PPOR with parents? // what would you do with $500k

K

kyozaro

Hi all,

Just wondering if we can generate some discussion with this..

Parents have sold their PPOR, and now have approx $500k in savings..

We are going to rent in the meantime, but they are wanting to move into something bigger (850-900k range, Sydney) and get a loan for as much as we can borrow and chuck it in the offset. It will be under mine and my old man's home until I find a partner and move out.

Is this a wise move? Or should we just rent a nicer place and get a few IP's...

What would you do with 500k and a family of 4 in Sydney?
 
Why would you want to be on title?

Once you move out your share may be suhject to CGT. Land tax issues potentially. Asset protection risks on bankruptcy and family law issues.

Possibly the parents cannot service a loan on their own?
 
Terry_w said:
Why would you want to be on title?

Once you move out your share may be suhject to CGT. Land tax issues potentially. Asset protection risks on bankruptcy and family law issues.

Possibly the parents cannot service a loan on their own?
Click to expand...

Wow, thanks. That's the sort of thing i'm still unsure about, having my name on the title. Looks like i'll have to do a bit of research on this too.

Would it be better if I owned the home and parents lived with me? Or should it be the other way around.. eep not sure.
 
There are many ways you could do things, so better on some aspect. e.g you could buy and rent to your parents claim negative gearing. But the you would not get the CGT exempt status.

Separately you and your parents could have 1 property each which is exempt from CGT. Good to utilise this generally. However even with this there are many ways to structure things.
 
Thank you Terry. Just saw your newsletter has some good info regarding this too! Will give it a read ;)

Just on the point before.. yes, parents cannot service the loan by themselves.

What are the implications if I have my name and my dad's name on the title, but I don't move out though? Can I not just buy another place with my (future) spouse?
 
kyozaro said:
Thank you Terry. Just saw your newsletter has some good info regarding this too! Will give it a read ;)

Just on the point before.. yes, parents cannot service the loan by themselves.

What are the implications if I have my name and my dad's name on the title, but I don't move out though? Can I not just buy another place with my (future) spouse?
Click to expand...

You can, but then your interest on the parent's property would be subject to CGT.

Maybe a 99% / 1% ownershiip as tenants in common.
 
Terry_w said:
you could buy and rent to your parents claim negative gearing. .
Click to expand...

Would the rent count towards serviceability of the IP loan and would the bank approve the loan if you also lived there as an occupant? i.e. instead of buying as a PPOR, you buy an IP, rent to your parents and you 'live at home' with your parents.
 
magic said:
Would the rent count towards serviceability of the IP loan and would the bank approve the loan if you also lived there as an occupant? i.e. instead of buying as a PPOR, you buy an IP, rent to your parents and you 'live at home' with your parents.
Click to expand...

CGT is what i'm most concerned about :(

To the bank, the rent would count towards the serviceability of the IP and I believe they are approving it.

But then If I buy it as an IP and rent to parents, I would have no PPOR? :confused::confused: or am I then classified as living with parents?
 
Sorry for newbie questions, just very new to the whole joint purchasing. Just trying to do things legitimately and beneficially.

Can I just confirm, if I buy with my dad now, we then turn it into an IP later down the track and both move onto new PPORs for 6 years we will be CGT Exempt?
 
magic said:
Would the rent count towards serviceability of the IP loan and would the bank approve the loan if you also lived there as an occupant? i.e. instead of buying as a PPOR, you buy an IP, rent to your parents and you 'live at home' with your parents.
Click to expand...

If you were living in the property you wouldn't be able to claim rental income from it.
 
kyozaro said:
Can I just confirm, if I buy with my dad now, we then turn it into an IP later down the track and both move onto new PPORs for 6 years we will be CGT Exempt?
Click to expand...

It may be depending on the circumstances, but the new property may not - only one property at any one time
 
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