Property ownership structure

Hi all,

I’m new here (my first post) and I’m also new to property investment. I’ve been reading about property investment and been feeling a little stress about property ownership structures – which really is not my area of expertise.

My wife and I own and live in a small 2 bedroom apartment. As we’re expecting our 1st child soon, we feel that we need a bigger place to stay. So, it’s either we sell our apartment and buy a bigger place or we keep it as investment, get an equity home loan (and do all the other property investment mumbo jumbo, as I just learn) and buy our new bigger primary residence elsewhere – most likely further away.

We decided to explore the later option. We bought the apartment using a join loan account and both our names are also on the property title. I’ve been reading that if you have investment property under a joint name, you will not be able to claim full tax and other negative gearing portion on it? My wife used to work. But with the baby on the way, I reckon she will be working even harder – looking after our newborn. . That leaves us with one income…

So:-

1) Is it true that if the property is under join names I can’t claim 100% of the expenses through tax? I’ve also recalled reading somewhere about CGT implication in this instance if the property is sold in the future.

2) What is an ideal thing to do for my situation? Should we buy our new primary residence property under single or join names? Should we also change our current property title to a single name (my name) in order to capitalise on the negative gearing better before renting it out? Or, any other suggestions?

3) I’ve been hearing from a colleague that changing property ownership can be a cumbersome process and quite expensive. Anyone got any knowledge of this area?

(If we could afford it), we really wanted to keep our current property and turn it into investment. The location is good, about 25 mins by train Melbourne CBD (zone 1), 10 mins walk to a big shopping centre, 3 train stops away from a university, local shops and nice neighbourhood, good rental return etc.

We bought the apartment for $400K and we can rent it out for $420 – $450/wk – according to the agent. It’s a 1 year old apartment. My mortgage broker said we may be able to borrow another $500K (based on my situation, and considering the potential return income etc) to get another property – whether for live in or for investment. Let say our apartment price stays at $400K, we currently own approx 55% equity on the property.

But the issue of ownership structure keeps bugging me and I can’t seem to find a good answer from anyone so far. Hope I can get some direction from this forum. We plan to keep the apartment for as long as we could if the rental demand is good.

Sorry my 1st post is long. You can tell how much this stuff is bugging me now. Already I have enough stress dealing with a pregnant wife, but that’s another story altogether…

Appreciate you expert to give me some guidance here. Think I’m going to stick around this forum for a while, so much good information here.

Cheers.