Steve

I beleive that you would not need a RE licence if buying and selling options as you would have an equitable interest in the property via ownership of the option.

ps. However, I am not qualified to speak on this matter!

Regards

Terryw

Terryw
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Hi Stonewall

I know what your talking about and you don’t really need a reason. You could put an amount back at settlement if the property settles on such and such a date.

Becareful, sometimes you can be delayed and it may go overtime and you can lose the discount.

Terryw
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Ozbroker/Dynamite

That’s is right. Combank low doc loans are all mortgage insured with GE and they have a strict postcode list. You also pay a 1% premium on interest rates with Combank Low Doc. there are much better products available, but most are in fact mortgage insured-this includes all loans not just those over 80% lvrs.

Terryw
[email protected]

I beleive you won’t have to pay any CGT because of the 6 year rule. (I have done this, rented out my home, sold it and paid no tax). But I beleive that you can only have one PPOR at a time. So you may have to pay CGT on the new home if you ever sell it. But the period for caluation will only be the short time that you had this and the other property.

ps I’m no accountant.

Terryw

Nathan

Some more thoughts with lease options:
1) it is also easier to withdraw any increase in equity.
2) There may be a greater chance for the tenants to just walk away from the deal because they don’t ‘own’ the property.
3) There may be a greater chance of the tenants cashing you out if they can get the FHOG down the track.

Terry

Jarrod

You need to get your solicitor to draw up an option contract. Just adding and/or nominee won’t do becuase you will be required to settle on the property if you do not find someone. WIth an option agreement you have the right but not the obligation to purchase the property.

Also with an and/or nominee clause you cannot nominate someone that you find after signing (in Vic). You have to have an existing agreement in place before you sign or double stamp duty. I think!

Regards

Terry

Bruce

I’ve done the course and Felicity’s explanation seems to be correct.

You basically buy an annuity and the money recieved back (both the principle and interest component) is classed as income with some banks.

With Felicity’s example, the $20,000 plus interest per year (say approx $21,000 per year) is simply added to your income for serviceability purposes. If you had a salary of $50,000 per year and $100,000 in a loc, you could buy a annuity and your income would then be $71,000 for the bank’s serviceability calculations. This enables you to borrow much more

You would make a small loss, but this is tax deductible as the purpose was to income your borrowing capacity for investing.

It is a bit hard to get your head around this at first.

Terry

Michael

If you want to transfer after you have already settled, then it will be just like selling the property from yourself to your company. So you will have to pay stamp duty and possibly capital gains tax!

Maybe you could do your first one in your name, see how it goes, and if you decide to continue, then set up your company for your 2nd+ house.

Terry

Bris22

It doens’t matter what you call it, as long as it works.

If you did what you propose, it would only be negatively geared for a very short time. The interest would be decreasing rapidly as you pay it off, so your overall deductions would decrease resulting in the rent you receive being more than the deductions making it positively geared From a tax perspective). You will have to pay tax on this money then.

This is one strategy and works well, it is a very safe way of doing it. Imagine then when you buy your second property, you could put the rent from you first into that as well!!

However many people try to leverage more by buying as much as possible as soon as possible. For some stories look at that orange book by Jan Somers (has 101 investment stories with people using this and other strategies). Different things work for different people, go with what ever you are comfortable with.

Terry

Bris

I believe you can do this by using and/or nominee (in some states at least). But you have to have an agreement in place with the person you are going to nominate beofre you sign the contract-otherwise stamp duty. This way you don’t actually ever have to own the house.

Another way to do it is acquiring an option to purchase, and then selling the option.

Or you could just onsell.I have a friend doing this in Sydney at the moment. She bought at an auction and had found a new buyer straight away 9or maybe even before). She is organising a simultaneous settlement so that she won’t even need a loan, however she is getting a loan preapproval just in case the reselling falls over or takes too long. It will be interesting to see if the bank valuation on the resale will come in at the price the onsellers are going to pay (about $40,000 more than she bought it for).

good luck

Terryw