It depends on what assets/investments your Trusts hold. My accountant charges about $100 for the trust return and then about $100 per property, extra per shares and capitals gains and business etc.

Terryw
Discover Home Loans
North Sydney
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There will be a time when banks will say no more, but shopping around should let you keep going. some banks get worried when you are too rent reliant. I once asked a lender to define rent reliant, and was told if the client needed the rent to service the loan, then they are rent reliant!!!

Terryw
Discover Home Loans
North Sydney
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I was keen on cashflow positive properties, but my ideas have changed and would now only go for growth. Any cashflow would be a bonus.

Terryw
Discover Home Loans
North Sydney
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I agree that the first one is the hardest. It is harder to qualify for the finance and it is harder because you don’t really know what you are doing.

But it sounds like you have planned well as this property may also be CGT free if you sell within 6 years.

Terryw
Discover Home Loans
North Sydney
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Penguin

It varies, but generally you will have to be self employed for 2 years (proven by ABN history). Some will do low docs to PAYE. Some lenders will lend to anyone on low doc loans.

Also soem lenders will not lend to companies or trusts under the low doc products (eg ING and Suncorp)

Terryw
Discover Home Loans
North Sydney
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Hi Jaff

Yes, I misread your post, you would put 20% on the purchase price – before the FHOG was minused. Your numbers seem correct, but an 8% interest rate seems a bit high.

But from your original figures if you rented it you would be getting $19.69 per week +ve cashflow. If you wrapped it you would be getting $29.73.

So for getting an extra $10 per week you would be giving away any capital gain. You have to consider if you are better to just keep it and do a buy and hold (and/or reno).

BTW with a wrap when they cash you out (ie when they refinance) you will get some cash too. ie their loan to you less your loan to the bank.

The only other costs should be accounting.

Terryw
Discover Home Loans
North Sydney
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Elves. I think the family law court would see it differently.

Terryw
Discover Home Loans
North Sydney
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yes you can rent your home from your own trust. There is actually a tax ruling abut doing this with unit trusts – where the ATO took a dim view. But to my knowledge there is no ruling on discretionary trusts. All rent must be at market value, and don’t forget the home will not be CGT free when you sell (if) and you will ahve to pay land tax.

Terryw
Discover Home Loans
North Sydney
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You haven’t given all details but,

Resale price would be about $45,600 (20% more than asking price).
The wrappee would pay a small deposit, which would reduce your upfront costs.

This deposit would come off their purchase price and the remainder would be a loan to you. The interest rate is usually set about 2 to 3% above standard variable rates.

There would be no vacancy rate and annual cost for you would be greatly reduced – maybe only insurance.

You profit would be their loan repayments to you minus you repayments to the bank. Plus when they cashed you out, you would receive a gain of their remaining loan to you less your remaining loan to the bank.

Terryw
Discover Home Loans
North Sydney
[email protected]

Your accountant is probably not in a position to give you advice on property – just on the tax aspects. An accountants dream is to reduce peoples tax, so he must be concerned about his clients doing things to pay more tax. But this is a narrow view and there is more to it.

However, I would be wary with buying cashflow positive property at the moment. It depends on where you are buying, but some of these towns have had an average of 1-2% pa growth for the last 10 years or so, and then recently boomed with 10 to 20% growth. This may mean that prices may even drop or stablise for a long time to come. So please be careful and research fully.

I myself sold one of my Sydney properties to invest in cashflow positive properties. Now I wish I didn’t.

Terryw
Discover Home Loans
North Sydney
[email protected]