# Ideas... not advice



## lindsayf (26 July 2019)

I am looking for some ideas on how to approach finances to position myself and wife for retirement. Nothing anyone says will be construed as financial advice...I am just finding that accountants and financial advisers are limited and conservative in their offerings...at least the ones I come across.

So the gist is this:

Me 55, wife 48..both working part time and this can be the case for the next at least 5 years. Combined income about 100k.  No remaining dependents. Good at frugality.

Super: about 100k each, both in industry funds. (Yes there are good but unfortunate reasons for such low super balances).

Realestate: PPR value(25 acres) value about 750k equity about 400k
Investment property1: value about 300k equity about 250k
Investment property2: value about 400k equity about 340k
Both IPs rented and cash flow positive with net income roughly offsetting loan on PPR
Cash available via redraw about 200k.

All properties in regional NE Vic with moderate prospects for capital gain.

Inherited bluechip shares: face value about 110k but no point selling due to CGT.
                                       Dividend income about 5k pa

Trading plan: I plan to scale up my trading as I move more into semi retirement.  I can do this both in my super and out of super.  I will be trading ASX shares on weekly timeframe, Forex on weekly timeframe and futures intraday, probably Bund. I have not decided on capital allocation but the majority will be with the weekly systems, unless my intraday performance improves.

Again, NOTHING anyone puts in this thread will be taken as advice... I am not so naive as to implement anything I have not thoroughly looked into myself.  I am just after some general ideas to think about and if of interest then look into more deeply in a way very specific to the details of our circumstances.  I am happy to be a bit aggressive in approach.

Many thanks in advance...


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## willy1111 (26 July 2019)

I would be thinking what is the most tax effective way to structure my affairs...what the pro's and cons of those structures.

I would be thinking a weekly system on asx might produce 20% p.a. compounded profits, the general public think this is impossible.

A weekly system requires minimal input and allows one to get on with other activities in life/retirement.

I would be thinking do I want to keep existing IPs for diversification or would I rather no maintenance/headaches and sell down at opportune times, to minimise CGT and deploy those funds to trading systems producing 20% returns.

I would be thinking Superannuation is currently taxed btw 10-15% and 0% upto 1.6m per member in pension phase. Having an smsf would allow me to trade more freely, if I was happy to not need the money until preservation age and not concerned about future changes the govt may make, I would be considering how to get as much as possible into super as it has the best tax outcome.


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## kahuna1 (26 July 2019)

Hmmm ,....
Well ... being a trader in many ways all my adult life, an observation is that less than 1%  who try, succeed.

Having at various times been king of the world in terms of trading and investments, with hundreds of staff even able to choose between thousands of applications, I repeat the first line again.

Assets wise, not a bad plan if one can pick up a few percent on your real estate assets.
I would point out that 100k in super is not enough, I suspect divorce one of the likely reasons or working for yourself and not paying it.

If I look at net numbers, 1,2 million including super plus 100k in shares CGT is ... what it is ... 25% in reality. Getting the 5% income is ok ...

One needs a place to live and that makes the real number 800 k plus 200k in super.
So a million .... at 5% ... 50k a year income wise and hopefully it keeps pace with inflation.

Of course, one would I believe need to reduce the capital and plan for there not to be much left at say age 90.

If we said say 70k and slowly eating into the capital ... at 20k a year, well ... it would run out !!
Basically 60k ,,,,  50k income and 10k capital .... it could be done, but would be better if the amount was double.

Looking at shares for long term capital appreciation is a good idea historically, an AWFUL one right now. AWFUL.

Long term perspective is needed and investing at ALL TIME highs in equities is never wise. 

Whilst I suspect they continue higher for a while, mainly driven by ultra low interest rates, USA market where no one pays any tax, and ignores the deficit and implications, for NOW maybe a another 5-10% more.

WAIT ... is all I would say, and it may be painful, but wait till the world is ending and IT WILL OCCUR,  a stock market pullback ....  and it does time and time and time again, we will, at some stage have a correction and likely a deep one and BUY when the world ends. In the meantime, it likely will be watching the stock side go up to say 8,000 in the ASX 200 ... or the S+P 500 up to  say 3,175 or so. Then ... well .. these things change and whilst not wanting to miss the boat, the boat sailed late last year at 5,400 on the ASX 200 not the 6.780 or so where we are now.

I am not sure how long you plan to work, but ... whilst property seems to be the flavor of the Australian market, it is somewhat overvalued on a longer term basis even after the recent small correction.

I would NOT trade ,,, nor risk capital ... I would be a diversified portfolio of shares. I prefer ones which pay income and holding over 15 or so BLUE CHIP stocks with less than 10%  in risky side shares is the go. Any single share keep it under 5-6% overall so you will end up with 20 or so ... 

KNOW what they are worth ... or what they are supposedly worth and ONLY buy when they are well below the estimate say 85% or so .... and then expect on the other side they will overshoot the value by similar margins as we are seeing right now.

Get a few brokers reports .... follow the best performing funds and their holdings and mimic them ...
DON'T increase if it keeps going down.
DON'T ... buy if their is bad news out ...
DON'T TRUST anyone ...

I could go on ... but this is your and your wife's next 50  years of income so RISK aversion and diversify the income MORE ...  the NET value you have in one investment property at 5% for a decent selection of dividend paying BLUE chip stocks a lot better I suspect than where the MAYBE of being too highly into property may be the go. I don't know where your properties are or ... what they may potentially have ... but 5% on 400k and buying intelligently ... when everyone else is panicking ... slowly ...  using your brain ... so you both get income and capital growth works. With a 400k NOT in property at 5% ... whilst your still working .... 20k a year ... PLUS if you learn and read a few books and a lot of brokers reports .... your capital shoudl appreciate ... IF YOU BUY WISELY and are patient well over the inflation rate.

DON'T EXPECT massive returns ... over time ... sure everyone is a hero today with the ASX 200 up 20% plus post Dec 2018 ... it is HOWEVER the SAME level it was in late 2007 !!

That said ... dividends and wise reductions of risk ... inside a super fund I think maybe a good idea. Less tax ... or when your over age 67 ... tax free ... thats the only reason to speak to an accountant. 

It does of course go against the grain ... buying when most retail people are selling ... that is the sad reality of markets. People are in love with stocks when they should be reducing and buying when a lot are panicking and selling.

NO LEVERAGE ... on stocks or sparingly ...

Even ... as a suggestion ... have your investment properties ALWAYS for sale ... at idiotic prices or ones that make it very attractive. To avoid cap gains ... maybe sell your house and then move into an investment one and avoid it totally !!

Advice and opinions ... especially free ones to be ignored. SO ignore me ... and especially a bloody accountant or anyone who tells you they can predict the future. Some shares, you will loose on ... no matter how good you are. If its going pear shaped or bad bad news comes OUT ... CUT it ... loosing 50% even on  5% .... of shares ... is far better than 100% . If bad news comes out ... its usually the start ... not the end. Conversely ... into boom times and idiotic rises ... reduce .

Enuf ... from me. Good luck


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## willy1111 (26 July 2019)

I would also consider that interest on my home loan is not tax deductible but if I pay it down, split off an amount and redraw it for incoming producing purposes it becomes deductible.


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## willy1111 (26 July 2019)

I would also consider that I can put upto $25k per year into Super (depending on balance and including employer contributions) and it be a tax deduction in my name but taxed at 15% when going into the fund, so only worthwhile to reduce personal taxable income tax rate above that.


