multiple owner property

[Holmes2012]

Lets say 10 people got together and bought a 300k property with 7% yield. Cash contribution of 30k+stamp duty each. So no mortgage (to protect all owners against joint liability).

The yield would cover all expenses and with depreciation (with up to total $3,000 per item claimable upfront), there may be less tax to pay if any.

If an owner draws on personal mortgage to fund the contribution, she/he can claim that interest as well if negative gearing attracts.

Pros and cons of this?

 

[Terry_w]

Lets say 10 people got together and bought a 300k property with 7% yield. Cash contribution of 30k+stamp duty each. So no mortgage (to protect all owners against joint liability).

The yield would cover all expenses and with depreciation (with up to total $3,000 per item claimable upfront), there may be less tax to pay if any.

If an owner draws on personal mortgage to fund the contribution, she/he can claim that interest as well if negative gearing attracts.

Pros and cons of this?

Have you ever been to dinner with 10 people and seen how hard it is to decide where to eat.

If there is no mortgage on the property then there is no leverage. So you would be getting say 3% yield and say 4% capital growth.

If an owner borrows, from say a LOC, and uses that the buy their share then the interest would be deductible.

What happens if one person divorces and the spouse slaps a caveat on title?

What if John wants out and the others don't. What if 8 decide they want to sell and 2 don't etc.

 

[Holmes2012]

Have you ever been to dinner with 10 people and seen how hard it is to decide where to eat.

If there is no mortgage on the property then there is no leverage. So you would be getting say 3% yield and say 4% capital growth.

If an owner borrows, from say a LOC, and uses that the buy their share then the interest would be deductible.

What happens if one person divorces and the spouse slaps a caveat on title?

What if John wants out and the others don't. What if 8 decide they want to sell and 2 don't etc.

Wouldnt most of those issues be covered by an agreement? Meant for some close family members but guess personal circumstances are different. You raise good points! It could be ownership through company then where the 10 own shares in the company? But yeah who will be director etc...

10 people dinners are never easy!

 

[Scott No Mates]

Also need to check with ASIC as you may need a prospectus and PDS if buying directly without any structure. Whereas shareholders in a company may not face the same scrutiny.

 

[Paul@PFI]

A fixed unit trust is a far easier way to address up to 20 distinct owners with various agenda's. That said a off the shelf deed will need mods.

 

[Paul@PFI]

Wouldnt most of those issues be covered by an agreement? Meant for some close family members but guess personal circumstances are different. You raise good points! It could be ownership through company then where the 10 own shares in the company? But yeah who will be director etc...

10 people dinners are never easy!

A partnership agreement. Can you buy them on a roll of 200 sheets ?

Shareholders have no right to call for income or demand a buyer of their shares etc... More problems than benefits.