Would it be feasible to LOE 50K per year owning 3 Mil at 50% LVR?
Would it matter if the PPOR made up 1 Mil of that?
LOE Model
- Thread starter Perth Investor
- Start date
Would it be feasible to LOE 50K per year owning 3 Mil at 50% LVR?
Would it matter if the PPOR made up 1 Mil of that?
No CGT at all since asset hasnt sold.
Whether the interest on 375k is tax deductable or not depends entirely on the purpose of the expenditure. Buy investments with it and its deductible, buy other stuff and its not.
You dont pay any income tax on the 125k if thats what you're asking, but you DO pay tax on the interest as per above.
Make sense?
JIngo
You are right, ours was a long term buy and hold and work and save. Thanks for your lovely comments. I am enjoying the fruits now, it is such a shame my husband isn't here to enjoy it with me.
TMNT
As soon as the aussie dollar started increasing I knew I had to get out of the Cairns market. The rental market relies on the tourism, with a lot of southerners renting and working in Cairns. Tourism drops, so the southerners go home, vacancies go up and the properties go down in value. Nutshell version
I was basically working on, when the properties doubled in value that was when I got out, they went up more after I got out, but I do believe in leaving some for the one following you. That way you can sell.
I was advocating to all the friends that bought up there to get out while they could, some did, but some refused saying they thought it would be OK.
I had bought in when the Cairns market was really at rock bottom, so I didn't have to wait long for mine to start increasing in value. Thats when I went crazy and bought everything I could afford, they were going up in value before settlement.
You have to know your market.
Chris
You are right, ours was a long term buy and hold and work and save. Thanks for your lovely comments. I am enjoying the fruits now, it is such a shame my husband isn't here to enjoy it with me.
TMNT
As soon as the aussie dollar started increasing I knew I had to get out of the Cairns market. The rental market relies on the tourism, with a lot of southerners renting and working in Cairns. Tourism drops, so the southerners go home, vacancies go up and the properties go down in value. Nutshell version
I was basically working on, when the properties doubled in value that was when I got out, they went up more after I got out, but I do believe in leaving some for the one following you. That way you can sell.
I was advocating to all the friends that bought up there to get out while they could, some did, but some refused saying they thought it would be OK.
I had bought in when the Cairns market was really at rock bottom, so I didn't have to wait long for mine to start increasing in value. Thats when I went crazy and bought everything I could afford, they were going up in value before settlement.
You have to know your market.
Chris
yeah it does, so assuming you use it for lifestyle, and assuming your portfolio prior is neutral for example, you basically pay the interest rate from the mortgage for every bit you spend and your portfolio becomes negative, a bit like a low rate credit card, and when the rent rises the following year, then your debt becomes lower!
Yes it probably would be feasible as long as the loans are covered by rent ie cashflow neutral.
The PPOR worth $1Mil does not really come into the equation.
Cheers, i was wondering about the PPOR making up 'part' of the security as you mentioned issues with banks loaning against the PPOR after a 'certain age', but not against IP?
The bank manager told me that it was policy not to lend to someone over the age of 70 (from memory) if the security was the family home. The reason being they did not want to be in the position of forcing pensioners out of there homes if they defaulted. If the security for a loan was a non PPOR, age was not an issue.
I don't really understand why it's not OK to foreclose on someone over 70 as opposed to being fine to foreclose at say age 50, but thats the way it is. Apparently banks have a social conscience after all, or maybe they just dont want to be seen on A Current Affair bankrupting age pensioners.
Yes that is right. Not a big deal.
what do you guys do for CGT payments nearing retirement/death?
I mean if you have spent the last couple of years redrawing equity in say year 11 onwards, what would be the best way to pass on to your children
ie if youve been refinancing from year 11 onwards and spending it on lifestyle, when you die, then if you give the ips to your kids, wouldnt you be up for CGT, or if you sell it upon death, you have a stupidly high CGT bill with no equity whatsoever left! so do you die bankrupt? before spending any withdrawn equity on lifestyle or giving it to your kids in teh form of cash/cars etc?
I mean if you have spent the last couple of years redrawing equity in say year 11 onwards, what would be the best way to pass on to your children
ie if youve been refinancing from year 11 onwards and spending it on lifestyle, when you die, then if you give the ips to your kids, wouldnt you be up for CGT, or if you sell it upon death, you have a stupidly high CGT bill with no equity whatsoever left! so do you die bankrupt? before spending any withdrawn equity on lifestyle or giving it to your kids in teh form of cash/cars etc?
Our beneficiaries inherit the portfolio without any stamp duty or CGT via a 3rd Generation Bloodline Trust Will as part of our Estate Planning.
It also protects our beneficiaries from creditors should they be subject to bankruptcy and it also protects our beneficiaries from their ex-partners getting their hands on what they inherit from us should they go through a relationship breakdown.
The assets have to be passed down in direct bloodline.
Perhaps, Leave an insolvent estate. ie go into bankruptcy after death.
Would that leave a black mark on them, having a bankruptcy in their record?
It sounds tempting.
Yes. The deceased would never get a loan again.
Brings new meaning to the term "dead broke".
I would get alone for the first time ever.Yes. The deceased would never get a loan again.
How is the metamorphosis going LL?
Really, I liked LL posts, shame.
