Hi everyone,
We are looking for some advice to buy our first property.
We have $100K cash in the bank and we both have steady incomes ($250K between both of us).
We currently rent a house and want to know whether it would be good to buy a prperty as PPOR or as an investment property.
Thanks a million in advance for help from other members.
Regards
Welcome to property!
With that amount of income and deposit you sound like a conservative investor. Witrhout knowing your personal circumstances it is very difficult to assess you in a manner that would be just. Many people write on this site thinking they will get the solution to investing in a paragraph. Financial advice for the most basic of my clients takes an initial 3 hour consultation.
The following gives you an idea of the complexities of financial advice (this is on the most basic level).
- Plans in relation to health, income insurance, Trauma, Life/TPD (term or whole of life)?
- Asset protection-general insurance (house, contents, Liability, Indemnity etc)?
- Tax Deductible Debt v Non Tax Deductible Debt
- Fee’s and charges charged by banks and other related industries?
- Your own home and tax benefits- Owner occupied exemption, CGT exemptions
- State and Federal Grants for homeowners.
- Mortgage Broking concerns- interest rates, variable, low doc, LOC, fixed (short v long-15 years), 100% offset, investor loans- tax deductible set up, Records to keep for tax deductions, Consumer credit code, LMI, Capacity
- Purchasing costs of a home- government search, conveyancing, P&B
- What is capitalising interest? Sub accounts?
- Are you in the property business?
- Business structures, Sole trader, Partnership, Company and Trust ( Bare, Discretionary, Unit, and Hybrid).
- How does A= L+OE apply to a property business?
- Why would you buy a house in a trust? This is often not good contrary to the latest hype.
- Investment property seminar –interstate, are they deductible?
- The benefits of Holiday homes.
- In who’s name for taxation and capital gains purposes?
- Is interest payment tax deductible prior to a house being rented out? What about repairs after the property has been tenanted for income purposes?
- Land tax- name on title, joint tenants, tenants in common, % effect v taxable income v Capital gains tax
- Joint ventures?
- Expected rate of return v inflation (opportunity cost)
- Commercial v Residential v Public Trusts v Syndicates v Trust
- Do you want to retain your present home/ what are your house plans or areyou planning to move within several years?
- Rent v Buy, Shares v Property
- Employment situation and taxable income?
- Non -Tax deductible debt: credit cards, hire purchase and leases of domestic nature. What effect do these have on your mortgage or loans available?
- Depreciating assets v appreciating assets – What are these?
- Free cash flow- How can I improve this situation? How do you structure yourself to afford more property.
- Income Tax Brackets and Capital gains Tax.
- Age profile and the ability or risk that may be taken?
- Should I pay off my home?
- Mortgage repayment calculator? What can I afford to repay?
- How can paying off my home be accelerated?
- Negative v positive geared, The upside and downside to both of these?
- What is OPM, leveraging, equity, and collateral?
- Where to buy, unit/house, rental yield, new/old, price range, pool etc
- Management issues with properties. How to avoid these?
- Can someone house share with me to help pay the mortgage?
- Strategies and tricks?
- Co-owners with friends is this a bad idea?
- Depreciation v Repairs v Capital Improvement
- Loan cost write off
- What is the Cost base for CGT and the trigger date?
- How a line of credit can be so wrong?
- Pre-paid interest and variation to PAYG ( form 1515).
- How Lenders Mortgage Insurance (LMI) is of no financial concern.
Sorry, but this is Why you cannot have such a large open ended question solved on this site. A question such as the above will get a response that may cover only one of the above topics – If you went away to make a decision based on one, two, or even three of the facts above then you are short changing yourself and the ability to make a valid decision for your future.
Hi !
Sounds like in your household, you pay a decent chunk of tax and it would be nice to claw some of it back. There are a number of ways to do this – making extra contributions to your super fund is one, buying investment property is another.
Expenses (such as mortgage interest, insurance, council rates etc) associated with your own home (PPOR) cannot be used as tax writeoffs, whereas they can be for Investment Properties. For this reason, some people choose to continue renting for a place to live, and invest their money in an investment property or properties. If your aim is to squeeze the most out of your dollars, it'd probably be best to spend your money on IPs. If you have a need to be settled and cannot absorb the inconvenience of being a tenant yourselves, you might choose to spend your money on a PPOR.
It's always important to try and "buy low, and add value". This will be even more important if you own your PPOR. In other words, hunt for a property that you can do up using your spare time, thereby adding value to it. Later on you could have the place revalued, and potentially refinance on the new value with the bank, thereby generating some equity that could in turn be used as deposits on additional properties.
There are many ways of adding value to a property. Some include: cosmetic renovation (redoing the floor coverings, repainting, changing light fittings, perhaps replacing the kitchen and bathroom…), applying to subdivide the property (eg splitting the backyard into a separate title so you can sell the land or refinance on the new higher valuation), building another dwelling in the backyard and rent it out as a dual occupancy property…. the list goes on.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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