Hi Ferdinand, My preference would be to go for something a little further outside of the CBD, as the prices of inner city apartments tend to fluctuate quite wildly. In addition, the bank's will generally lend a lower amount for inner city apartments, and this has two complications: – You need to put more cash down which limits your ability to…[Read more]

Hi Pasha, Just a few quick words of advice from someone who started investing around the same age as you:- If you end up purchasing more than one investment (my preference if at all possible), make sure they are different types of property. For instance, buy a two bedroom unit with a strong yield, and perhaps a 3 or 4 BR house with maybe a…[Read more]

Thanks HP. Have you got any idea about what sort of property the mine itself would be interested in? Do they tend to purchase houses or units, and would they buy in the township itself, or perhaps say 10-15 mins out of town and a bit closer to the mine? Thanks,YI.

Is it possible to have trusts with lives longer than 80 years? I think Ed Chan talks about their "Property Investment Trust" having a longer life, but is it possible to prepare this type of trust anywhere?

Hi Norto, Steve has a chapter in his new book about the life cycle of an investment property. The overarching theory is that there is nothing wrong with selling an IP if the new opportunity will give you a better return. You just need to bare in mind the buying, selling and taxation costs associated, and make sure the new venture will still give…[Read more]

Thanks mate – that works beautifully. So what is the point of a supplmental deed then? Is this only for amending clauses in the trust deed? For example, if the trust does not have all the require borrowing powers etc? Cheers,YI

Very powerful indeed – What you have described is exactly my situation. I have IP's and shares as well as a PPOR (overall gearing about 50%), so if I can divert all the income from the investments to the PPOR then I can probably pay it off before I'm 30 – That would be massive!Thanks again for your help – I'll let you know about the ruling I get…[Read more]

Thanks Terry. How much does it cost to add beneficiaries to a trust later down the track. I am getting married this year and expect to have kids in the next 1-2 years so it would be good if I could add the kids as beneficiaries when they arrive. Also, is there any age limit on transferring income to kids? Thanks,YI

by the way… I love the ATO's 'get out of jail free card' to make sure they don't put their foot in it…"16. This Determination does not deal with the question of the application of Part IVA of the ITAA 1936 to arrangements involving compound interest."sneaky

Very interesting Terry. After reading that, I will be comfortable in allowing the LOC I use to purchase shares to capitalise interest (until it reaches the limit of course). I will definitely obtain a seperate ruling on setting up a seperate loan though – Seems a bit more risky and may come off as setting up a scheme. Just ran some numbers on…[Read more]

Two questions: 1. Are you suggesting to get an individual tax ruling for the interest capitalising issue, or only the seperate loan to pay the interest issue (or both!?). Just want to find out if you are 100% sure on the interest capitalisation question, or if you think it is best to speak with the ATO for that one too. 2. Could the same thing…[Read more]

Sorry Terry – Was referring to having a Trust with a Company Trustee, rather than ownership under the company itself.

Thanks for that Terry. That settles what to do with our existing properties… now I just need to work out whether to go with company and trust for future purchases, or keep them in individual names! Thanks again.YI

Hi Terry, So let me use another example here just to clarify: If I take a $100,000 LOC and purchase $50,000 worth of shares, I can let the interest capitalise to the facility and it will be fully deductible? ie: If say $3500 of interest is charged to that facility for the financial year, I can claim on the full amount?At the moment I have my…[Read more]

Thanks Duckster. I'm in the 38c tax bracket for the upcoming year, but have a full understanding of the implications of -ve vs +ve gearing. The consideration was mainly that I would rather use any additional cash as equity into the new PPOR purchase (via an offset account), rather than paying off the current PPOR which will become an IP and have…[Read more]

Hi Vitaliano, PPOR means Principal Place of Residence. ie: The home where you live.CF+ means cash flow positive. ie: a property which has a surplus of total income over total expenses. Hope this helps. Regards,YI.

dnh, A couple of queries about your NAB loan just to make sure that the Partner and/or associate won't charge any fees for the changeover. Is the loan part of a NAB Choice package? If so, no fees!How long has the loan been in place? Generally, NAB has an early exit fee for the first 4 years, but they will generally only charge this if you are…[Read more]

Hi Cubman,I actually have 3 properties in Parkdale (including PPOR) so I know the area you are referring to. Just an initial questio, does the grandmother have the cash to pay out the $145k on the IP?Cheers,YI.

Jimster, If you look at the long term interest rate figures, rates are actually quite low at the moment. As Terry pointed out, your restricting factor is likely to get much worse in the near future. Majority of estimates are predicting 0.75 – 1.0% RBA cash rate rises next year… and as we have seen from Westpac, CBA and ANZ, it is possible the…[Read more]

Mike, I just turned 26 and I purchased my first property at 22 – I now have 3 properties and about 100k in shares. I think the common theme coming through from everyone elses comments is that you hopefully won't need to sell any investment properties in 4 years to purchase a house. The next thing I would say is that whilst you need to plan for the…[Read more]