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## willoneau (26 July 2019)

Hi lindsayf, 
thankyou for your back story, as kahuna1 went into great depth about what to do with what you already have there is nothing i can really say and would probably be out of my depth. But i am at a similar age even if not in quite the same position and often think what i am trying to achieve as i also approach retirement.
My question to you is what do you want to do?
do you now trade shares, FX and futures ? and are you consistently profitable.


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## willoneau (26 July 2019)

willy1111 said:


> I would also consider that interest on my home loan is not tax deductible but if I pay it down, split off an amount and redraw it for incoming producing purposes it becomes deductible.



would you pay off your house mortgage with interest rates as low as they are at the moment?


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## Smurf1976 (26 July 2019)

willoneau said:


> would you pay off your house mortgage with interest rates as low as they are at the moment?



I would personally never choose to have my PPOR mortgaged other than due to necessity.

Just my preference.


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## willoneau (26 July 2019)

Hi Smurf1976, I wasn't talking about getting a mortage, i was referring to paying it off at 5% or investing the same at a higher rate at this time? a question i put out there as it was something i have pondered myself.


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## willy1111 (27 July 2019)

willoneau said:


> would you pay off your house mortgage with interest rates as low as they are at the moment?




Perhaps do a google search on debt recycling.

If one has a home mortgage of $200k = not deductible.

And if one has cash of $200k...and wants to invest/trade the $200k in the market (if investing it must be expected to produce income, buying a mining exploration company that has never paid a dividend will not cut it).

Does one

 a) put the $200k cash in the market and keep the $200k non deductible home loan or

b) use the cash to payoff the non deductible home loan, redraw the $200k back out into their investment account (do not mix with other personal funds) and invest/trade the $200k.

The result is the same however in scenario b the interest is likely to be deductible... there may also be other consequences to consider so best to seek personal tax advice.

Something to explore.


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## willoneau (27 July 2019)

willy1111 said:


> Perhaps do a google search on debt recycling.
> 
> If one has a home mortgage of $200k = not deductible.
> 
> ...



doesn't work that was in aussie


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## willoneau (27 July 2019)

IF you have collateral in your home you can get investment loan against it which you can claim the interest at tax time against any income producing investment.
Sorry just re - read it and agree, but what if you don't have that 200000 up front to pay out mortage?


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## willoneau (27 July 2019)

willy1111 , getting a little side tracked from what the original question was asked i think.
Re- read it and tell me what you think?


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## willoneau (27 July 2019)

Out of everything he said this is what caught my eye,



lindsayf said:


> Trading plan: I plan to scale up my trading as I move more into semi retirement. I can do this both in my super and out of super. I will be trading ASX shares on weekly timeframe, Forex on weekly timeframe and futures intraday, probably Bund. I have not decided on capital allocation but the majority will be with the weekly systems, unless my intraday performance improves


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## Value Collector (27 July 2019)

lindsayf said:


> I am looking for some ideas on how to approach finances to position myself and wife for retirement. Nothing anyone says will be construed as financial advice...I am just finding that accountants and financial advisers are limited and conservative in their offerings...at least the ones I come across.
> 
> So the gist is this:
> 
> ...




If I were put in your situation, (as the topic says this is an idea, not advice)

I would do the following.

1, Put all tax deductible debt on interest only (investment debt)

2, Then redraw the $200K, at probably around 4% interest, and invest it in rate setter at 8% (generating extra cashflow)

3, Make sure the share investments are actually in good companies, and if so just collect the divvies.

4, Use all the available cashflow from Shares, Property, Rate setter and wage to clear debt and make any tax advantaged contributions to your super.


-------

The goal being that at retirement you have paid off the Home, built up a decent super account and started clearing debt on investment property, and you have a cash flow positive rate setter investment.


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## willoneau (27 July 2019)

Ok my turn ,
1) equity in land 400,000 good start.
2) 2x investment properties pos gearded (great), question has the building depreciation claim expired (usually 10 years) if so revert to principle / interest loans as they are lower than investment loans by quite a bit since banks tightened up ( might be different now?). Can be left to pay them selves down with out much thinking about. Also good return in times of bear market cycles once debt free income producing.
3)Blue chip shares worth $110,000 income return 4.5% before tax and any franking. So with land equity and interest around 5% why bother touching them.
That is how it looks to me, now the fun side trading?
Big question is are you a consistently profitable trader at this time? if yes use equity in land up to a figure you can sleep at night and start getting a return higher than the interest payable on that investment loan which is tax deductable when running a trading business.
If not then leave it were it is and start the journey down the road to consistence. Being here is a good place to start. 
just my two cents worth.


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## Smurf1976 (27 July 2019)

willoneau said:


> Hi Smurf1976, I wasn't talking about getting a mortage, i was referring to paying it off at 5% or investing the same at a higher rate at this time? a question i put out there as it was something i have pondered myself.



My rationale is as follows:

1. I would personally not be prepared to put my home at risk in order to increase investment in an unproven or low return investment strategy.

2. If someone has a proven investment strategy producing decent returns and has done so for long enough to have confidence that it's well and truly proven then the value of their home is likely to be a relatively small portion of their total assets anyway. 

Others will have a different view but that's mine and it comes down to risk and what's most important. Being able to retire or buy fancy cars is nice but having a roof over my head is more critical.


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## qldfrog (27 July 2019)

52yold just retired
Safety first:
Only play with what you can afford to lose
So keep your title to your house your own, not with a bank
Worst case scenario your bank collapses: where is your title? Can you release it? No or at what cost if that bank is in bankruptcy?
So my point is, as smurf pointed
Make your home as safe as possible

Super investment:
Would i be retired if i had invested as pressed by advisers in my super?
Nope
See super as a ponzi scam looks great on paper, some make good money and can actually cash in
But what is important is: can you access it? What are the risks that you may not be able to?
Rules have changed basically yearly and i would not be surprised to learn access being pushed 2or 3y then maybe more later
And be wary of expected returns on trading
Most lose, and stock market can be pathetic ask japan
Or even waiting 12y to break even as we just did
When population growth stops and ages, real returns slow down.
Immigration can help but not if you just import welfare and social nightmare: ask europe
So my only recommendation, not advice is you are not in a bad situation, do not worry too much with super, increase your overseas exposure currency, countries.
Maybe india, se asia for share markets?
And usd yen gold for currencies.
No point doing good in Australia if the australian dollar collapses
A point rarely discussed here


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## Smurf1976 (27 July 2019)

There's also a big psychological aspect to trading or investing and having important personal assets, particularly the house, at risk is going to upset that for some people certainly.


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## kahuna1 (27 July 2019)

Just to add ...

Tax wise .... silly to have the loan on your house ....  NOT on the investment properties.
One is tax deductible ... the other is NOT.

Lots of tax issues as to selling the investment properties ... but... unless they are too far ahead in cap gains, I suspect by VERY PRUDENT .... Very conservative investing .... NOT BLOODY TRADING .... that's a different animal ... you could get 5% INCOME and identical if not better capital gains over time via shares putting you say 5% INCOME ahead on say 400k you extract from selling ONE of the investment properties. 

Debt wise .... get the loans all on the investment property .... RUN it as a loss ...  basically a 100% of equity loan and put the NEW NO debt on the home you live in up as security. Having an identical sized loan ... but having an extra 20k or so tax deduction will put 10k in your hand each year.

Same on salary sacrifice ... or similar ... putting it into a super fund and paying 15% tax is far better than close to 50% ... again ... its a long term or short term saving plan.

