Best way to structure this purchase

Discussion in 'Wills & Estate Planning' started by 2jzzzz, 29th Feb, 2020.

Join Australia's most dynamic and respected property investment community
?

What would you do?

  1. Just buy property outright and forego allowance

    0 vote(s)
    0.0%
  2. Find a solution - please comment in reply.

    0 vote(s)
    0.0%
  1. 2jzzzz

    2jzzzz Active Member

    Joined:
    5th Aug, 2015
    Posts:
    25
    Location:
    Melbourne
    Hi all,
    Not sure in the right sub topic, feel free to move it.

    My work subsides my rent as I accepted a position in a remote region (FNQ). Basic rules are that if I own a property in my name in that area, I am not entitled to this allowance. The amount is enough for me to pursue a more complicated strategy rather than straight buying a place and forgoing.

    My idea was that my 20% deposit is transfered as a gift to my parents, they then purchase the place I would like to purchase then lease off them. My parents could claim the tax benefits as it would be negatively geared but I pay all cash required to service mortgage. They would on paper own it as in an investment that I would then lease.

    Intention is that I rent until this current situation changes and then I would then purchase off them. I do not see much capital growth in this area but its cheaper to own than rent... And I want to live here long term as my PPOR. I own no other property have sold in Vic.

    Is there any holes in this plan, is there a better structure such as trusts etc? Has anyone pursued this and have real life experience?

    Thanks.
     
  2. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    6,035
    Location:
    Australia
    Stamp duty and cgt for the parents, potential pension impact?
     
  3. 2jzzzz

    2jzzzz Active Member

    Joined:
    5th Aug, 2015
    Posts:
    25
    Location:
    Melbourne
    I don't see much capital gain, if there is I would pay CGT. Amount of allowance would far outweigh.

    I would be purchasing this back off them before pension and retirement is realised.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,862
    Location:
    Australia wide
    It can still effect their pension.
     
  5. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    6,035
    Location:
    Australia
    If there is no cap gain, would you do better putting the deposit elsewhere even with the rent difference?
     
  6. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    4,022
    Location:
    Perth, WA
    Seems like a scenario where rent-vesting would make a lot more sense.
     
    craigc, 2jzzzz and piggybackzebra like this.