my father, on veteran affairs benefits, has discovered that his duplex excedes his allowable asset test. It is valued at 300k.
His plan is to sell half to me. Originally I was to pay him 100k for a 50% share. This money he is to put into annuities because they are not taxable.
Well now I find that he cannot sell at below market value or he will be severely penalised by DVA benefits. Ive done the figures and indeed it is cheaper that I pay at $140k and dad makes up the shortfall in monthly repayments. But this will reduce his income significantly and that would be fine if he was not so mobile. He is 70 adn in great health. It is now that he should be able to travel and enjoy himself.
My problem is I feel sick at making this deal cos it is not an investment that i would ever choose. There will be a yield of 5.38% I do not need negative gearing and frankly can’t afford it.
We have spoken to a financial advisor and I see no alternative but to go through with this deal.
I am wondering if anyone has ever had to make a bad financial deal like this for the sake of a family member or someone. Tis a dilema when your business brain is at war with your emotional brain.
thankyou for your consideration
MillyOriginally posted by Milly:I am wondering if anyone has ever had to make a bad financial deal for the sake of a family member. Tis a dilema when your business brain is at war with your emotional brain.
MillyHi Milly
I love your commitment to your dad, but he won’t thank you for making a bad investment decision on his behalf.
I assume the duplexes are a duplex pair which are strata titled????? If so, he should just put one on the market and keep living in the other one.
Re my thoughts about investing in duplexes, see my post today under the heading of “Duplexes”
Cheers
Greg F
Thanks Greg for the feedback. I like your comments on the duplexes thread.
These duplexes are not strata titled and because of the design they cannot be.
My father lives in his own home and is able to keep half his investment and receive that much rent.I shall simply have to think of ways to get a better return from this investment.
milly
Milly,
Why not look at some form of staged payout of the unit over 5-10 years via some kind of installment contract.
On this basis you do the contract upfront & pay enough at the start to cover your Dad’s costs & tax…then pay him off over time.
It makes the property positive-geared…the longer the contract term for payout the greater the prospect you keep it that way.
Cheers,
Aceyducey
In theory, there is no difference between theory and practice. But, in practice, there is.– Jan L.A. van de Snepscheut
House values can very quiet a bit, so who are they to say how much it is worth. Why don’t you consider getting two valuations done. Tell the valuers the purpsoe of the valuation and ask them to make it as low as possible, and then use this to justify the sale price.
5% is still a good yield, there may be good capital growth in years to come, so it may not be a bad deal at all.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Hi Milly
Seems to me that Terry and Aceyducey are BOTH on the right track, so perhaps a combination of both their suggestions is the way to go.
By the way, I got your PM, and will reply soon
Cheers
Greg F
You must be logged in to reply to this topic. If you don't have an account, you can register here.