Try and NOT incur cap gains tax if you can .... selling your own house you miss that .... move into an investment one for a year or so ... you miss it I think ... again issues.

As for the REST ... DON'T trade ... trading is a game where VERY few win ... few have the skills or temperament or discipline, Sure it looks easy in a bull market or a few years of 15-25% gains where even rubbish goes up. As I mentioned on another thread, some people boasting about this years returns ....  which yes, has been kind, but if you were able to get 20% returns after tax ...  for a mere 15 years on 400k .... well  you would have 15 times your money at the end.

Part of this .... a lot of retirement planning IS about tax ... and avoiding it ... the rest is about prudent INVESTING... NOT trading or speculating but taking conscious deliberate well researched LOW risk ... higher return decisions to ENHANCE ... your retirement income.

TRADING .... will not and does NOT do that unless your a freak and someone who is an exception ... the one in 1,000 candidates we hire .... of them one or two out of 100 are that .... SHORT term and then they usually burn out at 10 years of high pressure trading and that leaves 1-2 ... so less than one in a million !!

Whilst on paper ... your assets look great and MUCH better than most I got handed when asked similar questions .... sadly no one thinks about retirement or income or where the money is coming from till they get to say your age of 55 and have a mere 50k in their retirement assets and say pwn their own home and ASK .... how can I fix that ?
\
Between you and your I am sure lovely wife, Your position is a lot better ... it does need RADICAL work. Maybe your investment properties DO have great capital gains potential ... MAYBE they do  ... but if they don't and you can exit with no or little tax ... DO IT.  Put all the loans on the single one you have left.

Whilst ... having I think missed the boat on shares with a longer term perspective .... buying at 5,500 in the ASX 200 v 6,800 .... a mere 6 months latter speaks for itself ... ONLY idiots can not see the difference. Whilst I think we may go a lot higher ... its ALWAYS a game of timing and wait till there is some scare, and BUY into that dip ... always. The world WILL not and does not end despite it feeling like it.

Maybe you do nothing ... but tax wise ,., you can save yourself 10-20 k a year just by arranging your affairs ... by removing the least favorable investment property ... or selling your home ... taking cap gains and moving into one investment property ...  over say 10 years your adding in real terms to your retirement pile a REAL 200 plus k . That's 20% PLUS any cap gains you get ...

Freeing up cash and hopefully the shares ... good ones keep pace and beat inflation ... by a decent margin ... and you just reinvest the 20k income at 5% on 400k freed up ...  another 20k ... each year ...
your adding another 200k .... or 20% More to your nest egg ... over time.

Add the two together .... and compounding it with INCOME on the side ... and 400k becomes DOUBLE that so about 80% MORE in the retirement nest egg.

It is NOT about magic .... let me be blunt ... most idiots THINK its easy or boast about returns, most however would not know returns if it bit them in the arse. If they did and only starting at say 100k and making 20% after tax over 30 years, well one would be 237 TIMES more well off .... or 23.7 Million.

Most outside of extreme bull markets cant make money and DON'T make money trading. Eventually they put too much risk in one share and SPLAT .... they are gone ... all their assets are gone and well ... its sad. Go to the TAB .... or local betting shop on a Saturday and as an exercise .... have a drink or two, a flutter or two. small but watch, find the most desperate and clearly thinking the can win person and take TIPS from them, WITH THE REST of your life and that is what trading and hot tips and charting and some idiotic ideas you will find likely parroted by most accountants an investment advisors and certainly MOST traders.

There are old traders and there are bold traders, but there is NO such thing as an OLD BOLD TRADER. Reason being, is that they blow themselves up. EGO ... is needed to be a trader, being bold, but the good ones and they are rare ... may be bold ... may appear brash or dismissive and they have to be, reality is most think .... think they know about market or trading but most are in fact like the idiots at the TAB who are desperate to WIN and back the horse ... have more hope of success at lotto than they do at trading.

Sorry harsh .... but ... I am well qualified and have shared on various sites now for over 25 years trying to at times hoes down idiotic tenancies of people for the latest fads and conversely get them to BUY quality on market selloffs. 

Human nature and futility .... usually I speak to myself on some threads of decent stocks when I used to bother. Ones that are 40-60 times where they were 10 years ago ... NOT penny dreadful s ... but decent companies. 

BE an investor .... NOT a trader.
Now I sent you to the TAB ... next trip ... LOOK and find some homeless person and SIT and study them, and elderly one ... and ask yourself DO you love your wife ? Do you love yourself ? Have a good look ... a very good look ... and remember less than 1% of traders actually make money over time.

Be an investor, its boring ... and 99% boring and 1% sheer terror as the world appears ending and you BUY ... Not sell like the lemmings .... BUY into a market falling like a stone because whilst the lemmings were all buying at the other end of the world, you were reducing into their madness and going, thanks and reducing risk and taking it off the table.

Sobering ... but a good dose of it is likely a waste of time. I have tried over the years, loving a share when its say at 35 cents, hating it at $8 when the research pays off and its trading as though the next 20 years of what appeared likely would occur. It didn't ... and I still have not entered again. It appeared a sure thing .... but when already paid off for a sure thing, paying CGT ... tax ... on a massive gain ... even at the 50% discount so 25% is a good thing. Doesn't happen often but sometimes rarely ... it does. 

Trying to conversely explain to a devoted following of drooling believers on some share that's at its highs is a ponzi scheme and worthless ... and most small shares ARE worthless, likely never paying a dividend is a loosing game and waste of time for the current crop of idiots from the TAB soon to join the ranks of the homeless poor.

Sorry but  we, or you are asking about your retirement and if you have say 400k ... I would insist, if I could than no more than 5 % of that went into any venture or company than did not and had not paid a dividend or made a profit. Sure, maybe .... you get a goodie ... and that 5% split into 5 lots of 1% .... if you happened to get a monster and they do occur, MAY go up 10 fold .... and 1% becomes 10%  of your portfolio ... more often sadly over time, the balance will not perform as well, they WILL NOT pay you 5% each year in income and hopefully if your very wise and patient make 5-10% above inflation .... 

So that 400k or likely 800k you have been compounding via tax arrangements .... if you get 10% above inflation over the next 10 years .... on your 400k in the markets ... you basically DOUBLE your retirement nest egg, DOUBLE your retirement income and well .... don't end up  living in a cardboard box.

I sound blunt ... but its a game for mugs ... investing and trading. I will try and sell you something worth $1- but offer it to you for $2- and if you buy it, I will ask if you want another ? up until ... well you have it full invested ... and your really HALVED your assets.

Lots of learning I suspect you need, some decent books ... not stupid ones like rich dad poor dad or some other moron ... ones about valuation and investing, not trading. Read lots of brokers reports on shares, read the best returning fund managers in shares and various classes of shares and what they hold ... and eventually it will sink in. 

Sorry but I am blunt at times, once young brash and aggressive ... the highest compliments a young trader can ever have on their assessment, nowadays its a computer that does the trading and follows trends and cuts losses and so on. Whilst it appears exciting the returns, the ASX will not add 20% every year, in fact at some stage it will likely be minus 40% ... and that's time to buy quality. Since your not invested, its a game of getting that 5% income and hopefully 5-10% above inflation over time ... so sitting at 1% in a cash account WILL NOT work and possibly one might have to accept a not so great first entry. BUT you need to be invested, all be NOT here .... NOT at all time highs and yep despite me thinking we go higher over time, you will at some stage when the euphoria and new crop of idiots and drooling TAB punters have spent all their cash on worthless crap, there is always a correction and NEW level to enter the market.


