IP structure

From: Thorpey !


Hi folks,
We purchased our 1st home in 1997 and lived in it until 2000 and have rented it out since.
We live in a cottage on my wife's family farm and pay no rent. We do maintain the cottage though.
We are about to purchase a second IP and want any ideas as to how we should structure the loans etc to get the ball rolling on our property investing program.
We have just completed extensions on 1st property and will now receive increased rent as a result.
We are thinking of refinancing this 1st place (now valued at $370k)and placing what we currently owe (about $145k ) in interest only and take out line of credit on the balance of the 80%($150k) LVR to have as backup and to use as deposits on further acquisitions etc.
We will not be selling the 1st property at all so not worried about CGT.
Would you think this is a sound strategy, or any thoughts welcome.
The Wife:We are also, looking forward to joining Freestylers too and maybe getting some meetings happening in the Tamworth NSW area!
Talk to you soon
Thanks,
Thorpey.
 
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Reply: 1
From: Always Learning


In my very limited knowledge of such structures. I would think that your plan holds water extremely well. I've been doing such planning recently myself.
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Some issues to consider (of course this is my opinion based on limited knowledge)
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<li> Will you return to live in your first home?, do you need to consider the purchase of a new PPOR for the future? If so make sure you have a offset account to reduce your interest bill, don't pay down your IP mortgage if you plan to purchase a PPOR. Put all of your savings into offset account which you can use to purchase a PPOR. If you withdraw from a IP mortgage then you loose the tax advantage.
<li> Maybe a trust structure could be used to hold your future IP's. There are advantages and disadvantages, if you plan for your family to live off the income of the trust then you should consider it.
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