tax question about new loan

[gavins1]

Hi, my wife and I are going to buy our 2nd investment property, everything is in her name, Im the stay at home dad at the moment and not working, I will work later on, but she will allways have the higher income, should the next property be in both our names for the next loan, so I can claim a deduction as well, or will this effect how much she can claim back?

Thanks
Gavin

 

[Terry_w]

Hi, my wife and I are going to buy our 2nd investment property, everything is in her name, Im the stay at home dad at the moment and not working, I will work later on, but she will allways have the higher income, should the next property be in both our names for the next loan, so I can claim a deduction as well, or will this effect how much she can claim back?

Thanks
Gavin

Gavin,

Impossible to answer this as too many variables.

many things to consider besides tax too. e.g. what if the property is bought in her name and:
1. she becomes bankrupt,
2. she dies and leaves it to her tennis coach instead of you,
3. She increases the mortgage without your knowledge.
etc

 

[Rixter]

All things remaining equal, when her 'taxable' income reduces to the same as yours then its time to purchase in your name providing you both plan to remain in the workforce for the long term.

The trouble is, as Terry has mentioned, there are no guarantees and no-one knows for sure if things will remain equal

 

[Peter_Tersteeg]

Buying a negative geared in her name now gives her more tax deductions than it would you, as she's earning the higher income. That works today, but possibily is a mess tomorrow.

What happens when you go back to work? Will your income be higher at that point, perhaps you would be better off to have the greater share of tax deductions?

One would presume that the rent is going to increase and some day the property will be positive geared. At that point if it's held in the higher income earners name, then that person will have to pay more tax. If it were in the low income earners name you'd be in a better tax position with a positive geared property.

There probably isn't an ideal answer as your families financial circumstances can change at various points in your lives. My wife and I simply decided to go with joint ownership, or ownership via a trust and simply not worry about the tax implications. Looking back over the last 15 years, I think that's actually worked fairly well for us.

 

[Shahin_Afarin]

Further to the above points - also consider land tax if applicable.

 

[Aaron_C]

I personally keep things as simple as possible unless the massive numbers like commercial properties or developments are involved - in those cases the cost of compliance tend to be outweighed by the flexibility and tax benefits.