Anyhow, likely I have insulted many who are reading this, shared some wisdom for those who are honest and those who feel insulted, go look at your returns over time and be HONEST. Most sadly are not 

Its an aside, a delusional one ... for most. Horse two race two .... at the TAB.
Good luck


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## ducati916 (27 July 2019)

Re. the 'trading' aspect of your plan. Here are some [long] threads that will help you decide on a style of trading that might suit you.

https://www.aussiestockforums.com/threads/dump-it-here.34425/

Long thread, but read from start to finish, it will definitely give you something to think about with regard to mechanical or non-discretionary trading.

If you think 'safe' investments, here is a thread on 'fundamentals'.

https://www.aussiestockforums.com/threads/the-education-of-an-investor.34402/

Discretionary trading

https://www.aussiestockforums.com/threads/tech-as-technical-charts-of-interest.31431/

Probably keep you occupied for a while.

jog on
duc


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## willoneau (27 July 2019)

My god Kahuna1 why would you tell someone to sell a positively geared investment property? , the return is probably more than the interest payable on the home .


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## kahuna1 (27 July 2019)

willoneau said:


> My god Kahuna1 why would you tell someone to sell a positively geared investment property? , the return is probably more than the interest payable on the home .




CAPITAL RETURNS ... is why .... I dont know the property but 100% of all assets in one class making  maybe ... capital appreciation is NOT as good as buying prudently a share, when its got no friends, a decent company which will appreciate at inflation and PAY ... Return an income after tax ... and franking credits of 5% MORE ...

Your ahead of the investment property EACH and EVERY single year ... by a very long shot. 
Its simple maths. Putting all the loans against the investment properties and claiming an allowable tax deduction ... if you decide the property has MORE upside due to say some special reason, again .... getting say a 20k tax deduction and not paying tax on 20k income say at close to 50% marginal rate for the top end of your income ... is WHAT a good financial advisor or a top line accountant should tell you. All be it for $500 an hour or so.

It is a pragmatic and hard nosed approach which one must take. Having the investment property which YES due to a large portion of the value being NOT leveraged you break even on the interest of the leveraged portion of the value, SOUNDS nice, but its a wank !! If you make 1% over inflation .... on capital appreciation and over time with repairs and so on break even on the loan service .... in 10 years your maybe 10% ahead !! Maybe. Sure rents go up, but so too do other costs and rates and so on. 

I prefer, taking the say 400k out of a 750 k investment and getting a 5% return on the 400k and being  ascab buying into terror and selling or reducing into times like NOW ... getting an overall above inflation outcome of say 5% ... if not a lot more, instead of ending with a 10% or 20% at the end of 10 years ... you end up with 5% income times 10 years plus 5% above inflation after 10 years and compounding as time goes on, well .... one .... MAYBE and MAYBE 20% return ... the other, with some work and supreme discipline and NOT trading but buying out of favor blue chip stocks ... with dividends and you end up with not a REAL return of 20% at best but one that's 250% or so.

Your question and .... belief ... obviously is not based upon any fundamental analysis or rational basis.

Maybe, as I said the investment property has redevelopment potential or some other factor which makes it different, say a massive block with added things, but that ... to one side, the long term holding of an asset that likely will whilst do well, fairly safe, but not even in the same ballpark as one that's producing an income and if your judicious in your buys, and patient to reduce and take some risk OUT from time to time, their is no comparison in the two as long term investments.

NONE. Buying for example a long list of quite decent stocks, massive ones late last year such as a few banks like NAB, WBC and so on, a longer list of very much out of favor great and massive companies and listed infrastructure things with yields that hit 7% or so late last year, and hey presto, now 25% higher and in some cases 40% even 100% ....  is not something any property is likely to do. Sure we are in interesting times, but buying something and being paid 7% tax free with franking credits to hold and be patient and then going, OK .... let the new hero own it at 4% yield or 5% ...  await the next correction and as the price slides, the yield and dividend potential rises and you go, OK i sold it at $28.50 at $26 its getting cheap, at $25 very cheap and at $24. well the world ends, or Its a good buy ,,,, and 7% yield with franking credits and tax paid ....  

Hard investment strategy but holding a unit in a decent area that MAY increase at say 3% over 10 years a mere 1% over inflation over 10 years whilst sounds nice, the kitchen is now needing replacement and bathrooms and whilst 30% sounds good, I have taken this OUT of the returns one must demand from investments in stocks, Bottom line you need 3% for just inflation and 8% .... overall which requires some work from time to time to let things go ... when things go well and then conversely as cash piles up ... from dividends and divesting a bit at one extreme and sometimes a lot, in times of euphoric stupidity, the pile of cash or slight leverage on a share portfolio ... say 10% on the DIP .... you go from 110% invested and over a few years, to 10% in cash if no standout cheap stock strikes you and if your your lucky, you sell a little more at the top end of things and reduce ... to say 70% overall invested, market has a cow .... goes down 15% ... as it will and does periodically, your back 100% in vested or 110% invested and start it all over again. 

Complex but a plan. A good one, which well is LOST on most.

Take care


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## barney (27 July 2019)

lindsayf said:


> Me 55, wife 48..both working part time and this can be the case *for the next at least 5 years*. Combined income about 100k.  No remaining dependents. Good at frugality.




Hi Lindsay. I think you are doing just fine and don't really need any advice

But since you asked ….

If you remain healthy, and assuming you like your job, keep working!

It is providing you with all the available cash you need to live happily, plus you have plenty of passive income with your RP's …  and spare time!

You obviously like to trade, so simply trade with risk as your main priority, and only a small portion of your funds (I doubt you need to trade for the money)

If or when you or any of us get too old or too unwell to work, all the money in the world is of little use anyway, so my advice, keep doing what you are doing!

Perhaps in a few years, you might simply cut back on the job (if that's possible) to give you more spare time …… $50K annually will still get you enough pizza and Chinese takeaway to keep the wife happy cause she doesn't have to cook every night! (I actually assume you do a lot of the cooking anyway because most of us men do now days)


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## tech/a (27 July 2019)

It really depends on how you want to live in retirement and for how long——
Often a guess 

The best way in my view is two simple things which are in their implementation 
Complex.

(1) Save or accumulate enough asset that you can liquidate if needed
(2) Have one or more ways of having a continuous income stream through retirement.

(1) Gives rise to (2) 

Keep working can be part of (2) keep your business and draw a wage is similar
Endless opportunities which you should put into place leading up to retirement or semi retirement.

Everyone else are filling in the possibilities.
Your well on your way!


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## willoneau (27 July 2019)

I'm sorry Kahuna1 , I started to lose interest when you started to make a lot of assumptions  to back up your statements. I agree my fundamental analysis or rational basis has no base but wait, how quickly we forget about the housing boom (which i did well more luck though at time) and 4 years of positive trading profits in this hard stock climate must be luck too. So i guess forget what I said as i have no idea what i'm talking about.
PS I only have 1 positively geared investment property so am jealous of Lindsay
Take care.


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## kahuna1 (27 July 2019)

willoneau said:


> I started to lose interest




Yep ... 4 years, bravo .... positive returns in a rising market that's gone from 4,200 to 6,800 on the ASX 200. 
*You are my hero.*

Race 3 .... horse 3 .... at the TAB.  Better still use a chart and follow a chart .... or maybe moon cycles ? I hear they work for some !!


