Hi
I have been back through many threads but still am unclear as to the best course of action for the following. We want to be as best informed before we go to the Accountant & Bank:
My companion has a PPOR ( had for 20 years)Market Value $320,000
Mortgage 80% fixed.$150,000 (Improvements & divorce payouts (Ouch !!)
Has own Company in which he operates a successful business. The profit from Company is sitting in a Mortgage offset account this year against the PPOR $100,000( I really dont understand how this got transacted )
The current PPOR is on acerage and has become to big to manage for him on his own and Business committments.
He has been looking at buying a smaller property closer to town, with a view to renting it out initially and moving in at some later stage. Its been really hard to find properties in suburbia that provide storage and small trailer accesses.
Likely senerio would be PP of around $240,000 rental $280.00 $300 pw.
One issue is he needs to keep the workshop facility on the acerage for the business use as on occasions he does some small manufacturing works not condusive to suburbia. So only the house will be rented.Questions:
What loan set up would be best for the new 2nd property? Should he look into a new non business company trust set up for this property?? and for further investments that come along given the success of his business & CGT issues?
Would this provide the best flexibilty ie.he may move and he may not enjoy suburbia ? Hence it may not become a PPOR.
The 2nd property if rented this would be very negative geared. That worries him and would like to put as much deposit down or transfer the offset in PPOR to this ?Hi Jancrows,
I was wondering how big the acreage is at your PPOR – would it be possible to lease the acreage, thus removing the work involved in its upkeep (and providing another cash flow), keep living where you are, and then buy a second (+ve cash flow) property purely as an investment?
Cheers,
CroccoThanks Crocodile
Basically the current PPOR has three components – Workshop Office – completely on seperate part of property. 1 x large home. Horticulture Activity.
The income the Hort & Home bring in would make this +ve cashflow particularly with an additonal granny flat component income that is possible should he move the Office component to the 2nd property.
The main info we seek is how to structure such a new purchase and assoc. loan type that is appropriate.
I dont have personally any interst in his business or current PPOR.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
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry
Thankyou very much for your advice – there is so much to lean about structuring everything correctly – or as best you can.
I have learnt so much from this forum.
My companion went back to the bank yesterday to arrange everything for when the time comes to purchase – his finance rep who he deals with for many years is going into to hospital.
You know what he did !!!! he went out and bought her Steves 0-130 Properties Book for her to read whilst shes in hospital !!!. Hes never read it himself.. only seen me with my head in it.!!!!
He says “she likes to read things like that – shes into investing “
How sweet !!Regards
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