Hi there
A little about my situation first. Married, no kids, wife doesn't work, I'm 46yo, we own our own home, car and some shares = +$1m. I earn >$200K.
I've just bought off the plan my first IP within 2k of the cbd for about 500k due completion early 2015. This should rent for 550-600/week.
Doing the math I could pay this out in 5 years, then give it to the wife so she can get the rent, hoping she can claim the stamp duty transfer as a deduction as well. Or I could string this out to ten years payout, save the extra I would have been paying it off at and invest in shares or something, then buy the wife one outright at the 5 year mark. Or I could buy another one then be committed to paying out in 10 years. Also with any of those scenarios would I be better to have my wage offset the loan or invest that separately in my wifes account for tax purposes?
I am absolutely confused as to was is the best strategy.
Cheers Paul
Hi Paul
What state was the purchase made in?
Do you think you'll ever purchase another owner occupied home?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Hi Jamie
Forgot to add, the unit is in Qld and we also live in Qld.
As for would we ever purchase another house, at this stage I would say no as we a very happy with what we have & the location. Eventually we will downsize but I don't think we would move in the next 10 years. Our own house was our nest egg, no cgt to be paid we'd figured. it's probably ~900K. Shares are in my non working wifes name too.
Cheers Paul
Hi Paul
It might be less confusing if you first define your end goal. Then work out what needs to happen in order to achieve it. For instance, if the end goal is to have enough assets to generate an annual income of $50k in today's terms, you then ask yourself "does this unit achieve that, with what is left of the rent after paying the bills and assuming there were no mortgage?" If the answer is no, then you would need more income-producing assets. In this regard, paying the unit off quickly might not be the right approach. Instead, using spare funds to acquire more property or other income-producing assets might be a better approach for you.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Jacqui
I'm looking at a 10 year plan and tax minimisation given I earn >200k . As I stated previously I could buy 2 now and have them paid in 10. I could buy 1 now have it paid in 5, give that to the missus then start again for another 5.
The end goal is to pay the least amount of tax I can and own both outright at the 10 year mark. In either scenario, would I be better to have my pay offset the loan from the start or give my wife the extra so she can invest thru other means, then get it back off her to pay out the loans later? This initial property is off the plan so I believe there are good depreciation to be had there and I would likely do the same again.
Cheers Paul
Hey Paul
Paul:
46
200k income
450 house
Wife
46
5k income
100k share
450k house
(Super?)
Buy unit – most tax effective plan next 10 years …
jfk_o wrote:Buy unit – most tax effective plan next 10 years …Based on what??
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Paul
I'd be wary of having tax minimization as a plan … better to look at whether the property stacks up by itself or not. Tax breaks are a bonus – not the reason for buying.
You're probably going to need to speak to a financial advisor and/or accountant regarding what is best to do with your salary (ie put it into an offset account or give it to your wife to invest in other things).
I stand firm on my opinion that you want to clearly define your end goal (eg "In retirement, we want an income that is the same as $x in today's terms") and work backwards from there, ensuring you are gathering enough assets to enable such an income.
Hope this helps!
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
PTW wrote:Hi thereA little about my situation first. Married, no kids, wife doesn't work, I'm 46yo, we own our own home, car and some shares = +$1m. I earn >$200K.
I've just bought off the plan my first IP within 2k of the cbd for about 500k due completion early 2015. This should rent for 550-600/week.
Doing the math I could pay this out in 5 years, then give it to the wife so she can get the rent, hoping she can claim the stamp duty transfer as a deduction as well. Or I could string this out to ten years payout, save the extra I would have been paying it off at and invest in shares or something, then buy the wife one outright at the 5 year mark. Or I could buy another one then be committed to paying out in 10 years. Also with any of those scenarios would I be better to have my wage offset the loan or invest that separately in my wifes account for tax purposes?
I am absolutely confused as to was is the best strategy.
Cheers Paul
If you gave it to your wife she would be up for stamp duty and you CGT. Why not just buy it in her name from the start? If you think you want to be saving tax, then you may find that having it in her name will result in more tax saved.
Even better why not look at buying it in a discretionary trust. This way you don't need to worry about which name it is in as the income can flow through to whoever is on the lowest taxable income each year.