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## willoneau (27 July 2019)

No hero here, simple facts based on actual results, don,t go to TAB or Casino that's gambling.
I think others that actually trade the aussie market will agree that 2017 and to some extent 2018 have been difficult.
I forgot to mention 17 years of losses before it.
Moon cycles is Gann theory which i did try but failed at.
I did try system betting on the horses for 6 weeks but the odds are stacked against you so gave that away.




Not my definition of a trending bull market.
Take care.


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## kahuna1 (27 July 2019)

willoneau said:


> Not my definition of a trending bull market.




ASX 200 going from 4,200 to 6,800 ...

 RISE OF 62% in 4 years, not a trend ?

Okay. When talking about long term investments and incomes for say the Gent and his wife needed for 40 years, perspective and actual MATHS is needed I suspect. Long term hard nosed maths.

Anyone, even my pet goldfish makes money in wildly bullish markets. As they say, Sh&T floats and its amusing some of the ones floating right now.

Enuf from my perspective. If I didn't make money, I could not eat or exist. ITs all i do and have done for a very long time, all my adult life.

Take care

PS I was not talking about TAB the share ... but going to the TAB and the poor fellows betting on horses or say buying a lotto ticket expecting to win every week. NOT the TAB business or TAB share which I might add, down here, merged with tatts and paying over 5% dividend is NOT a bad bet with so many suckers spending at their various gambling ventures. .TAB paying 5% fully franked and invested say in 2000 ... if one reinvested the dividends the end result of the $3.06 ish starting price, well ....  close to $8.00 ... so not a great example ....  but far better than most. A stock like say CSL ... $7- to over $200- and a blue chip all that time let alone dividend reinvested so $300- ... and maybe perspective is lost ... MFG pre say 2008 at $1- and below ... to $62 peak and a lot of dividends ... about 100/1 .... blue chip .... even CBA mid-range $25 to $80 .... without dividends and with them at 7% ave .... 6 times increase in value. I doubt any property does that well over time ....


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## willoneau (27 July 2019)

kahuna1 said:


> BE an investor .... NOT a trader.
> Now I sent you to the TAB ... next trip ... LOOK and find some homeless person and SIT and study them, and elderly one ... and ask yourself DO you love your wife ? Do you love yourself ? Have a good look ... a very good look ... and remember less than 1% of traders actually make money over time.



Why carn't you be both?
Less than 1% of traders actually make money over time , were did you pull that one out of?
64% raise in 4 years , really i just showed you a chart of 2017 to 2019
6/1/17 high of 5818 - 4/1/19 high 5760, i would say down not up but again only a fact.


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## lindsayf (27 July 2019)

Ok thanks for all the replies.
No time to digest them just now but just for added context...Note my membership date here..I have been trading on and off for about 10 years...I am no beginner so we can skip any thoughts that come from there.  I wont be blindly beginning a trading system at a market high and I wont be putting ppr or any property at risk with silly trading dreams.  I am educated about what and how trading returns, if they come, are realistic.
I will have a good look at replies over the next few days...
All ideas much appreciated thks again


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## willoneau (27 July 2019)

Hi Lindsayf, I think the discussion i and Kahuna1 got into was because of such a very open set of questions that have many different interpretations. Discussing one question at a time might be more thought provoking?


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## Smurf1976 (27 July 2019)

A lot of this reminds me of a fairly common saying:

"Time *in* the market not tim*ing* the market"

The point to realise is that the above is either absolutely true or is a load of nonsense depending on when you choose to put it to the test.

Toward the end of a bull market - time *in* the market is all you need to have made a profit.

Toward the end of a bear market - too much time in the market will have seen your funds diminish greatly.

Whenever one approach is clearly superior to the other based on past performance it's time to be doing the opposite.

When fund managers start widely quoting that saying, because at that moment in time it is actually true, then it's time to sell.


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## Sir Burr (27 July 2019)

kahuna1 said:


> the world is ending and IT WILL OCCUR




Just some stats on the Allords I've plucked out of the www. Interesting looking at the worst years and within 1-2-3 years a rebound.

I like buy and hold index ETFs (more global) plus a portion towards a trading system on the ASX. Dividend ETFs/LICs, not bothered as an income. Mainly capital gains will do 

Also, depends on your situation but paying off debt first then $25K salary sacrifice into super seems a good idea (to me) getting closer to retirement.

Decade Average Return
1880s +15%
1890s +7%
1900s +12%
1910s +8%
1920s +14%
1930s +10%
1940s +9%
1950s +14%
1960s +13%
1970s +10%
1980s +21%
1990s +13%
2000s +14%

Decade Negative Years
1880s 1
1890s 2
1900s 1
1910s 2
1920s 1
1930s 2
1940s 1
1950s 2
1960s 2
1970s 4
1980s 4
1990s 3
2000s 3

Worse years
1889 -1%
1891 -10%
1901 -3%
1915 -4%
1929 -5%
1930 -30%
1941 -6%
1952 -13%
1965 -8%
1974 -26%
1982 -14%
1990 -18%
2008 -40%

Best years
1883 +29%
1895 +26%
1903 +22%
1919 +19%
1922 +21%
1933 +26%
1942 +18%
1959 +44%
1967 +43%
1975 +55%
1983 +67%
1993 +44%
2009 +34%


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## Smurf1976 (27 July 2019)

Sir Burr said:


> Just some stats on the Allords I've plucked out of the www. Interesting looking at the worst years and within 1-2-3 years a rebound.



Don't forget that a 33% decline needs a 50% increase just to get back to the starting point.


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## willy1111 (28 July 2019)

kahuna1 said:


> Putting all the loans against the investment properties and claiming an allowable tax deduction ...




@kahuna1 are you saying if he transfers the $350k loan he has owing on his home to his investment property, the interest on the $350k will suddenly become tax deductible?


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## qldfrog (28 July 2019)

willy1111 said:


> @kahuna1 are you saying if he transfers the $350k loan he has owing on his home to his investment property, the interest on the $350k will suddenly become tax deductible?



I think you can more or less do that
In any case always minimise or better pay off your ppor mortgage
In term of risk and tax advantage, very rarely beaten


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## kahuna1 (28 July 2019)

Yes ...  but the security for the loan .... MUST be the investment property .... it may be the bank needs more security such as the title of the home as the loan.


The LOAN is a NEW loan with the bank with the investment property FOR a new amount and primary security for the loan is the title over the investment property .... it may be they require secondary security like the title of your house as well ... but the loan is over the  investment property.


And yes the loan will become deductible ... it already WAS ...  that you have to refinance and make it bigger is irrelevant !!


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## willoneau (28 July 2019)

I don't agree but you can try.

investment worth 500,000 and 400,000 paid off
home owing 400,000
refinance investment to 500,000 but no new investment property only paying off home mortage.
I think tax department might have soming to say about reclaiming interest on the investment property again.


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## kahuna1 (28 July 2019)

Howdy

Having an accounting degree, and masters along with tax qualifications I have NO idea .... what the hell you think your talking about. 

Sorry but absurd, what your saying.


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## willoneau (28 July 2019)

I do vaguely remember asking my accountant if i could refinance my investment load back up to original amount and use it to pay off some of my home , he said NO.


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## willoneau (28 July 2019)

But please explain how i can do it, i would love to pay my home loan off and claim the interest.


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## kahuna1 (28 July 2019)

Not being rude,

Find another accountant and pay him.
Tax minimization is legal, and suggesting it is NOT is absurd. 

