+ Reply to Thread
Page 1 of 3 123 LastLast
Results 1 to 10 of 24
  1. #1
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week

    Default Tell me about investment properties.

    We are looking at maybe buying another property. Ideally we would rather rent that one out but the banks have said they will lend the money as long as we live in that house and rent out the one we are in.

    Im wondering what the benefits are in having a rental. How exactly does it benefit at tax time. What do we need to be careful of Etc.. We will be going shares with mil as she is already on the existing loan and without her income we wouldn't stand a chance on paper. It's a means to an end and one we have been doing reasonably OK with so far (even if it has been testing at times and I have done my fair share of complaining about).

  2. #2
    BH-KatiesMum's Avatar
    BH-KatiesMum is offline Community Manager
    Winner 2008 - The most optimistic poster
    Winner 2014 - Most Helpful Moderator
    Join Date
    Oct 2007
    Location
    Perth WA
    Posts
    22,393
    Thanks
    5,359
    Thanked
    5,806
    Reviews
    3
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 postsEmerald Star - 10,000 postsRuby Star - 15,000 postsDiamond Star - 20,000 posts
    Awards:
    Past Moderator
    200 Posts in a week100 Posts in a week
    I dont really understand why the bank would require you to rent out your current property and live in the new one?

    From a tax point of view that isnt the ideal scenario. You can only claim a tax deduction for interest if the purpose of the loan was for investment purposes. So you wont be able to claim the interest for the new property as it will be for you to live in, and you wont be able to claim for your current property as the purpose of the loan was for a home.

    It is pedantic, but the ATO are very strict on it, and if you get audited, they will disallow your interest for this reason.

    For tax purposes, you are always better paying down as much as possible on your home loan, and borrowing 100% of the investment property ... but the purpose of the loan when you borrow the money MUST be for you to buy an investment property.


    As far as going with MIL ... as long as that is viable and the relationship is good, its all fine. I would put in writing an agreement as things can go awry and its not until then that you need it ...

    look carefully at the market in the area you want to buy. Do your research .. go to the council or real estate association in your state and buy the list of sales in that area (dont just go off what the property was advertised for) - and carefully assess the facilities and benefits of the area. Make sure the house is sound and doesnt need too much work.


  3. The Following 2 Users Say Thank You to BH-KatiesMum For This Useful Post:

    DesperatelySeekingSleep  (02-08-2015),HappyBovinexx  (02-08-2015)

  4. #3
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week
    Quote Originally Posted by BH-KatiesMum View Post
    I dont really understand why the bank would require you to rent out your current property and live in the new one?

    From a tax point of view that isnt the ideal scenario. You can only claim a tax deduction for interest if the purpose of the loan was for investment purposes. So you wont be able to claim the interest for the new property as it will be for you to live in, and you wont be able to claim for your current property as the purpose of the loan was for a home.

    It is pedantic, but the ATO are very strict on it, and if you get audited, they will disallow your interest for this reason.

    For tax purposes, you are always better paying down as much as possible on your home loan, and borrowing 100% of the investment property ... but the purpose of the loan when you borrow the money MUST be for you to buy an investment property.


    As far as going with MIL ... as long as that is viable and the relationship is good, its all fine. I would put in writing an agreement as things can go awry and its not until then that you need it ...

    look carefully at the market in the area you want to buy. Do your research .. go to the council or real estate association in your state and buy the list of sales in that area (dont just go off what the property was advertised for) - and carefully assess the facilities and benefits of the area. Make sure the house is sound and doesnt need too much work.

    That is interesting. I was thinking it was strange. I will have to question that. So far mil has done all the talking with the banks. I have the emails sitting there but haven't yet had a good look at them. I think they are redoing the whole loan. Im not sure. But yes we would be borrowing 100% of the value. We would only be paying stamp duty etc

  5. #4
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week
    And we have done our own value of the house as it is just a few streets away from where we are. It's a good deal value wise, as for checking the soundness that is a given. We have those qualified people in the family.

  6. #5
    BH-KatiesMum's Avatar
    BH-KatiesMum is offline Community Manager
    Winner 2008 - The most optimistic poster
    Winner 2014 - Most Helpful Moderator
    Join Date
    Oct 2007
    Location
    Perth WA
    Posts
    22,393
    Thanks
    5,359
    Thanked
    5,806
    Reviews
    3
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 postsEmerald Star - 10,000 postsRuby Star - 15,000 postsDiamond Star - 20,000 posts
    Awards:
    Past Moderator
    200 Posts in a week100 Posts in a week
    redoing the loan etc is fine, but it still doesnt change the fact that the purpose of the new loan is to buy a house that you will live in. Its not to buy an investment property.

    its good if you have people in the family who can help with housing stuff. Means you can buy something with some work to do and do it to increase the value of the property.

