PLEASE HELP SOMEONE WHO KNOWS SOMETHING!!!
Myself and my hubby currently have a mortgage over the property we live in here in Western Australia.
We are looking at purchasing our first investment property but have been given so much "different" advice that im just so confused!!! So hopefully someone out there can help…..
Situation is: Hubby works full time. I work casually and am a at home mum.. however my job is finishing on 30th June this year (in like 3 weeks) so i most likely won't go back to work until next year maybe??? If i do go back this year it would only be casually….
We are looking at purchasing a unit here in W.A also. Unit is fairly old and we only intend on keeping it for no more than 5 years at this stage – not 100% sure yet….. Mortgage broker has told us to put it in my name (the offer that is)… Property Investment Coach told us to put it in my name… Random Accountant that i rang out of the phone book told me to put it in my hubbys name…
Im just so confused as as of June i won't be working so why put it in my name???
PLEASE SOMEONE HELP!!!!
renabelz.
Sounds like your Mortgage Broker and Investment Coach have absolutely no idea.
It all depends on whether the property is negative / neutral / positively geared as to whose name you would put the property in.
I think i would be listening to a qualified Accountant or Financial Planner any day over the others.
With children or dependants you should also be considering a Trust structure.
Richard Taylor | Australia's leading private lender
Hi Qlds007
Well i went to see an Accountant today and to be honest i am still a little confused…
Basically the property looks like it will be negative geared… however "i think" he said to put it in my hubbys name? He reckons either way has its benefits so im kinda still stumped about that….
The unit is like 20-30 years old so he reckons that we wouldn't be able to claim much tax wise on it… he tried to encourage us to buy a new off the plan house in the eastern states (QLD or Melb) and put it in my hubbys name cause then we could claim alot more on it….
So now im back to square one!!! Whether to buy in a 1bed unit for $315k in nothern W.A or a 3-4 bed brand new house for $370-390k in the Eastern States??? Any suggetions?
If you are negatively gearing then it is better to put it in the name of the highest income earner, which sounds like your hubby.
He has to pay more tax than you do, so negative gearing will work better for him.Ring another accountant to confirm
Even though your hubby will get the better tax breaks now, he will also be taxed on the capital gain (although only 50%) at his tax rate.
Consider doing a cashflow projection over the term of the investment (5 yrs?) on 3 scenarios.
1. Hubby owns 100%
2. You own 100%
3. You both own 50%This will give you an idea on the difference between the ownership tax effects.
Also, if you hubby's work allows salary packaging, and you own the property jointly, he can package all the rental expenses at his higher tax rate and split the income with you at your lower tax rate.
Finally, find an accountant who is willing to take the time to explain and educate you the different options and their consequences, not only tax consequences. What about asset protection? Is your hubby in a litigation risky occupation?
And, as Richard said, also consider a trust structure, which can provide the ideal tax benefits and also asset protection.
ross
If you put all of your properties in your husbands name because he's the highest income earner, what would happen at retirement when all the assets/income are in the husbands name? Is it better to purchase 99% hubby, 1% wife – then in retirement change % to 50/50? Would you have to pay stamp duty and capital games tax on the 49% that your transferring to wife?
Millions, yes you may have to pay CGT when transfering a share between spouses. There may also be stamp duty, though in some states, like VIC, this may be waived.
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
Thanks Terry…….another thing to consider along with all the other taxes….Are you still doing a newletter? I haven't received one for a while. Thanks.
Hi Millions
Yes I am still writng them, but think most are being picked up as spam!
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
Another alternative would be to buy in hubbys name and draw up a deed of trust in the kids name and exercise the deed of trust when you look like selling to transfer the properties to the kids name for the sake of cutting the impact of capital gains tax and stamp duties( I don't believe there is stamp duty on the property if a deed of trust is exercised). Someone on here with more legal knowledge on this may be able to explain it better. i believe this way your hubby can claim the tax breaks on the neg gearing before it is transferred.
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