What should I do with my $250,000

Yes, you are entitled to FHOG, and you will still be entitled to it if your first one or two acquisitions are actually Investment Properties.  Presuming the FHOG still exists later on of course.

Gift the money to a discretionary trust. Borrow it back later on to buy your PPOR. Have a loan agreement which gives an initial interest free period. Borrow 80% from the bank. Live in the property for 6 months, then move out. Rent it. You can still claim it as the main residence, but get all the deductions. Have the trust charge you reasonable rates for the outstanding loan and pay the bank their interest. Allow the trust to take a second mortgage over the property.

This has 2 effects.

1. Asset proteciton in the event of bankrutpcy and some asset proteciton if you later go through a marital separation.

2. Diverts income into the trust which can then be distributed more tax effectively.

Hi Royce

Yes you are in a strong position and you may wish to reduce the tax you are paying and look to buy high growth property. I agree it does not make sense to you to buy a home to live in. These days I would advise most people starting out to rent and buy investments because home ownership does not make financial sense. If you buy a home to live in it does nothing to reduce your tax and you have the burden of carrying the full loan.

By investing it gives you the opportunity of buying in another location that may provide stronger capital growth. I think investing  gives you a lot more options

Hi Royce

First and foremost, congratulations on being in such a good financial position

Be aware that you'll get plenty of offers of assistance to relieve you of your money…. some will be with your best interests at heart, and others will not.  You can leverage the skills of some awesome professionals out there, and their fee will seem small with where they help you launch yourself to.  Just be sure that if you get help, the person you are asking to help you to smash it out of the ballpark will indeed do so, and that the result will be better than what you can do by yourself.

Some people choose to purchase a home to live in, and others choose to spend all their cash on deposits for investment properties, and they carry on renting themselves.  It really depends on your personality and life circumstance.  For instance, someone with children might not want the stress of being a tenant with the ever-present threat of eviction and not being able to get another property in the same area.  Such a move can resulting in having to move out of the postcode catchment of the schools in the area, which results in having to move to a different school, and so on and so forth.  Conversely, someone younger might love moving about a bit and being near all the action, where it is affordable to be as a tenant but not as a homeowner.

That's the first big decision you need to make.  Whether you want to buy something to live in or whether you intend to rent a residence to reside in.

With regards to the First Home Owner Grant, did you know that you can buy a duplex pair (two little houses glued together but on the one title) and live in one and rent the other out?  Just something to think about…

Looking forward to reading more about what you fancy doing… everyone will have an opinion on where you should invest hehehe

Hi Royce.

Salary $137K and you're giving Dad $50 every 3 weeks, ?  well I spose it's the principal of the thing but I suggest you make it a coupla grand and start your journey on a better footing. 

If you're not sure where you're going and how to invest, Terry certainly has the expertise to make it as simple or as comprehensive as you need, but with flexibility, which you need when there's indecision.

I'd be living on the $37K and investing the $100K p.a. for a few years, while the going's good.

Cheers

thecrest

Royce

1. certainly not
2. no. This wouldn’t work in a company either. A car is a capital asset so not deductible, but it may help to reduce the taxable income slightly by depreciation or other claims, but you couldn’t claim the car outright.
3. costs from nil to $20k to set up. average around $2k or so can be done in a few min.

BUT, I wasn’t suggesting you buy in a trust

Quick note if you do buy a PPOR (although note the best option by the sounds of it) you have to live in the place for 12 months – 6 months for the first home buyers grant yes but if you leave before the 12 months you have to pay back the government the stamp duty concession pro rata. Learnt the hard way over a year ago and our mortgage broker and financial planner never brought it to our attention.