    But property is a long term investment. Flipping stuff isnt so easy these days, as stamp duty makes it pretty unviable most of the time.

  7. #6
    Join Date
    Feb 2014
    Posts
    3,196
    Thanks
    312
    Thanked
    960
    Reviews
    13
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 posts
    I'm only assuming the banks will lend $$ on existing being rental as the yield maybe better or you can get more rent?
    I agree though from a tax point of view it's better to buy a new property as an investment

  8. #7
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week
    That's definitely food for thought. Thanks.

    I have always wanted to have an investment house for long term gain. This house just popped up and seemed like a good opportunity to enter into that world. It's the bank (according to mil) that is putting those terms on it. Dp is going to talk to them himself tomorrow I think.

    Without going into it too much is all based on a rough 5 year goal plan to break free of joint loans with mil.

  9. #8
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week
    Quote Originally Posted by maternidade View Post
    I'm only assuming the banks will lend $$ on existing being rental as the yield maybe better or you can get more rent?
    I agree though from a tax point of view it's better to buy a new property as an investment
    The new house would be a 4x2 and the old one a 3x1(what we are in now). The rent would be much the same. Maybe $50pw more for the 4x2 (the new one).
    @BH-KatiesMum have you got a link or something I could use to show mil? She can be trusting of the wrong people (banks in this case) and take advice that isn't necessarily beneficial to her (or us).

    The advice of buying for investment vs tax makes sense and that is sort of what I had already thought. That you buy fresh to rent out. The reasons for that were different to what i thought though.

    I will be suggesting we talk to an accountant for sure now and not let her assume the banks know best for us.

    I will be getting dp to ask the bank some specific questions now. Are there any other things we should be asking? Nothing is official yet. It's all just in the "let's see if it's possible and beneficial" stage ATM.

  10. #9
    Join Date
    Dec 2011
    Posts
    6,718
    Thanks
    3,789
    Thanked
    3,838
    Reviews
    17
    Achievements:Topaz Star - 500 postsAmber Star - 2,000 postsAmethyst Star - 5,000 posts
    Awards:
    Busiest Member of the Week - week ended 14/11/14100 Posts in a week
    Quote Originally Posted by BH-KatiesMum View Post
    redoing the loan etc is fine, but it still doesnt change the fact that the purpose of the new loan is to buy a house that you will live in. Its not to buy an investment property.

    its good if you have people in the family who can help with housing stuff. Means you can buy something with some work to do and do it to increase the value of the property.

    But property is a long term investment. Flipping stuff isnt so easy these days, as stamp duty makes it pretty unviable most of the time.
    I get you, on both points.

  11. #10
    Join Date
    Jun 2014
    Posts
    1,228
    Thanks
    576
    Thanked
    859
    Reviews
    0
    Achievements:Topaz Star - 500 posts

    Default Tell me about investment properties.

    Oops posting randomly. Ignore me!
    Last edited by mummymaybe; 03-08-2015 at 07:55.


 

Similar Threads

  1. Tell me about your investment property?
    By bigmummahen in forum General Chat
    Replies: 7
    Last Post: 21-06-2015, 22:57
  2. Solar panels- worth the investment do you think?
    By Taffabella in forum House & Gardens
    Replies: 12
    Last Post: 20-05-2015, 19:43
  3. Foreign investment in Australia - what do you think?
    By Little Ted in forum General Parenting Tips, Advice & Chat
    Replies: 13
    Last Post: 25-02-2015, 17:29

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
free weekly newsletters | sign up now!
who are these people who write great posts? meet our hubbub authors!
Learn how you can contribute to the hubbub!

reviews
learn how you can become a reviewer!

competitions

forum - chatting now
christmas gift guidesee all Red Stocking
Tambo Teddies
Visit our online store and select your individually handmade natural sheepskin teddy bear. Our soft and loveable bears come in a range of styles and colours. Created in Outback Queensland each bear is unique individual. 100% Australian made!
sales & new stuffsee all
Wendys Music School Melbourne
Wondering about Music Lessons? FREE 30 minute ASSESSMENT. Find out if your child is ready! Piano from age 3 years & Guitar, Singing, Drums, Violin from age 5. Lessons available for all ages. 35+ years experience. Structured program.
Use referral 'bubhub' when booking
featured supporter
Little Rugby NSW
Catch, weave, chase, run, but most of all have FUN! Little Rugby runs a NSW network of fun, safe and non-contact footy classes for BOYS and GIRLS aged 2yrs – 7th birthday.
gotcha
X

Pregnant for the first-time?

Not sure where to start? We can help!

Our Insider Programs for pregnancy first-timers will lead you step-by-step through the 14 Pregnancy Must Dos!