Real Estate Sell Down

I still would only put the least amount possible in super if I was in my 20's.
There are still many ways of minimizing tax and retaining flexible deployement of funds.
And of course buy a ppor.
My context of super is for a max of 5 yrs before pension age.
I will not give the gov control over my money for longer.

 

Article refers to old information. It states bring forward of $110k p.a. from 1st July (changed to $120k p.a.) and TSB of $1.68m (should be $1.9m).

 

Certainly true for those without a ppor.

My comment was in reference to concerns that it can be taxed at death. I generally assume this is a worry for 50+ yos.

 

Similarly here, hubby didn't want to contribute, but ours is mostly in RE, but luckily, he's in the age he could confiscate all and pull out if he wanted to, has choice what to sell above $1.9M free TBC, can leave the rest in accumulation, plus less tax paid in Small Business we run, so lots of nice choices to have. I have couple of years to go....
Yet we still cannot bring ourselves to sell many IPs like many here instigate they are doing in SMSF as CG served us so well over many years. ETF's or dividends will provide the income, but we cannot see same CG as from RE we attained. Liquidity of % drawdown will impact us but I cannot see why cash offset accounts cannot be used or sell offs over the years when we need to draw out more.
I suppose it depends on what one wants to achieve greater income vs CG?

 

I did struggle a bit with the selling part at first, but now happy to see them all go with the exception of one or two. They've done their job. They've built the wealth. I'm now happy to just accept the income.

 

I wouldn't mind selling couple, less maintenance, but selling many is the issue for me especially if we no longer wish to run our business?

 

I started at 22 buying regional houses, finished at 44, too much land tax even with a few major Crown Jewels. am about to sell PPR and downsize with kids and get a second cash cow city residence..property has amassed me 5m net and while I’ve paid a lot of CGT and stamp the rent offsets all that. Super happy and wish the next wave the best- with 500k migrants a year for knows well need property

 

Congratulations. I can relate to that, we started in year 2000 and since then our nett Capital Growth unrealised is above 8 figures, gross still invested is double that, hence, imagine waiting another 10 years or so for another cycle if this was to double again?
Similarly with rents, recent increases took care of inflation or close to it... IMHO.
Land tax is part of this journey, part of running this RE business, so I don't dwell on what I cannot control.
Perhaps, we will be up for huge Capital Gain tax when we would sell, and since we still derive income from business and alternative sources, it would be feasible to sell at later time. Having alternative sources of income is great but does not favour selling.
Only in SMSF entity CG tax is so much less so plan is to sell few there. The aim for us was never to sell only recent SMSF changes if they do go through will force us to sell few there.
I suppose we could evaluate living off equity instead of selling off too. I realise we are very blessed to be in such a position, but agree with your comment, recent large population increases and lack of supply and demand in RE at present and many economic factors in different states seem more favourable to keep RE at present rather than sell.
Does anyone look at such factors say for the next 10 years or so?

 

Cap growth over 8 figures?! Far out that’s BIG

I guess I went from $50,000 to 5 million in 20 years.

I forgot to mention that I’ve been forced to stop my investing career because I’ve had no loan approval now for about eight years lol

but it’s fun joining the ranks of people who buy with cash. The suburbs where I live and where I’ll next buy have HALF cash buyers like me - very interesting.

 

I assumed $5M capital growth not total invested?
We didn't buy all cash, had loans but I have included ALL RE, so PPOR and SMSF and Joint Names and Trusts entities.
I think bought in total 23 and sold 4 over the years. I think the key was that we accumulated most and grew asset base within the first 8 years and held lots in House and land interstate, rather than units which have smaller land valuations. That permitted huge CG, then sold few lemons and reinvested again.
Started in year 2000 and last purchase was in 2014. So have not invested last 10 years or so, helping adult kids now with their purchases too and mentoring some others and looking toward exist strategies.
Hence why we are hesitant to sell, especially if economic circumstances may allow for another CG within say next 5-10 years or so?
I am thinking about living off equity strategy, which may not suit many, not their cup of tea, but it really depends on someone's personal circumstances. Having Big portfolio and low LVR, the lenders may see outside their tunnel vision, when we present WIN/WIN (more titles and interest over the years for lenders BUT more equity growth relative to our loans required to live off and less tax... if that makes sense) scenarios, who knows?

 

It may be a while before banks will ignore serviceability in favor of low LVR.
I did one many years ago and was ok with the notion of never qualifiying for a loan again.
It may take another severe rcession for that to happen again.

Now I'm much more at ease and don't care all that much about the banks and their policies.
And still making more than I ever thought instead of eating up capital.

I could go and get a job or work 40hrs a week just to qualifiy for a loan... yeah right


Though I still have a relatively small LOC (10.25%!) which I may use for reno or KDR.

 

Thanks for that I am just brainstorming, would have alternative passive income plus let's say Super income increasing with age withdrawals so unsure really.
Time will tell as I have couple of years to access SMSF.
I am just wondering whether anyone is in similar situation and confiscating RE, like you are?

 

I increased my loan limit 50% 3 years ago state bank manager said I could because of LVR though some brokers here said you cant. Which was I think about 17% LVR , with an unencumbered property and new property for added security LVR increased to some thing like 22%. For servicability, kids becoming independent, 2% interest rates , increasing rent and a letter from my accountant vouching for income from rent and shares done the job, since then sold 2 properties in the last 18 months put $2.1m in my pocket transfered loan security and LVR is about 40% now, but only about 11% is drawn as it is fixed at 2.4%.

 

The government has a home equity access scheme for those who are of pension age but are self funded retirees. The interest is extremely attractive - currently 3.95%!

 

Thank you never thought of using PPOR paid off asset... as a collateral though?

 

After selling my RIP I have little "income" other than investment income and dividends only this FY. Other than that all I have is capital gains according to the banks.
I earned little due to lots of CG 21 & 22.
I may be using a company for my investing for other reasons though payments from that may count as regular income.

I have no drawn debt , and LOC that's about 25% of the PPOR value, CIP + cash.
Last new loan was over 10yrs ago.
In 2022 I started asking around for a 50% LVR looking at Brisbane and Perth around 5-600k.
Most answers were straight "no" or alt/business loan at 8-9%. Not interested in those terms.

 

https://www.servicesaustralia.gov.au/home-equity-access-scheme

That's interesting though I got "You will reach the qualifying age 2035"

And as expected many conditions, limitations and it's not a lump sum.
Still good to know that if i spend all my cash trying to emulating George Best there may be some hope

 

As the process of resructuring assets continues, next i will be setting up an investment company.
At first it will be mainly for owning shares, and maybe some small property at a later date.
Base rate taxation of 25%, and it will also be a benficiary of assets I will hold in trust.
Director 1, shareholders a few.

Now I have to find an inappropriate company name

 

What about Piston Broke, if available?

 

there quite a few and many no longer active.
Maybe something like Crash'n'Burn Securities
Bums'n'Noses p/l
Scrooge, Scrounge and Associates
Standard Poor & Poorer
Barren Wuffett