Hi All,
Im new here and am just seeking some advice and idea's from you all that I could discuss with a financial planner soon. Personal experience's would be a bonus
Currently im 25 and living at home. My goal has always been to save as much as I can and move into my own flat / townhouse by the time im 26/27 which is fast approaching. I have managed to save dilligently with 100k now to invest. Im aiming at the best long term benefit from an initial property purchase, as I only plan on living in it 1-2 yrs then making it an investment, and moving onto another PPOR.
My first question is regarding FHOB, I have the option to purchase in either VIC or NSW as im on the border, the FHOB appears to favor NSW buyers with the same $7000 as VIC, but NSW also gives no stamp duty benefits, am I correct in my thinking on paper NSW seems the better choice and have I missed any important details with this offer ? Wasn't sure if VIC still offers 3,000 extra and in what situation. Location really doesnt matter seeing as it will be an investment long term.
Secondly, im not sure if I should invest the lot or if I should get into debt and keep as much of the principal aside for further investing ? I have no issue with debt, but what would be the best way to structure the purchase for the best tax benefits ? If I was looking to purchase a unit, for example would it be better to purchase 100k outright then offset this toward another loan, or would you just make it a long term loan to begin with for tax advantages after I put it for rent and save as much of my principal as I can for other investment options ? Are there any caveat's for tax offsets on a property if you change from PPOR to investment ? Is there anything else I should consider.
Thanks very much for any advice or thoughts.
Cheers1. With $100 K and a bearish market you could possibly buy a positive cashflow property as an investment and stay at home. Haggle hard on the price. $100K deposit.
2. Depending on your salary, put $50K down on two investment properties to negative gear.Stay at home and buy IP's
You could really set yourself up well. Buying a property for yourself is great but probably not the best way to go in terms of wealth creationWow Dig
Just be carefull rushing out and buying a PPOR then turning in into an IP as you will only be able to deduct the interest on the loan balance at the time and you wont be able to redraw funds and claim a deduction against the interest.
You really need to ensure that the loan structure is set up correctly to ensure that you can maximise your deductions as well as reduce your interest payable.
At the moment Vic does offer the additional $3K FHOG bonus but this is not to last for ever however you need to weigh up all of the costs both now and in the future before you rush in and buy between the 2 States.
A good mortgage broker will be able to offer you advice on the loan structure and come up with something that will work for you both now and in the future. Remember loan associated costs are deductible once the property becomes an IP over the term of the loan or 5 years which is the lesser so make sure that you keep an accurate not of any expense you incur.
Richard Taylor | Australia's leading private lender
Digian,
Maybe you should give a good long thought to how many investment properties you wish to have in 20 years time.
A trust maybe your best starting point, maybe do a bit of reading first. If you wish to retire one day with lots of properties in your trust, then you can sell them with no capital gains tax. But if you just wish to have a few properties then putting them in your own name maybe the best and especially for your first, so you can get the FHOG and no stamp duty. Just do a bit of reading about trusts before continuing too far into the property collection business.Don't rush into buying as prices will fall for a while yet, best to buy just after they start to rise to make sure you purchased at or near the bottom.
Never like to disagree with a fellow foum member but do be careful because this statement is clearly not true:
If you wish to retire one day with lots of properties in your trust, then you can sell them with no capital gains tax.
A Trust is liable to pay CGT the same as any other entity.
Richard Taylor | Australia's leading private lender
Richard, whether you have IP's in a trust or not, you can't avoiv CGT. How can you say that. We've owned and sold properties in both scenarios and paid the required CGT each time.
Digian, you're in a great place to start. A couple of thoughts for you to look at. 1. First home owners grant, etc. mean you need to live in the place for I think six months before you can turn into IP. 2. There are some great areas in regional mining areas where you can find IP that will pay for themselves and put money back in your pocket if you put in the footwork to find them.
Good luck and speak to some professionals (i.e. good accountants who are into property investing) first.
Mick
Mick
I did not say you could avoid CGT in fact i making comment on the statement made by WJ Hooker when he stated that if you buy in Trust then you can sell the properties with NO capital gains Tax.
Richard Taylor | Australia's leading private lender
Hi,
Yes , I said the wrong thing.
What I ment to say was the the trust can distribute the CGT whichever way it wants. Thus if you have a few people in the trust, you can give the CGT to the person who would be able to absorb or partially absorb the CGT.
But yes I said it wrong … sorry. I think I was thinking about superannuation….Thanks all.
WJ – no dramas
However just to let you know a Superanuation Fund also pays CGT at 15% or 10% of the asset is held for >365 days.
Richard Taylor | Australia's leading private lender
Thanks folks for the wonderful feedback so far. I've been planning on grabbing a copy of trust magic the australian published book for a while now, trusts have certainly been on my list of things to research. 10% CGT via a super fund, Richard that sounds interestingly like a loop hole, haha. Cheers.
Digian
Drop me an email and I might be able to help you with a copy of Trust magic.
Richard Taylor | Australia's leading private lender
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