Quickchick
An adult can earn up to $16,000 pa without paying tax. Jo said she is not working, so could receive a distribution from a trust up to this level (think it is a bit more) and pay no tax – assuming she has no other income and no other deductions.
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
paulandjo wrote:All I can say is thank you so much for all the advice and I will def look at all options!! So many!!! I think that selling the neg geared property and making a loss wouldn't be so bad after all too. At the end of the day though i have no problem paying lots of tax, cause as said by someone earlier, "if you're paying lots of tax it's because you're earning lots of money". Ultimately wealth creation is our priority, for us and our kids.Thanks everyone!
Jo.
Ps…..continue with the advice if ya think of any more…Jo,
I think you should only be considering getting rid of a property if it is not performing and is unlikely to perform. It wouldn't be a good idea to sell the negative geared one if you think there is capital growth around the corner (but this is trying to predict the future a bit).
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
Good advice as always Terry. You should definitely not sell a property just because it is negatively geared- in fact a negatively geared property in a good location might be a better investment than a positively geared property in a secondary location depending on what your goals are.
I would also take Colin's advice and not cross collatoralise any loans- there are much better ways of structuring borrowings, and crossing loans is not a good option.
Cheers,
LukeI would not buy a negatively geared property, so that's my bias.
The strategy is commonly known as "buy and hope".With the current economic climate, Aussie's not wanting to spend much (see recent retail plunges in sales), the general trend to saving more, I don't know that we have a huge prospect of capital gain per year.
I am not pessimistic about our property market, I believe jobs are strong and population growth will support housing prices.Your investment strategy should reflect your market outlook.
Right or wrong, it gives you a rationale of why your strategy should work in the current market.Does anyone believe we will have an average of 7-10% capital growth over the next 7 years?
If so, that may be a good reason to buy negatively geared property.If not, you pay weekly to have a chance of making a capital gain, when you don't believe we will have enough capital gain to make it worth your while! I know that property anecdotes suggest a property will generally double in price over 7-10 years. But with overseas economic uncertainties and local ones (not the carbon tax again!), I don't expect that will work currently.
I prefer NOT to have my borrowing capacity tied up by property that makes me poorer, based on a long term hope.
For those who have a large wage, one negatively geared house may be a good inclusion in your strategy.Jo is not currently on a high wage (been there at home with young children myself) and may have better uses for her (limited) investment dollars.
Recently we have been in the midst of a small development, (moderately negatively geared in the development phase) which has drained our cashflow. And reminded us why we like cashflow properties! Although it should hold a worthwhile profit.
Of course, depends also on your risk tolerance, and what you consider to be a risky strategy.Terry, I am well aware of the $16K threshold of taxable income, but again it brings the focus of one's investment back to tax-minimisation. Depends on the viewpoint of the investor, I'm sure there is room for a variety of opinions.
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