 I have given enough free stuff here, go pay someone .... to hear the same thing. Suggesting one cannot arrange your finances ... or are not allowed to, then actually insisting its not allowed  ... was already absurd. 

If your suggesting a margin loan on say shares as investments is NOT tax deductible ... same thing ...
A loan against any income producing asset and even an asset NOT producing income but designed to eventually produce income is a tax deduction. BUT NOT >.. home loan. 

More money you pay better advice and structure you get


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## willoneau (28 July 2019)

Never mentioned tax minimization is illegal and misquoting me is being rude.


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## willoneau (28 July 2019)

I can only guess we might be arguing or discussing two different things and not on the same page.


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## kahuna1 (28 July 2019)

willoneau said:


> I can only guess we might be arguing or discussing two different things and not on the same page.




I thought I was crystal clear. I am not arguing, merely outlaying a simple concept. The misconception of deduction of interest is a ONE step issue. 

Over home ... NO .... Cap gains over home ... NO

... over investment property YES deductible;e ... Cap gains on investment property get hit with tax. 

NO debate ... no fuzzy lines its ... I thought impossible not to comprehend or understand. 

If I am being rude ? I would be blunter. Like telling someone strident and rude in their incorrect belief about tax deductions they were an imbecile. I don't believe I said that, nor implied it.


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## willoneau (28 July 2019)

kahuna1 said:


> Debt wise .... get the loans all on the investment property .... RUN it as a loss ... basically a 100% of equity loan and put the NEW NO debt on the home you live in up as security. Having an identical sized loan ... but having an extra 20k or so tax deduction will put 10k in your hand each year.



DIscussion probably started from here i suspect.
Good luck.


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## kahuna1 (28 July 2019)

Not  discussion ... an assumed basic knowledge ...

Loan on home .. NO tax deduction ...
Loan on investment, shares, investment property and so on ... tax deduction.
Tax at top end of marginal rate with medicare levy close to 50% ... so 20k int deductible equals 10 k tax and medicare levy saved in hand. 

simple stuff .


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## willoneau (28 July 2019)

kahuna1 said:


> Not  discussion ... an assumed basic knowledge ...
> 
> Loan on home .. NO tax deduction ...
> Loan on investment, shares, investment property and so on ... tax deduction.
> ...



your point? I love the word assumed it gets so many people into trouble.

get the loans all on the investment property, please explain simply how to achieve this without selling land or investment properties?


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## kahuna1 (28 July 2019)

Gee ...
Go to the bloody bank and refinance.
The security is the same, ... please speak to a competent accountant, he will spoon feed it to you, so too will any decent mortgage broker. 

What the hell are you talking about selling investment properties ? IT is NOT an issue. It in fact is a capital gains event. Again ... speak to someone who has the inclination to explain it.

Even google TAX deductions investment properties Australia and your visible knowledge will exponentially increase. 

You do know what Google means ? OR am I assuming too much ? Maybe ask some 6 year old and they will share. 

Good luck


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## willoneau (28 July 2019)

I have had enough of you assuming i'm stupid so F..off.


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## willoneau (28 July 2019)

Lindsayf , I apologize to you for getting off track from your questions


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## willy1111 (28 July 2019)

kahuna1 said:


> Yes ...  but the security for the loan .... MUST be the investment property .... it may be the bank needs more security such as the title of the home as the loan.
> 
> 
> The LOAN is a NEW loan with the bank with the investment property FOR a new amount and primary security for the loan is the title over the investment property .... it may be they require secondary security like the title of your house as well ... but the loan is over the  investment property.
> ...




My understanding is different.

What does s8.1 of the Income Tax Assessment Act 1997 say?

Essentially *purpose* of what the funds were used for will determine deductiblility it says nothing about what secures the loan.


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## kahuna1 (28 July 2019)

willoneau said:


> I have had enough of you assuming i'm stupid so F..off.




Sadly I see you couldn't work out what google was.



willy1111 said:


> Essentially *purpose* of what the funds were used for will determine deductiblility it says nothing about what secures the loan.




Yes ... the purpose is to REPAY the capital you have invested in the investment property. So if its worth 750k and you borrow now 750k but have 400k of equity, that being now repaid ... and an aside you use that capital to repay 400k off your home loan is an aside.

The securitization and what the bank will demand as security IS an issue and the primary mortgage MUST be still over the investment property.,  That they will likely still demand a security over the home as well ... appearing on the title is ... basically not much different than two separate loans.

But they .... are needed ... to change the structure and nature of the loan ... the loan, whilst maybe NIL movement if you have the loans between two banks, merely a 400 k debt against home loan now appears under the investment one, it is needed to satisfy the ATO.

That the free funds could be used for a trip to Vegas or whatever ... is really secondary. The purpose of the loan and NEW arrangement is to free capital ... CASH invested in the investment property. 

Pretending the mortgage over your home has now been a loan over the investment property DOES not and will not satisfy the law. Arranging a new loan does. Intention and purpose I presume were changed for a long list of reasons, and I suspect divorce or assets being handed down may be something to do with it. An aside, easily remedied and likely with a lowering of the overall interest rate paid. 

Shop around ... be hard nosed with it. Of course ask your accountant or tax advisor and he will confirm the same. To suggest one cannot switch funding for investments is, well, strange. Home loan is one thing but when o0ne goes beyond that, investments, properties, shares and so on, its a expense that can be deducted. Using NO capital gains on home is a good thing, not being able to deduct the loan interest is the payoff.  Vica versa for investments ... whether they be art or shares or gold or investment properties or commercial ones .... 

If that makes it any clearer..

Then again ... still laughing over  Google issue.


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## willoneau (28 July 2019)

My grandmother doesn't know what google is hope you wouldn't laugh at her.


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## willoneau (28 July 2019)

kahuna1 said:


> Even ... as a suggestion ... have your investment properties ALWAYS for sale ... at idiotic prices or ones that make it very attractive. To avoid cap gains ... maybe sell your house and then move into an investment one and avoid it totally !!



Don't you pay capital gains on the difference between purchase price and valuation when you move in or are you saying not to sell the property at all after you move in?


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## willy1111 (28 July 2019)

willoneau said:


> Don't you pay capital gains on the difference between purchase price and valuation when you move in or are you saying not to sell the property at all after you move in?




Assuming one has never generated income from their home it can be sold tax free....main residence exemption from CGT.

Move into investment property and never sell it = no CGT to pay as not sold.  If it is sold down the track, their is a complex CGT calculation to perform which takes into account the proportion of time it was invesment and home where main residence exemption applies.


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## willoneau (28 July 2019)

willy1111 said:


> Assuming one has never generated income from their home it can be sold tax free....main residence exemption from CGT.
> 
> Move into investment property and never sell it = no CGT to pay as not sold.  If it is sold down the track, their is a complex CGT calculation to perform which takes into account the proportion of time it was invesment and home where main residence exemption applies.



but after complex calculation some GST would be paid?
Willy1111 I did actually know that, all except how to do the complex calculation, unless it wasnt' going to be sold in the future. But guess something would have to be paid after death but only an assumption.


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## Sir Burr (28 July 2019)

willoneau said:


> but after complex calculation some GST would be paid?




Yeah I might be up for a bit as we rented our place for about a year before moving in. Probably not a great idea but at the time wanted to get the mortgage down.

Rented for a year and owned for 20 years so I think it's basically 1/20 of capital gains - buying costs.

Not "that" complex


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## willy1111 (28 July 2019)

willoneau said:


> but after complex calculation some GST would be paid?




