investment interest compound while paying more off private debt.It's completely wrong to suggest that…[Read more]

Thanks Terry. It was just back in "help needed/Stamp Duty!!!" Sorry, I shouldn't cross-post.I've checked one of their information brochures on their website. It states: "For first home concession, you must never have held and interest in other residential land in Qld or elsewhere…"Another thing to watch: They also state that if you start leasing…[Read more]

Tristan that property would still be considered your PPoR and as such will be CGT free for the next six years. Converting it to dual occupancy might affect  that exemption. Just something to consider and maybe get some professional advice on.Cheers, S/C. PS Terry you never answered my query on exemption from stamp duty for first home owners who al…[Read more]

AAMI have a combined landlords/building insurance which is probably what HG is talking about. I also had those, but I also had the normal landlord's insurance with AON. I never did investigate how much the AAMI policies overlapped. I too was a bit dismayed by the large increase in AAMI's policies. Their reasoning was that investment properties…[Read more]

Hi Terry, I know we can still be eligible for the FHOG after buying an IP (since the 1st July 2000 I believe) but I've assumed that we will also be eligible for first home owner stamp duty exemption after buying an IP. We can't really assume anything with government policy of course, especially since the stamp duty is a state government tax and…[Read more]

Chris, your $1M property is way above the threshold in NSW and it doesn't make any difference if it is your first PPoR or your second or an IP for that matter, the stamp duty is the same $40490. I suggest you move up to Queensland! You get a discount if it's your PPoR, ie $31000 for PPoR (first or second makes no difference as the first home…[Read more]