You could refine the strategy a lot more and considering your situation you could make things work well.
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 Jacqui – Paul's question is about off the plan apartments in Brizzy, as to whether that is a good idea or not is not his question.
Hi Paul – a book called the of Australian Taxpayers Handbook is well worth picking up
jfk_o wrote:Hi Jacqui – Paul's question is about off the plan apartments in Brizzy, as to whether that is a good idea or not is not his question.Hi Paul – a book called the of Australian Taxpayers Handbook is well worth picking up
Hi jfk
Yep, well aware that is the question. Can anyone answer it? Maybe, maybe not. What I do know is that people ask me or the forums questions every day. Questions about which house they should buy between option A and option B. Questions about should they invest in a house or in shares. Questions about whether a unit is a better choice over a house. More often than not it is not really the question that needs to be asked and answered that drives the decisions. It is important to know what destination you want to reach in order to be able to answer the question of whether a particular property or asset is aligned with that goal.
Cheers.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Paul
As Terry has mentioned you cannot in Qld Transfer the property from one party to another (irrespective if it is your Spouse) without triggering Stamp Duty and CGT.
Must admit not sure where in Qld it is but we are starting to see a few issues with valuation in Brisbane on OTP so hopefully you have chosen wisely.
One big downside i see in buying a unit is the external body corporate expenses and being OTP it is likely to be a high rise with high than normal BC fees.
Not sure if it is too late to pull out of the Contract but certainly think i would be reconsidering the the deal.
Without all of the information to hand it is difficult to comment however i would have thought about buying the property in your wife's / Trust name especially if she is a non tax payer.
If you want to have a read of my API interview it can give you an indication of what can be achieved.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks everyone for your comments and advice. I was aware of the stamp duty & cgt but figured she could claim the stamp duty.
I hadn't also thought about buying the property in my wife's name considering she has half the house anyway, good point! I will look into that this morning!
Hi Paul
No hate to say she cannot claim the Stamp Duty as a Tax deduction as it is added to the Cost Base for Capital Gains Tax purposes.
Mortgage Stamp Duty is deductible as a loan cost however there is no mortgage stamp duty in Qld.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jacqui
I guess the end goal is to have the prop/s in my wife's name so that I don't lose half the rent in tax. It wasn't till I came on shift tonight and saw the first post by jfk_0 where he split my wife and I that the penny dropped! A bit further down TerryW confirmed that I finally saw the forest for the trees
I should be able to swap the contract over with minimal fuss given it was done just prior to Xmas.The purchase of the property itself is not an issue, I am happy with that decision.
Cheers Paul
Qlds007 wrote:Hi PaulNo hate to say she cannot claim the Stamp Duty as a Tax deduction as it is added to the Cost Base for Capital Gains Tax purposes.
Mortgage Stamp Duty is deductible as a loan cost however there is no mortgage stamp duty in Qld.
Cheers
Yours in Finance
Hi Richard
No worries, see my above, will buy it in her name from the start. So glad I jumped back onto this site yesterday!!!!!!
Cheers Paul
Good to hear Paul.
Will make a big difference in the long term.
Also look at using a Long term deposit bond rather than using cash or equity to cover the deposit.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard
Had thought about the bank guarantee, I guess similar to a Long Term deposit Bond??? The deposit was only 5%, so 25k, bugger all really. I believe I would get the interest on that from the developer anyway. I will pass the info onto my wife anyway as she had mentioned it as well.
Cheers Paul
Paul there is a difference between a Bank Guarantee and a Deposit Bond.
Wouldn't go the BG route as they will want to take security and this could hinder your investments going forward.
Guess it all depends of you want to sit on your hands and wait for the OTP property to settle or intend to be a bit more active and buy a couple more before it is completed.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
"or intend to be a bit more active and buy a couple more before it is completed." ???? Bwhahaha….give me a break. I've gone from "absolutely confused" to having a small sense of what's going on now in only a day. One shall do for now – baby steps for this amateur
The OTP completion date is early 15, will just save & invest some cash before then.Thanks heaps for the advice about the BG v's DB.
Cheers Paul
I should be able to swap the contract over with minimal fuss given it was done just prior to Xmas.You must be logged in to reply to this topic. If you don't have an account, you can register here.
