Whose name dilema?

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From: Gayle Harvey


Can I get opinions please on whose name to put a property in. My partner is in the top tax bracket and our accountant always says his for the tax advantages, and he may be correct but I am taking a longer time view.

Thinking I need a new accountant too who has a wider view and more than 5 minutes to spare.

We own our own home in both names. We have an investment property worth 135,000 rented @ $150pw in his name which we have had tax deductions on for 5 years, we now owe 85,000 on this. We are now buying another investment home for 50,000 and it will rent for $150pw also. This is the one I am not sure about?
We have just bought our dream block of land where we want to live with river views and want to build and move there in the next couple of years. When we want to move the plan is to sell the original investment, hopefully then worth at least $150,000 and paid off to build our new home with no debt, we will then have our own home and the new one and a 50,000 loan with both rents returning $300 a week. My partner will then be on a lower wage and I will have no income, so it seems smarter to me for us to put the new home in my name and then most of the rental income will be mine with less tax to pay as I will have half share in one and full owner in other. We will be keeping both these properties longterm. And besides with a 50,000 loan returning 150pw wouldn't this loan be +ive from day 1 anyway.
Hope this is not confusing ... on re-reading it seems to be to me. If you follow, opinions most appreciated.
Thanks
Ank
 
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Reply: 1
From: Rolf Latham


Hi

Me thinkst you answered your own question in your last lines.

Likely that the thing would be +ve cashflow or v close so think of the future rather than now

ps this is not tax advice

- any ideas Dale ?

Can you let me in on the secret of 50 k buy with 150 weekly rent - where ?

ta

Rolf
 
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Reply: 2
From: Terry Avery


Hi Gayle,

The second IP you are buying is definitely positively geared if it is only
costing $50,000 to buy. The only reason to put it into your husband's name
is if there are large deductions on the building and fittings available but
if you are making a profit then it should be in the lower income earners
name as you said.

However the whole email is a bit confusing. You say you have one IP and are
buying a second. You then plan to sell the first IP and build a new home.
What are you going to do with your own home which is paid off?

Why are you selling the IP, you will have to pay capital gains tax. If you
sell your own home to pay to build your new home you won't pay capital gains
tax.

Why sell any property? Why not borrow against the equity in the three
properties to build your new house, then you will have three lots of rent to
pay off your homes as quickly as possible?

You need to provide more information on the depreciation situation and to
crunch your numbers for each of the above scenarios. As always seek
professional advice as this is only my opinion.

Cheers
 
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Reply: 3
From: Dale Gatherum-Goss


Hi

It's always a question of balance between the short term benefits of negative gearing and the longer term issues of Capital Gains Tax.

I believe that the $50k property should be in your name simply because it is positively geared and what you have said about your personal situation.

Good luck and keep asking

Dale
 
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Whose name dilemma

Reply: 1.1
From: Matthew Campbell


I'd also like to know about the 50k - 150pw buy ...

you've got me wonderin - Dubbo maybe ? :?)

Regards

Matthew
 
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Reply: 3.1
From: Sergey Golovin


Could be tropical Tasmania, with that sort of price range or Western Australia?

Serge.
 
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Reply: 3.2
From: Gayle Harvey


Thanks everyone for your input. :eek:)

Sorry about any confusion, and yes, I have thought of most of the scenarios put to me.
There will not be any capital gains on the first house to pay as it hasn't increased in value since we bought 5 years ago, it has not lost value either tho, and I have my fingers crossed things will pick up in the next couple of years, but not holding my breath. MUST BE TIME!!

Our own home is in the same town as the new one ...mining town, Qld, and so is also only valued at around 60,000 but the rent we will receive if we rent is also around 150/160 so it seems to me to be more logical to sell the property worth 150,000 and build our new home and keep the cheaper properties where the rent is pretty much guaranteed and the properties worth less.

We have considered keeping the 3 of them and renting them all and it is a good option that we are still considering but on a personal level I am not really interested in life getting too complicated. I am into keep it simple and have never been into making things complicated for the sake of money, I have always been of the opinion that I only need what I need and everyone else can have the rest along with the problems. A life of no mortgage and 2 rental properties to supplement a smaller wage while living a simple life is my/our aim. I personally have had enough of living in mining towns after 10 years and want coastal life with family close and more leisure.

Anyway keep the opinions coming, I am interested in your views.
Hope I made it less complicated this time.

Cheers
Gayle
 
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Reply: 3.2.1
From: Sergey Golovin


They say (on TV) that about 50,000 people are moving into coastal towns every year all around the country.

And that figure is steady.

You can imagine all of the positives and negatives come with it.

Population on coastline gets denser and denser and middle is getting empty.

Serge.
 
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Reply: 3.2.1.1
From: Sheldon Lipschitz


Why not use a discretionary family trust to own your IP's. Then all the deductions are taken in the trust and the net income can be distributed each year to the lower income earner that year. A tax accountant should be able to sort this out.
(Usual disclaimers re tax advise apply)
 
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