Hi everyone, I am new to this forum and have spent the past 3 weeks holidays reading Steve's books amongst other similar suggesting Positive Gearing. It is now something that my husband and I are seriously considering, and definately considering attending Steve's seminar in April.
Now, our situation, your opinions please!
Our PPOR mortgage is $180 000, value approx $520, 000
Investment property currently being built, due for completion end of Feb. Cost $400 000 should attract rent of $360/wk (negative gearing). Reason for purpose, currently investment house and PPOR in Gladstone. Experiencing good growth at the moment. House in hubbies name and land in our trust name.
Run our own home based business, which pays for itself. Considering selling at the end of the year for a profit. Set up as a trust.
Hubby works full time, I work 2-3 days week. 3 growing kids.
Considering whether to sell IP after completing and pay capital gains and get into positive gearing elsewhere, or maybe sell our PPOR and live in the IP to free up more capital to invest? Not sure where to go from here?
Thanks
BillNew property would have capital works deduction depreciation and may increase your cash flow
http://www.ato.gov.au/content/downloads/NAT1729_07.pdf
section 1:19 page 23 of pdf fileTalk to your accountant to find out how much – is it claimed over 40 years .. 100% of capital building cost / 40 per year .. and th e cost base draw back for CGT
Thanks, will talk to our accountant!
Hi Bill
Firstly welcome to forum and i hope you enjoy your time here.
To answer your question one would need more specific knowledge of your individual situation cirumstances.
A couple of points worth noting:
1) Your husband is self employed running his own business yet the current PPOR appears to be in his sole name which is not wise for an asset protection structure unless mortgaged to the hilt.
2) Moving from your current PPOR into the new IP will have consequences which will include non tax deductability of interest due to your occupation and secondly land tax issues as the PPOR will then be held in Trust and no your own personl names.
You probably need to consider untangling your current loan and entity structure before completion of the IP so as not to cause you problems down the track.
3) Is the IP held in a HDT or DFT and if the later is this the same as the current business entity.
An Accountant is all well and good for doing your figures but remember a QS will need to do the Depreciation report on the new IP which for the cost of it is money well spent.
Richard Taylor | Australia's leading private lender
Thanks so much for replying Richard.
Just to clarify a few things. My husband has a full time job and I have a part time job and we also run a business from home. Our business is in a joint trust, our PPOR is in both our names. The IP (house only ) is in the same trust as the business.
We are really keen to go down the positive gearing pathway, put wanting to come up with the best soloution to have enough funds to get us started.
Any suggestions?
Bill GrayBill not a great loveer of having the business assets and your property assets within the same structure but that is a bit too late now.
I think the decision on what you do will depend on whether you decide to make the new IP your PPOR if so then probably you need to move pretty fast to recitify the situation.
Are you current loans all cross collateralised with the same lender ?
Richard Taylor | Australia's leading private lender
Hi
Thanks for your reply again, appreciate it. We have decided to stay at our current place of residence as our business is there and being the kind of business that it is we need the storage etc.
We have restructured all of our loans(mortgage, business and IP) have not settled yet though. All are cross collaterised with the same bank. I realise now that this may not be great after my sml (I mean small) insight into property investing.
If we sell our IP after completion and put that small profit into investing in positive cashflow properties what percentage of capital gains would we have to pay (house in hubbies name, land in trust)? Are you taxed any less for capital gains if you reinvest the profit into another IP? One year will be up (with regards to capital gains) in September.
We don't plan on rushing into anything with regards to another IP just yet but obviously with the IP about to be settled we need to plan ahead!
Talk soon
Bill
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