Hello 1st time on here, wanting to know who can help me here, many years ago i had a chap come to my house talking to me about one of the best ways of people that struggle to buy their own home, his strategy was something like this, you buy an investment property & a family or friend also buys a investment property, you both spend the same amount on purchasing the property's, now the property that i want to live in is the investment property in the family or friends name & the property they want to live in is in my name, that way they are genuine investment properties & you get the tax benefits, so on paper they are drawn up as legitimate investment properties, but as the properties are the same value you have an agreement between you & your family or friend, that the property you are living in is YOURS & the property they are living in is THEIRS, this seemed like a brilliant idea when i heard of it, but was not ready to do it, as i have found a family member that wants to go ahead and do this,but we just want to know the pros's & con's as i am still renting & have a small deposit & the other party has good equity in their own home,any one that can give some advice on this topic would be very much appreciated, Kind Regards Neil.You have a few replies to this over at Somersoft.
Capital Gains Tax is one major drawback . Sell the property down the track and you are liable for CGT. You may need do do it through a real estate agent property manger so that the transaction of rent paid is at an arms length and charged at market rent prices.
Hello whiskanddry
It seems to me that the best way to do this would be to live in it yourself first, for as long as you need to (depends on which state you're in if you are eligible for FHOG and reduced stamp duty) and then rent it out to get all the deductions.
This way you can rent out your house for up to 6 years without losing its CGT free status.You certainly don't need to rent it to a friend for this strategy to work so you need to be certain the advantages outweigh the disadvantages.
Cheers
Elka
Hello , thanks for your ideas, i don't know much about state laws & regulations regarding this situation, but i can tell you some things that may help, i am based in Victoria i have almost 30 k saved & not sure how best to go about it, whether i keep saving ,the thing is i am paying 1k p/m in rent now. the bottom line is i desperately want to get out of the rat race, but can not afford the high repayments on a loan, i know the old saying is you can't have the whole cake & eat it too, but i am just looking to see if any one can best advise me as to which way i should go, any one with help in this regards would be very much appreciated Regards Neil
Neil,
Another way of going which is what I have sort of done is you buy a lower priced house say in Cranbourne around the $240,000 mark and travel into work on the train. The loan repayment would be approx $610 a week and it costs about say $100 a week for the train. so you are $290 a week better off. If you put the extra $290 onto the loan repayment you will pay off the house in may 2019 with total interest at $194,000. Where as if you pay $610 a week interest would be $336,000 and it would be paid off at may 2029. This is based on 12% interest rate rather than 9% as interest rate at a possible worse case scenario.The main thing is to get your foot into the property market as property values go up while you are trying to save the money and rents are going up where as the mortgage payments stay the same if you calculate the worst possible scenario of what you can afford . Like say a 16% interest rate the repayment is $770 a week. Or say a 18% interest rate the repayment is $855 a week. At 20 % interest rate a $240,000 loan is still cheaper than $1000 a week.
duckster wrote:Neil,
Another way of going which is what I have sort of done is you buy a lower priced house say in Cranbourne around the $240,000 mark and travel into work on the train. The loan repayment would be approx $610 a week and it costs about say $100 a week for the train. so you are $290 a week better off. If you put the extra $290 onto the loan repayment you will pay off the house in may 2019 with total interest at $194,000. Where as if you pay $610 a week interest would be $336,000 and it would be paid off at may 2029. This is based on 12% interest rate rather than 9% as interest rate at a possible worse case scenario.The main thing is to get your foot into the property market as property values go up while you are trying to save the money and rents are going up where as the mortgage payments stay the same if you calculate the worst possible scenario of what you can afford . Like say a 16% interest rate the repayment is $770 a week. Or say a 18% interest rate the repayment is $855 a week. At 20 % interest rate a $240,000 loan is still cheaper than $1000 a week.
i think the figures you based this on are per week but my post states that the rent i pay is per month, as i now pay just over 1k per month in rent, we are looking to buy a property in the west, sunshine , hoppers xing, caroline springs area, thanks Neil
Hi I would just like some advice. I have a property which I have lived in for the past 23years. The other person who signed the deeds with me has never lived in the property or contributed anything towards the mortgage, service charges or upkeep but is now demanding half of the profits. is this legal and could he be entitled to half ? I feel I was juped by someone who was a lot older and knew what he was doing. I unfortuntely was a young woman who wanted to better herself and her young child (NOT HIS!!) Will I have to pay out for something he has never contributede too – or is there some justice?
Collette Dier wrote:Hi I would just like some advice. I have a property which I have lived in for the past 23years. The other person who signed the deeds with me has never lived in the property or contributed anything towards the mortgage, service charges or upkeep but is now demanding half of the profits. is this legal and could he be entitled to half ? I feel I was juped by someone who was a lot older and knew what he was doing. I unfortuntely was a young woman who wanted to better herself and her young child (NOT HIS!!) Will I have to pay out for something he has never contributede too – or is there some justice?erh.. Justice ?.. lol that was a LONG time ago, girl. Now it's the one with the most expensive lawyer who gets the 'justice' part. Anyway, what do you mean 'the one who signed the deeds with you' ?.. your husband ?
Or someone who paid half for the house ?.. Does he own half of the house ? Which part of the deed did he 'sign' ? …Best to visit a lawyer I guess.
Hello Collette
Not sure what you mean by "signed the deed with you". Is his name on the title and/or on the mortgage or did he just guarantee your loan? Who paid the deposit and buying costs? Did you draw up any agreement at the time?
No one here will be able to give you a definitive answer and you really need to go to a good solicitor with this problem. Take with you all the relevant paperwork including proof that it's you who paid the mortgage, council rates, water service charges etc.
If you post the area you are in there may be someone on the forum who can recommend a good solicitor.
Good luck
ElkaIf at the end it all turns nasty – let the ATO know he has recieved a profit not derived from a PPOR – then at least he has to pay tax on it. Poor consolation I know. So all the very best and seek good council.
Mick
Hello 1st time on here, wanting to know who can help me here, many years ago i had a chap come to my house talking to me about one of the best ways of people that struggle to buy their own home, his strategy was something like this, you buy an investment property & a family or friend also buys a investment property, you both spend the same amount on purchasing the property's, now the property that i want to live in is the investment property in the family or friends name & the property they want to live in is in my name, that way they are genuine investment properties & you get the tax benefits, so on paper they are drawn up as legitimate investment properties, but as the properties are the same value you have an agreement between you & your family or friend, that the property you are living in is YOURS & the property they are living in is THEIRS, this seemed like a brilliant idea when i heard of it, but was not ready to do it, as i have found a family member that wants to go ahead and do this,but we just want to know the pros's & con's as i am still renting & have a small deposit & the other party has good equity in their own home,any one that can give some advice on this topic would be very much appreciated, Kind Regards Neil.
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