My Partner and I recently purchased and moved into our first home in August 2009, in Brisbane. Since we have fulfilled the FHOG criteria of living in the property for 6 months within the first 12 months, we are considering renting our home out and renting elsewhere at less rent. The idea we had was to receive tax benefits as the property would be negatively geared. We earn a combined annual income of $180,000.
Just trying to get some advice on this topic.
Another option I was also considering was maybe getting a "rent to own" tenant in. Then I could work towards investing in other positively geared rental properties.
Any help on this topic would be appreciated.
Hi Fred
We call what you're proposing, our "negative2positive" process. It should allow you to sell your property at a premium price and allow you to get a deposit up front, positive monthly cash-flow and a lump sum payment, we call our back-end profit, when the new vendor finance buyers refinance.
Sandra on the Testimonials page of our website is a negative2positive client.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
Thanks for your reply, I have been researching vendor financing/lease options and think that it is a very good strategy for generating positive cash flow and subsequently good back end profits.
At this stage I need to get an independent solicitor and accountant to provide me with some advice (i.e. legal and tax implications).
I have done some quick figures on my current property and think I would be able to generate a positive cash flow return and a good back end profit. This is based on current rental and purchase prices for the region and also the current interest rate. In saying this I may be more interested in doing a vendor finance deal on another property rather than my PRPOR.
Thanks
Hi Fred
There is a list of vendor finance specialist lawyers at:
http://www.vendorfinancelawyer.com.au/vendor_finance_specialists.htmWe use Tom Forster for all our Qld transactions but use a NSW based accountant. Tom may be able to steer you towards a vendor finance savvy, Qld based, accountant.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I chose to move our of my property, rent it our, and go on rent mysef. The area I like to live has a small rental return. As an investor I refer to my which gearing properties – they are usually one bedroom or working class properties. It comes to the choice:
- Buy a house for al least 1.5mln in my area, have undeductible mortgage for a very long time, land tax, etc., and hope that when one day I sell a property (which I don’t like to do anyway) I’ll have some capital gain tax free profit;
- Or, for the same money I can buy 3-4 highly geared properties (in few states, so land tax is reduces) that will basically if not fully pay for themself, use tax benefits, rent the best house in my area for $1,000pm and still much better off at the end of a financial year!
By the way, because I do not have other PPR – my rental property has 6 years capital gain exemption. So I can use all tax deduction, but if I sell it within 6 years I can get exemption form capital gain tax. I’m much better off going on rent!
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