I think you mean CGT.  



willoneau said:


> but after complex calculation some GST would be paid?
> Willy1111 I did actually know that, all except how to do the complex calculation, unless it wasnt' going to be sold in the future. But guess something would have to be paid after death but only an assumption.




If it produced income at any point, when sold yes there would be a cgt calc done...but they could free up money from sale of home tax free to use/invest through retirement until death...ie the cgt is delayed...whereas selling Investment property to free up money for retirement will incur CGT at sale which means CGT not delayed.


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## willoneau (28 July 2019)

willy1111 said:


> I think you mean CGT.
> 
> 
> 
> If it produced income at any point, when sold yes there would be a cgt calc done...but they could free up money from sale of home tax free to use/invest through retirement until death...ie the cgt is delayed...whereas selling Investment property to free up money for retirement will incur CGT at sale which means CGT not delayed.



 yep my mistake 
very interesting point willy1111 if they wanted to leave their home i guess
in red, so selling home using the money tax free for income producing investments.


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## willoneau (28 July 2019)

lindsayf said:


> Realestate: PPR value(25 acres) value about 750k equity about 400k
> Investment property1: value about 300k equity about 250k
> Investment property2: value about 400k equity about 340k
> Both IPs rented and cash flow positive with net income roughly offsetting loan on PPR
> Cash available via redraw about 200k.



So sell PPR (if willing) and take $400,000 profit, pay off say invest prop1 and move in. Then use 150,000 to invest in income / cap growth investments.


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## lindsayf (28 July 2019)

willoneau said:


> So sell PPR (if willing) and take $400,000 profit, pay off say invest prop1 and move in. Then use 150,000 to invest in income / cap growth investments.




Thanks interesting discussion.
Just have a few minutes as travelling.
Some contextual points.
1 PPR is a great lifestyle 25acre bush block ( only purchased 12 months ago) with great solar passive solar powered house. Only leaving this place in a box if I have any say.  It does have some income producing potential ie maybe a few cattle or sheep or agistment.  This place wont be sold. Possible tax advantages(primary producer) here?
2 our current income has very low marginal tax rate due to salary packaging available in health sector. Effective rate is about 20% if that.  This makes loading up super to get lower tax environment less attractive.
3 it would be great if i could transfer more debt to the investment properties so awaiting more clarity around that. My advice is that I cant increase debt on a positively geared property...but maybe this is doable?
4 I want to maintain some cash access for trading and general financial flexibilty.

Ok hopping on a plane soon to come home.

Thanks
Lindsay


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## willoneau (28 July 2019)

Hi Lindsay, glad for more information and i did feel that living on acreage is a life style choice, ( i live on 4 acres and love it). I think one way to increase more debt associated with your investment properties would be to borrow to trade with as a business, just one thought but not sure how.


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## willy1111 (28 July 2019)

lindsayf said:


> Thanks interesting discussion.
> Just have a few minutes as travelling.
> Some contextual points.
> 1 PPR is a great lifestyle 25acre bush block ( only purchased 12 months ago) with great solar passive solar powered house. Only leaving this place in a box if I have any say.  It does have some income producing potential ie maybe a few cattle or sheep or agistment.  This place wont be sold. Possible tax advantages(primary producer) here?
> ...




Oops my bad...main residence exemption applies to home under 4.94acres so it might not be entirely tax free on sale even if only ever your home, anyways sounds like you have no intention of selling

https://www.ato.gov.au/General/Capi...ence/Dwellings,-structures-and-adjacent-land/


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## qldfrog (28 July 2019)

willy1111 said:


> Oops my bad...main residence exemption applies to home under 4.94acres so it might not be entirely tax free on sale even if only ever your home, anyways sounds like you have no intention of selling
> 
> https://www.ato.gov.au/General/Capi...ence/Dwellings,-structures-and-adjacent-land/



For more than 5 acres, you have to value 5 acres and the rest, obviously the 5 acres you select is your house and all infrastructure, the rest pure land but you will pay cgt on that 20 acre of land component
Ideally you have a valuation of the 2 bits on purchase then when selling to apportion any increase between the tax free and the cgt bits


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## kahuna1 (29 July 2019)

lindsayf said:


> My advice is that I cant increase debt on a positively geared property...but maybe this is doable?




Hi Lindsay .... the above, is ... not given by any qualified accountant, it is actually absurd.
*I strongly urge you visit a real accountant.*

Being positively geared when you have two properties valued at 700k with 600 k in equity and a mere 100 k of debt is EXPECTED. Your barely geared. Whether they are negatively geared and the interest is more than the NET rent or vica versa, to the tax office is an aside as long as correctly reported as either an income or expense. What is NOT is purchase and sale price and capital gains when disposed. 

My comment on NO net income on two proprieties with 700 k value that should be generating say 27k Gross rent ... a little under 4% ,.,, minus agent fee and rates and depreciation and then 5k interest on the loan the NET ... should be positive of around 12k per year.

SHOULD.

*I would secondly strongly advise a visit to a financial planner *... a qualified one !!
Both accountant ... real one this time ... I suggest and yes YOU will have to pay them for their time.

Why ? 
Lots of obvious reasons and here comes a slap ... 
You have a net income of 80k after tax. You have another 5 k off the shares.
You have a loan for 300 k over I suspect your dream home of 750k value.
If you tried to pay off the loan, saving hard and around 25k a year into that loan ... it would take 17 years to repay.

I take it your not planning to retire age 72 or the wife 65 ?

As mentioned the feat .,,, and it is NO feat to be basically covering the interest when you have 600k equity on 700 k of investment properties ... is NOT good. One would expect NET income pre tax of 12-14k !!'

Even assuming  a mere 50k if the properties were sold to be Capital Gains tax ... right now so real NET equity is say 550 k. Pay off totally the home loan, a mere 250 left added to 100k super and 100k of old shares. So 450k as of today debt free ?

If one were to be bullish and expect ... 5% over time capital gains on your investment side properties ... even after 10 years, the 700k goes to 1 mio .... it is 5% GROSS minus inflation so 3% post inflation, but this aside, 300k more when sold of which CGT of 50% reduced and then hopefully you spread the sales over tow years and over both you and your wife's incomes so as NOT to hit the top end of 50% marginal  tax ... but say 20% on 150k so a mere 30 k ... and no loan at the end once you have fixed the issue with NO income net in 2019 ... and get it so it pays off the loan over the next 10 years. Then ... 550 plus net of CGT on today's number and another net 270 would be a good result. So 820 in 10 years but still the home loan is NOT paid off and of the 300k there is still 190 owing. so NET in 2019 dollars ... 630k plus the 100k still keeping pace of those old shares and say 120 super PLUS I hope another 100k added via working another 10 years.

So scrimping and saving in 10 years, you own your 25 acres outright and have in 2019 dollars, 630 plus 120 super and 100 more super ... its 850 k

Now today 450k is NOT enough to last.
In 10 years, ignoring home equity .... 850 k .. u being age 65 and wife 58 at that time you need INCOME to live on pay the bills. You need it for 35 years so ... being conservative a 5% return, given we have had way above average returns on asset classes into 2019 and are at all time highs .... whilst your super may have 9% return on a balanced fund over 10 years  ... 

Here comes a slap ... YOU WILL BE OLD and a capacity to earn money working not there the older you get. You must be conservative and PLAN that way. Less risk ... NOT more ... talking about trading is MORE risk and a skill very few have .... very few. Short term trading and you mentioned futures and short term stuff, well FORGET it ... its your future and your wife's.

