I'm trying to work out long term goals at present, as well as work out the best structure to continue purchasing in.
One strategy I'm looking into is purchasing a property in a UT owned by a DT, and then down the track clearing the mortgage on that property so the unit can be transferred into a super account to take advantage of tax benefits on the rental income..
Now let's say for the purpose of this exercise I buy a property in a UT owned by a DT today at $200k, and I buy another in my personal name at $200k. 20 years later they are both worth $600k. Both purchased as IO.
The way I see it there are a couple of ways to clear the mortgage:
a) Refinance property in personal name to pay down debt of property owned in trust so that the unit can be transferred to super. I then have one property mortgage free and the other with a high LVR.
b) After 5 years, let each property carry over to P&I. One would assume that in this 5 year period the rent has increased to (more or less) cover the P payments so that in 20-25 years it pays itself off.
Have I missed anything? Is option b) the most commonly used option? The only downfall I can see is it slightly affects your cash flow but if it still remains (about) neutral once carried over to P&I then the property can pay itself off without any intervention.
I'm 21 so if I was to purchase 10 IPs ($2.5M value) by 2018 as planned, then convert them to P&I for say 25 years then by 2043 they will have paid themselves off. I'll still only be 51. If owned in unit trusts then I could then transfer them to my super..
Any advice would be appreciated.
John
One strategy I'm looking into is purchasing a property in a UT owned by a DT, and then down the track clearing the mortgage on that property so the unit can be transferred into a super account to take advantage of tax benefits on the rental income..
Now let's say for the purpose of this exercise I buy a property in a UT owned by a DT today at $200k, and I buy another in my personal name at $200k. 20 years later they are both worth $600k. Both purchased as IO.
The way I see it there are a couple of ways to clear the mortgage:
a) Refinance property in personal name to pay down debt of property owned in trust so that the unit can be transferred to super. I then have one property mortgage free and the other with a high LVR.
b) After 5 years, let each property carry over to P&I. One would assume that in this 5 year period the rent has increased to (more or less) cover the P payments so that in 20-25 years it pays itself off.
Have I missed anything? Is option b) the most commonly used option? The only downfall I can see is it slightly affects your cash flow but if it still remains (about) neutral once carried over to P&I then the property can pay itself off without any intervention.
I'm 21 so if I was to purchase 10 IPs ($2.5M value) by 2018 as planned, then convert them to P&I for say 25 years then by 2043 they will have paid themselves off. I'll still only be 51. If owned in unit trusts then I could then transfer them to my super..
Any advice would be appreciated.
John