Hi, I am new to this forum and would like to hear some of your thoughts on this.
We puchased an apartment in Melbourne's inner fringe in Nov '08 with the view of turning it to an investement property in a few years until we can afford to get into a larger house (more than 1 bedroom!). Our combined income is around $150K and thought it would be better to get started and be in the market rather than delaying entry in the property market.
My partner's parents have a trust fund and would like to puchase property in Melbourne as an IP. A couple of scenarios have been presented by them:
1) The trust fund purchases the property outright and we pay maket rent. Although this would make sense for my partner as he will eventually own the house as a beneficiary of the trust, I don't think paying for rent fits with my financial strategy as this will not assist me with my goal of home ownership. Rather it will be an expense I could be putting to repayments for asset accumulation.
2) The trust will lend us $650K to purchase PPOR which they have mentioned can be IO so we can afford to keep the apartment for IP which will be negatively geared.Does anyone have any other ideas how this could work for everyone?
1) His parents/trustees want to invest in property and assist us into a larger home. They have done this with another sibling but it was much more straightforward since that particular sibling is not in a relationship. The other sibling also received financial help in business.
2) My partner insists of getting a reno project and has $100K to use for this. A move-in and pay rent scenario would not really work if we are adding value to the property
3) Me -I don't know what my options are. I have $25K in savings with no debts and minimal outgoingsc so just continuing to save. We are in our very early 30's and may have children in a few years time.Should we seeking advise from an accountant or a solicitor? Can anyone recommend in Melbourne?
Thanks,
Turtle78
An accountant can help with the tax aspects, a solicitor with the legal aspects. What are you trying to ascertain?
There are not many tax advantages to you if you rent from the trust. Just think of it as renting from someone you don't know. You may be able to get a discount out of them on the rent because of the family relationship though.
If the trust lends you money to buy, also no real advantages. Just think of it as borrowing from a third party – except you may get a discount.
I think what you need is some sort of investment strategy.
eg you may be able to buy in your name by borrowing from the trust. Get the FHOG etc, then mortgage this property (if the trust allows it) and get a LOC which you can then use for further investing. to do this will need legal advice on mortgages etc. But before the legal advice you need to know what you are going to do generally.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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