Sarah

I beleive you can still choose between the two. one or the other, not both, can be claim as your PPOR at the same time. It may be better to chose the one with the higher growth. Check with an account before you claim.,

Terryw
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Not really. The nature of debt cannot be changed. The ATO looks at the purpose of the funds.

You should make sure you have IO for investment and PI for non investment.

You should also look at maybe setting up a LOC to pay for rental expenses – even interest. This will allow you to pay off your home loan earlier.

Terryw
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Minors cannot enter into contracts and cannot obtain finance.

If you wish to buy a property for your daughter, maybe you hsould look at a Bare Trust. This occurs when you enter into an agreement with your daughter to buy a property with her as beneficial owner and you as the trustee owner. For all legal and taxation purposes she will be the owner, but her name will not appear on title. Any loans would have to be in the trustee’s name.

Once she turns 18, you should be able to transfer the title into her name with only nominal stamp duty.

I am not sure how this will affect the FHOG or the claiming of the PPOR, but I suspect that you could still claim you current home as your main residence and she could claim the new home as her main residence with you renting from yourself – the trustee. There may be tax consequences if she is receiving rental income as a minor though.

So best to talk to a solicitor and accountant.

Terryw
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If you don’t use equity, then it will take a very long time to save deposits. Most investors use equity in their homes, and then with growth they keep accessing the increased equity for more properties.

Terryw
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I beleive the HUT trust must claim the depreciation against the rental income received in its tax return. Whatever is left over after costs and depreciation is distributed.

Terryw
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Just be careful that you don’t get your funds tied up for too long. Things don’t always go to plan and often go over time.

Terryw
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Having one big loan may save you a few dollars up front, but it can get messy – especially if one loan is for an owner occupied house. Even for investments, you would have to apportion interest per property at time time (which won’t be that hard if all are IO). However, what if you want to sell one property or to refinance it with another lender. This is when you will wish you had 3 stand alone loans.

Terryw
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The two remaining owners would have to purchase the 0.5% shares from the other owners. The stamp duty should only be payable on the value of the 1% transferred. CGT should also be minimal.

Terryw
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Hi

I generally think it is better to rent first rather than buy a home to live in.

With yields so low, you could rent something in Sydney for about $400 pw, which would be worth about $500,000. To purchase something for $500,000 would involve considerable costs (not claimable) and the repayments would be huge – about $650 pw interest only. And then you have council, stata fees (if a new unit these could be another $5000 per year).

So it may cost twice as much per week to live in your own purchased home as to rent the same place.

There is also the fact that you may just spend the money you are saving on ‘living’ if renting, whereas with buying you would be forced to put it on the loan.

There are also capital gains to consider. However, if you have a rental property while renting, then you will still have access to the capital gains – maybe not tax free though.

Maybe you could buy something, live in it for a short period and then rent it out. This way you may be able to claim it as your main residence for a period of up to 6 years and still claim the deductions and yet pay no CGT if sold during htis period.

I started doing an excel spreadsheet on renting verses buying a while ago. I don’t think I really finished it, but I could send you a copy to play with.

Terryw
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Yes having no money is a bit of a problem! It can be gotten around though.

<the following comments refer to a deleted illinformed comment by another poster. No it is not Terry going bananas [exhappy] – derek>

I am not sure what you mean by buy a positive geared property and use the equity. What equity? These properties often (but not always) have low grow, so it may take a very long time to build up any equity. You usually only have equity initially if you put in a large deposit or buy way under market value.

I have never seen a 100% low doc or a no doc. a No doc would be a max of 85% LVR on a good property.

Terryw
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