Great thanks Richard – will do! Thanks for all the feedback everyone…
I guess I can talk to you about this separately but I've been reading up on DFT. I'm not sure that it's for us based on this:
* IP2 will be neg geared for at least 2, maybe more years. Hard to say really when a lot of the figures at this stage are estimates.
* If there are losses, there would need to be other income earned by the trust to offset the loss. Losses are also applied against future income earned by the trust.
* We don't have a business, unlikely to be sued or anything obvious that really needs the protection of a trust structure.i can definitely see how DFT benefit investors who go in with little or no borrowings and are pos geared early on. I just not confident that we will benefit from this, at least, not for a while…
I've also been thinking a lot about whose name IP2 should be in. I read something that (unusually) was against sole name arrangements, even if the spouse wasn't working. Primarily because IP's are for the long term: buying and holding forever, so that one day, the property will be income positive.Obviously there are some losses in the initial years, but then, if we did decide to sell one of the properties the CGT disadvantages would be significant (if in husband's name only). The loss will eventually turn to profit so I'm less worried now about having our property/ies in joint names.
Anyway, I'm happy to be contradicted or corrected as I've mentioned several times, I'm young and new to all of this.
amy.. using DFT makes some sense to hold the property.
I bought the property in Newcastle back in 2006 for A$342k. It was rented ~A$ 320, but I am renting out for A$550/week this year. It means that it is now CASH FLOW +ve and CASH to GILLARD's pocket.
Been so busy!!! sorry for this late reply…
Amy- being a new and basic investor i say stick with a basic structure else you will just get to confused…DFT has it’s benefits but also some disadvantages as well ( ie can not claim any deduction from your personal tax income).
I personally have a trust structure for my “risky” adventurers i take on- commercial loans and developments. But for my basic bread and butter IP and PPOR it’s under a standard set up…
In regards to having it under one name or 2..it depends on who will benefit the most from the tax break? if its even…then keep it under both names.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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