PLEASE HELP SOMEONE WHO KNOWS SOMETHING!!!
Myself and my hubby currently have a mortgage over the property we live in here in Western Australia.
We are looking at purchasing our first investment property but have been given so much "different" advice that im just so confused!!! So hopefully someone out there can help…..
Situation is: Hubby works full time. I work casually and am a at home mum.. however my job is finishing on 30th June this year (in like 3 weeks) so i most likely won't go back to work until next year maybe??? If i do go back this year it would only be casually….
We are looking at purchasing a unit here in W.A also. Unit is fairly old and we only intend on keeping it for no more than 5 years at this stage – not 100% sure yet….. Mortgage broker has told us to put it in my name (the offer that is)… Property Investment Coach told us to put it in my name… Random Accountant that i rang out of the phone book told me to put it in my hubbys name…
Im just so confused as as of June i won't be working so why put it in my name???
PLEASE SOMEONE HELP!!!!
renabelz.
Oh yeah and bank loan wise too – how would that work?? His name, my name, both names???
Hi Renabelz,
first, can I ask you why you intend to sell in 5 years?
Selling costs and capital gains tax eats into the profits, and you lose out on a lifetime of capital gain that you would get if you
keep the property.If you are going to sell, the property would be better off in your name as you will be earning very little income compared to your husband, so your capital gains tax bill will be a lot smaller after the sale.
On the other hand, your tax deductions will be a lot less if you buy it in your name – for this purpose it would be better to have the property in your husband's name as he will have a much higher taxable income than you. The tax savings for you doing it this way can be significant over a number of years.
You may be able to buy the house in your name, but have the loan in your husband's name. This way you can have your cake and eat it if you choose to sell in a few years. The only problem will be getting security for the loan if your husband's name is not on the title. The Bank may want to use your PPoR as security for the new loan, but will there be enough equity in it to satisfy the Bank's exposure?
It would be advisable to talk to a property savvy accountant to work out the best strategy with this.
In my opinion, only buy property to never sell. This means the capital gain factor is non-existent and the tax deduction factor is important, making it easier to work out the best strategy to use to buy.
Continually buying and selling property will possibly give you a short term income, but won't build long term wealth.
I would prefer to see you buy an I.P, hold it for a while and when the equity improves use some of it to buy again and so on – keep adding properties and your wealth will grow exponentially.
Hi L.A Aussie!
Thanks for your advice! Well hubby wants to keep the property for only that amount of time as we are in a mining resource town and at the moment the prices are very high up here to buy property so the unit that we have been offered is fairly cheap for the prices that are going up here…. we can get pretty good rent on it and so he wanted to sell it before the boom here in this town goes down… hence wanting to sell no later than 5 years time…. me on the other hand, im not 100% what i wanted to do… i have read in the API mag and seen that people are making it by holding on to their properties but we just have to be careful in this market up here…
Im going to see an Accountant today so hopefully he can shed some light for me… dunno if he's property savvy but we'll see… I like your advice about building wealth by holding onto properties and using equity from that one to carry on to the next…. but as this unit is an older 1 bedroom one… could that even work???
Thanks alot…
renabelzHI renabelz
We are basically in a similar situation as you. We also live north west WA and have an investment property in yanchep. we are deciding whether or not to purchase up here as the market is booming at the moment but who knows in 5 to 10 years time. The rent is a big drawcard to buy up here as the return is great. We were contemplating buying a 2 bedder here and maybe a unit in perth somewhere. our hope is to be able to sell one of the investments to pay off a big chunk of our yanchep mortgage as that is where we would like to end up. I would be interested to find out what you end up doing and if you manage to track down a property savvy advisor.
NicoleK
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