I beleive that borrowing your equity to live on can be a good idea. You must have many properties and only borrow a low percentage of the growth tho. As long as your portfolio is growing faster than you are spending it, it should be ok. I would rather see someone do this than selling a property to access the funds.

BTW, I know someone doing this at the moment with one property! Not good.

Terryw
Discover Home Loans
North Sydney
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I knew someone that purchased a small unit in Kings Cross that was positively geared after tax deductions.

But I think you will be very hard pressed to find something without being creative. eg. renting individual rooms out, adding a bedroom, something with a granny flat etc.

Or you could wrap or lease option something to make it positively geared.

Terryw
Discover Home Loans
North Sydney
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I don’t think there is much to it. He would want the new loan to be IO if it is going to be rented out. But PI if he is going to live in it. A LOC would be suitable for this, but you may pay a premium for this (try ANZ on their package deal). Or go for a loan with a redraw and pay only the minimum off the new loan and plough every thing you can into the offset, so if you move out, you can withdraw that money and put it onto your new home loan.

I wouldn’t worry about paying down the new home to reduce the negative gearing loss. It is far better to pay off the one you are living in.

Terryw
Discover Home Loans
North Sydney
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Noel Whittaker also has a monthly newsletter which you can sign up to via his web site. It is pretty basic, but sometimes has some good info, and always some corney jokes.

Terryw
Discover Home Loans
North Sydney
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Confused. You are probably aware of this but, don’t forget if you pay your dad, he has to declare the money as income.

Terryw
Discover Home Loans
North Sydney
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I think the only way you are going to these figures is to ask the vendor or management company. These figures are not publically available or recorded anywhere.

Terryw
Discover Home Loans
North Sydney
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Unit trusts still cannot distribute losses. I beleive that a way around this is for the unit holder to borrow to buy units and claim the expense that way against their personal income. In this situation, you could probably a variation of your tax.

Terryw
Discover Home Loans
North Sydney
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There is a Tax Determination available from that ATO that details what is a Principle Residence.

“TD51. Capital Gains: What Factors are Taken into account in determining whether or not a dwelling is a taxpayer’s sole or principle residence.”

Do a search in the legal database on http://www.ato.gov.au.

Terryw
Discover Home Loans
North Sydney
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for further info on the 6 year rule see:
http://law.ato.gov.au/pdf/td95-009.pdf

and

INCOME TAX ASSESSMENT ACT 1997- SECT 118.145
http://www.austlii.edu.au/cgi-bin/disp.pl/au/legis/cth/consol%5fact/itaa1997240/s118.145.html?query=%7e+dwelling+that+was+sect+118+145

Terryw
Discover Home Loans
North Sydney
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Gmh454

I agree about the monkeys and the peanuts!

Terryw
Discover Home Loans
North Sydney
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