Hello fellow forum users,
New to here like many people, I have enjoyed going through the old topics and there seems to be a mass of information!
I would like some advice though on my personal situation.
After making some terrible investment decisions in the past, shares and not buying many properties that my wife and I looked at that seemed over valued at the time and in hindsight half what prices are at present, as I was scared to commit to anything of that size mortgage we essentially became savers as it was a much safer descion as we had been burned a few to many times.
Our current situation is, my wife and I have taken some time off to travel so officially not working although, I am currently doing some contract work for the next few months. Have just over 700K in savings basically not doing anything as the banks only give around 3.5 percent at the moment to savers (and then inflation eating away at 2.5%). When we are both working would earn over 100k each and up but depending on jobs of course.
I am thinking I would like to go down the trust avenue due to being able to divert income where we would like it to go, rather then being told where it has to go. I am open to many ideas that anyone may have being, but I would like to invest in the Sydney market although extremely worried that it is overheated. Even reading the an article that so called experts have called the Sydney market to rise 5-7 percent again this year….how can anyone keep affording these house prices?
I also look a lot in the Perth market and am thinking it is a lot more cold at the moment due to many layoffs in the mining industry and could potentially pick up a few bargains.
Obviously the main problem is that we would like to keep enjoying our life of travelling at the moment and have a separate account for this but the problem being the lack of income coming in. I would like to keep a low LVR and was potentially looking at trying to buy 2 properties and let them pay themselves off until the time as I come back to work.
We will obviously need a place to live when we come back but am happy to rent or borrow to buy a PPOR.
Can anyone give me some advice on what they would do if they found themselves in this situation?Thanks
RustHi Rust
One big downside is if you end up paying cash for the properties is when you come to buy your PPOR you will have to borrow and therefore find the interest to be non deductible whilst the income from the properties (even if you do buy in Trust) will be Taxable income.
In an ideal world you would gear against the properties and place the savings in an offset account.
You mention that you are not working although you do not mention whether you are self employed.
If you are and have had an ABN for the last 2 Years then this options up plenty of options.
Would need further details to provide structured answer.
Set up probably you could certainly have your cake and eat it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hey Richard
I understand that issue… I am just not sure what the lenders will be keen to give me on the 2 investment houses and still keep the money to sit there until I purchase the PPOR.
On a side note, is it possible to purchase the “PPOR” within a trust and rent it back to myself and treat it as another investment. Obviously I understand that it will not be capital gains free but I only plan to live in it for maybe 5 years and then move to a bigger house elsewhere and then it will continue to be rented.
Unfortunately I was a employee for a company and not self employed but I do want to be able to set up a company within the trust that both my wife and I can both use for contract work and can feed up into the trust.
I’ve waited far to long to get this kind of thing sorted! I turn the big 30 this year and feel if I don’t get on with it soon more opportunities and more importantly time will continue to pass me by but its very important to get it done properly and structured the correct way than anything else.Cheers
There is a potential way around this by proper structuring and it would involve making a gift to a discretionary trust and then borrowing it back to purchase property in your own name. Dont do this without legal advice though as many issues involved.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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