Anyone retired early solely from property or shares?

I will have ample funds available to carry me from August to February when I will turn 60. I have structured receiving my income paying very little tax.

 

Hopefully, you are zero CGT on the sale of your share of the partnership?

 

That's correct. Don't want to elaborate too much on a forum but the sell off is taking place over several years, otherwise ouch!

 

Anyone here plays the lottery for it ?

 

We all do

 

Nope

 

Just read this post. Love it. And thought provoking as usual.

In our case however, those living expenses have to be doubled at least, and there's rent/mortgage on top as well. There wouldn't be too many people living on $30K including rent.

Turning Equity Into Income: The Property-to-Shares Transition Strategy - Strong Money Australia

 

Enjoyed reading this, thanks!
But couldn't we do that same way using equity draw down say every 3 or 5 or 10 years? Yes it is dangerous and not as comfortable perhaps for many? Also depends if financiers would lend the funds on such a plan if illustrated at chosen points in time (may have been easier years back or if very low LVRs)?
In addition what if there is another GFC say correction of 40%, I suppose it would depend on what value of the shares was then, since selling so slowly over 12 years....?
The figures for CG tax would not be so little if one had double or triple basically larger the portfolio, as more likely then to be in the top tax bracket even if retired?
So I like the illustration on such figures presented but may be not so suitable for larger portfolios?
Still for some may be acceptable situation.

 

Living off equity is certainly one strategy. It used to get spruiked about a lot, but I haven't really seen it talked about much lately... I guess ever since we crested the peak of the market - LOE is more achievable in a booming market, or I guess if you have held the property for a long term and it is unencumbered. But then you would need to qualify for a refinance, so may be a challenge these days.

During the GFC, the share price may have dropped, but the dividends (generally) did not drop - and if they did it was not by anywhere near that amount, so the living off dividends thing still works in that scenario. Plus it means the shares are on sale, and the yield goes up!

The CG tax thing would be more of an issue with fewer properties that have had a higher capital gain, rather than the number of properties or size of portfolio per se - directly relates to dollar figure of the capital gain per property.

As said in the Strong Money article. They are rough figures to demonstrate the strategy, Your mileage may, and will, vary.

Cheers,
Inertia.

 

Its pretty hard to live off property equity through loans and sale of property is largely required. These days older borrowers face tough requirements to service and show debt reduction in their lifetimes. Equity drawn down schemes for retirees can have a major compounding concern and quickly balloon.

Property comes with a problem that a phased sell down is not a practical strategy unlike say shares. The lump tax issues are unappealing too especially for part pensioners.

 

So what's the recommended strategy when it comes to resi if you can't LOR, can't LOE and can't/shouldn't sell due to the exit costs?

 

It's a stepping stone to CIP for some....

 

I've got 16 ips at the moment (more on the way this year). We were planning to sell one every couple of years (or as needed). Over the years the principal on the others will be reducing. I think that should work and worse case scenario a short locum or two each year should make life very comfortable.

 

The

While it is great for illustrating a concept, the scenario is not as realistic as it could be and alot of holes could be picked in it. The first thing Mr Strong should invest in is a good accountant. If he has $62K and is investing in shares he should put 25K in Super and only pay $3,750 dollars tax on that instead of $8k each so have another 50 K(2X25k) of compounding tax free returns instead of having an extra $42k wasted in an offset account returning about 3% after tax. After 2 or 3 property sales over 6 or 10 years he may find he doesn't need to sell as many properties,

 

Maybe he doesn't want to wait till 60 to smell the roses.

 

I have 10 at the moment, don't intend to pay off debt, CG has made it only 30%LVR it was 60% LVR 6 years ago about 20% of portfolio value is drawn, Debt is one of the most valuable things you can have. Had planned to sell one every 4 years for 30 years, to give an extra 80k p/a income after the banks tightened up. I have sold 3 and bought 2 higher yielding ones in the last 6 years, just kept the loan the same and took the cash for 2 as they were cross collateralized, then paid cash for another, for one purchase I just transferred the security of a sold one, . Half my portfolio has doubled in value in the last 6 years and yields have increased 25% -50%. Proceeds from a sale were put into shares. I could now liquidate some shares and pay off all loans. I don't plan to sell any-more now , has half my portfolio ( commercial) now will give me more in income than I planned on getting p/a from selling. The original selling was part of a risk and concentration reduction strategy, which is no longer needed. I am now looking at buying again possibly up market.

 

Well why did he buy so many crappy yielding properties that needed him to work his butt off the yields wouldn't have covered costs. You must like working to pay for properties like that. I am not sure why you think he cant walk and chew gum at the same time.

 

Some properties are really passive and some are not .

 

I wish I could pay little tax . This year I will be paying over .5m in income tax.
:-(

At least it is still pretty easy to live off property rentals!

 

Hi
how you did it:
Property

what and where you bought:
mostly SEQ 2 NSW

how long it took:
First Home at 21 started to wind back from work at 30 no "real job" at 35ish 45 now wow doesn't seem like 10 years haha



how much passive income you're living off:
180k ish taxable I say ish as some properties in my name some wife some company and trust. not a perfect set up as I learned on the way



Did you do it with/without kids, etc.?
Yes, and no I came from a very poor single-parent family and was always motivated that I wanted to work hard and not stress about money, no clue how except hard work, when I was 19 I worked for an immigrant who came to aus with nothin, he was easily the wealthiest person I had ever met and he had made most of it through property investment. I was inspired!!. he said to try and buy a property every year "try"
I set a plan to work hard and try and build some wealth by 30 then start a family. Which is what i did.

try and keep a brief overview
I peaked at 18 properties at 29 ish I sold a few properties 5 sold and reduced some debt wasted some money haha also sold my very humble home, my first home (significant sacrifice i made was to not have a big personal mortgage) Did a few small developments but can be brain damage also I was able to finally build a beautiful home for my family at this time.

I still carry a large sum of investment debt, I could sell down and be debt-free on similar passive income, but I believe or should i say know its the capital growth that makes you "rich" for want of a better word.so better to have 15 properties growing each year, not 10.
I had some commercial but sold out post-GFC residential is so much more stable in my opinion.
I have been buying a few more properties in the last few years as I love property and think it's a good time to buy in some places.
After a few years, "retirement" nearly sent me nuts (this is a whole other story), so I do a bit of "work" most weeks
hope some of that makes sense not a big typer haha.