Hello all,
I found this board while searching for some information on purchasing a property for my mother to live in. I would welcome any suggestions anyone has about the best way for me to go about this. I am looking to buy something in Perth, Western suburbs or South Perth/Como. Expensive I know…… It has to be somewhere she would be comfortable and happy….I am thinking of taking out an interest free loan and I am not sure whether to do this in her name or in mine. Mum would be financing the loan repayments for 2 years. After which time, I am thinking I will sell her old unit – which is now tenanted (I helped her buy it 2 years ago) and use the money to pay off the bulk of the mortgage. Hopefully leaving her in an unencumbered home.
I already own a few properties in Australia. I am not resident…..I am confused as to whether – taking my “plan” into account I would be better to purchase in her name – is there some sort of trust that we could set up….I am sure these are fundamental questions….apologies….
Thank you
RegardsHi,
Thanks for your post and welcome to the forum.
There’s a few things to say…
1. Will you be owing the property as an investment and having your mother as a tenant? If so, I imagine that you aren’t too worried about the cashflow loss and will be hoping to make it up in terms of capital appreciation as values rise. To this extent my advice is to clarify your investing strategy so you isolate what investment performace criteria you are looking for.
2. An interest free loan? Hey – tell me where they are and I’ll be there in line with you!!! Do you mean interest-only? If so my advice would be to try and pay down the loan to reduce the risk should interest rates rise. It might be a little extra, but it will also eventually bring down your interest payments. Check the affordability of the repayments, and, if you can, go with P&I terms.
The last question you riasei s one about structuring. Perhaps the biggest benefit/issue to be considered here is the principal place of residence exemption. If you buy it in your name then it will be an investment property (unless you live in it) so you’ll have to pay CGT.
If it’s in your Mum’s name and she lives in it the it will be CGT free. Perhaps you could get some kind of undertaking that you mum leaves the property to you in her will in return for you helping now.
Hmmm – just remember though, if this turn sour it’s the sort of thing that A Current Affair will love to run a story on
Hope this has helped.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks Steve,
This plan only just necessitated formulation yesterday so it needs a lot of work…not least of all sourcing an interest free loan [
]I will go off and do some more tweaking to the “plan” thank you for pointing me in the right direction…and I have LOTS of questions re Captial Gains tax…but Ill save those for another day….
Thanks again
Regards
Abby
Hi,Thanks for your post and welcome to the forum.
There’s a few things to say…
1. Will you be owing the property as an investment and having your mother as a tenant? If so, I imagine that you aren’t too worried about the cashflow loss and will be hoping to make it up in terms of capital appreciation as values rise. To this extent my advice is to clarify your investing strategy so you isolate what investment performace criteria you are looking for.
2. An interest free loan? Hey – tell me where they are and I’ll be there in line with you!!! Do you mean interest-only? If so my advice would be to try and pay down the loan to reduce the risk should interest rates rise. It might be a little extra, but it will also eventually bring down your interest payments. Check the affordability of the repayments, and, if you can, go with P&I terms.
The last question you riasei s one about structuring. Perhaps the biggest benefit/issue to be considered here is the principal place of residence exemption. If you buy it in your name then it will be an investment property (unless you live in it) so you’ll have to pay CGT.
If it’s in your Mum’s name and she lives in it the it will be CGT free. Perhaps you could get some kind of undertaking that you mum leaves the property to you in her will in return for you helping now.
Hmmm – just remember though, if this turn sour it’s the sort of thing that A Current Affair will love to run a story on
Hope this has helped.
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********[
]
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