All Topics / Help Needed! / 2nd Property Investment advice

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  • Profile photo of Ace_MythAce_Myth
    Participant
    @ace_myth
    Join Date: 2012
    Post Count: 3
    November 28, 2012 - 4:13 am

    Hi everyone,

    I am new to this site and am trying to get some thoughts/ideas on a couple of things for a friend.

    My friend bought a unit to live in about ten years ago, then after 4 years decided to move but keep the unit as an investment. She is now at a point where the original mortgage is almost paid off and is thinking about buying another investment property.

    Should she set up a company or trust at this point and transfer ownership of the first property into the company/trust or can she just buy another property in her own name? What are the tax/legal implications?

    Thanks in advance

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539
    November 28, 2012 - 5:44 am

    If she transfers the property to another entity, she'll have to pay stamp duty and capital gains tax.

    What is she trying to achieve?

    If it were me, I'd get a really good mortgage broker on board to get a new lender to cancel off the debt with the current lender and start it again as an equity release loan for investment purposes.  Jamie M (Jamie Moore) and Qlds007 (Richard Taylor) are both contributors on this site and are very well respected brokers that could sort it out in a jiffy for you.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    November 28, 2012 - 7:18 am

    Thanks for the wrap Jac M – you're too kind :-)

    I'd do what Jac has suggested. Use the equity in the existing IP to purchase another – whether it be done through her current lender or another will depend on a few factors.

    No need to over complicate things.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544
    November 28, 2012 - 8:37 am

    Keep it simple.

    The first property may still be CGT exempt if it started out as a home – there is a 6 year CGT exemption that may apply in your friend's situation.

    Generally speaking companies are not a good holding entity for property as you are not eligible for ant CGT discount and all profits are taxed at the company rate.

    Trusts have some advantages, particularly if your friend works in an occupation where she is extremely exposed to possible litigation.

    I would seek some legal advice so she can work out which is the best entity to continue her investment journey in. Certainly it sounds like she has a great asset base to launch from.

Viewing 4 posts - 1 through 4 (of 4 total)

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