Lower returns even with a balanced portfolio and LESS risk ... at 5% are decent and a very good result for less risk. It will produce 50 k per annul for 35 years with zero left !!
Not a great income.

That is WORKING and saving hard for 10 years with your current plan. You are age 55 with 400 k of debt .... 300 on the home you plan to live in. Whilst yes net assets of investment properties are 600k and a I presume I suspect correctly if sold they will have Capital Gains of at least 50k ....  your NET if you paid it all down today is a mere 450k for retirement and that needs to last not 35 years as I set out ... but 45 years .... and even more conservative nature would be needed to protect income and future income.

MORE conservative equals less risk and LOWER return.
The 450 k today number, well you cant touch the 100 k super and cant touch the shares to what you said massive CGT tax implications.  Which leaves an at best 250 k net if you sold investment properties today,

NO pension till age 67 ... so if you can make 250k last 12 years I would be amazed.

Talk about income from 25 acres .... absurd. Sheep ? are you joking ? 10 sheep still need shearing, still need looking after as much as 1,000 sheep on just checking fences and water and so on. An at best income from 10 sheep .... unrealistic. Or say 6 calves raised to adults a likely Gross 6 k a year NET at half that and checking every day fences and water ? 

*Please please please go see a real accountant*, one that is qualified not the one your using which I suspect is not a real one due comments about negative and positive gearing.

*Please see a very qualified financial planner.*

Outcomes if you act, vastly different. 
Even if I were mean .,.. and halved say investing in the very best funds returns over the last 10 years, NOT you managing it, but the best of the best, 8-10% on most asset classes i what I would expect say outside bonds and cash. Half the past 10 years, so 9% .... minus inflation ... 7% growth verses having a maybe 3% ... in the investment properties ? 

Even if you halved the investment property side and got 4% more, the impact over what I think is a realistic 10 years more working is going to add a vast amount. Sort out the bloody mortgage.

Yes you can trade, here is 50 k in 10 years o the 850k. NOT more, keep records and if you make consistently a decent return over 5 years YOU can have a bit more !!

At this stage, and its sounding like you plan to retire soon or in the next few years, well ... a harsh conservative and adult look at things is often NOT welcome. For a single person I would not even contemplate retirement with 450k NET and 12 years to pension with only 250 k I could really use over the next 12 years. I don't know what income you expect in retirement but I suspect its 50 k joint and sobering as it is ... without HELP and change that's 15 years away !! 

*Please please please go see a real accountant*, 

*Please see a very qualified financial planner.*


This is what a real accountant and a REAL financial planner would say. As for income out of 25 acres ? Unless you planning a market garden on 10 hectares or some other intensive Ag option, agistment will net say 2k a year or 3 k if yu can find it. Trading ? Ohh its easy .... well when the s+p 500 has risen from 1,800 to 3,000 or 66% since Trump slashed taxes there which I might add cant be sustained unless healthcare becomes not an option .... and now again is about to lower rates ...

It looks easy in a  bull market. Hero's are made every day in many many minds. Over the previous 7 years 2010 to say 2017, the ASX 200 went sideways, it had not much gained after it bounced off the lows around 3,100 on the ASX 200 and hit say 4,200 or so and waffled and waffled for a long while.

Whilst it looks good, smells good, the rise from 4,200 over 50% most happened in two years out of 10.

Hope the hand-print of the slaps are fading, but one has to be realistic and especially into old age. RISK ADVERSE ....  you cant go to the wife, sorry ... this share I liked just went broke and our nest egg just halved, bread and water for 30 years dear !! 

Trading and risk are an art-form. Any imbecile looks and thinks they know risk in a bull market. I started in 1982 as a junior trader, my life, my sole income and only income has come from investing and earlier on trading. I of course know not a thing. I give my time for free and have done so for now 25 years ... its my own form of giving.

Not I might add to much avail. I mean no disrespect, but I must be harsh and at times blunt. It dose not sink in normally, certainly not immediately, but go see a real accountant, a real financial planner, they WILL charge and KEEP the receipts and tax deduct it !! Then compare and play devils advocate form my side ... if they are too bullish. Oh and DON'T PAY ANY FEE's for them to manage your money ...  don't go into any scheme they have to save you .... 

With return ... their is risk, so if they offer you some absurd 10% return, bet your bottom dollar its so risky it should be paying you 20% !! 

Good luck ... sobering ... and forget farm income, enjoy the grass !! ITs 25 acres, mow it by hand and get fit !!


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## willoneau (29 July 2019)

lindsayf said:


> Realestate: PPR value(25 acres) value about 750k equity about 400k
> Investment property1: value about 300k equity about 250k
> Investment property2: value about 400k equity about 340k
> Both IPs rented and cash flow positive with net income roughly offsetting loan on PPR
> Cash available via redraw about 200k.



Just a thought (Kahuna1 don't jump down my throat), if the two investment properties are net income producing enough to pay the principle/interest loan on home off without any of their net pay (job) going into it would holding the investment properties at this stage of the housing cycle be a good idea. I see the point of selling investments and using the profit to pay off home completely and starting again with only a investment loan.


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## kahuna1 (29 July 2019)

willoneau said:


> Just a thought (Kahuna1 don't jump down my throat), if the two investment properties are net income producing enough to pay the principle/interest loan on home off without any of their net pay (job) going into it would holding the investment properties at this stage of the housing cycle be a good idea. I see the point of selling investments and using the profit to pay off home completely and starting again with only a investment loan.




I have no idea, a lot more information needed and what has been supplied suggest NO net income to repay loan its just covered. It may be actually what I suggest ... actually making 12-14k pre tax and able to pay off the loan. It makes it better ... this occurring for obvious reasons that say in 10 years no debt of 100k ..

As to selling the properties ? No idea. We have seen prices appreciate a lot over time and closer to highs than  lows. Not being able or frankly qualified to comment on the virtues of the said investment properties, they may have massive upside as I said, be awful stand alone houses with great views on blocks that could be split.

This is up to the gent and his wife to decide. I could be totally right and of course totally wrong and without knowing if they are units, or free standing, or their merits who knows.

I am just being blunt and blunt not to be a bugger, but blunt as to realities about risk and HOW possibly which may be right or totally wrong ... again up to the couple to decide other than when one enters end of life or retirement its NOT time to take risk.

Pointing out a net debt free number of 450k today is an absurd level to retire upon ... easy.

It may be a mix of a lot of things. Some make sense, some don't, some they disagree with ... others they do not. Any advice even paid, the decision comes down to the client and their views. 

Some things such as tax laws and I got my accreditation in 1983 via a distinction in the subject at uni ... and yep are up to date, are not open for debate. NOR time value of money and earning 5% on a pile but needing say 50k a year, is maths.

Sadly so. Whilst an opinion about trading income and so too income from 25 acres, both, I have vast experience in. It may sound cruel to hoes down a possible income from 25 acres, reality is ... another thing. Making an income from say 50 k capital trading and say 25k income each year is a 50% return and RISK ... leveraged return I suspect to get there ... which means either your a freak with supreme discipline and well founded track record to back that belief or about one chance in 10,000 of it being realistic. 

Leveraged return say via CFD's or options or futures .... and this is ex head of trading at a top 10 bank globally hat on ... even professionals at times come unstuck and that's why they have a lot of rules and limits to stop self destruction even for a 15 or 20 year veteran to protect themselves. Granting say naked options you may do it for 3 years, collecting premium after premium then ... one day you loose all 3 years and in fact 30 years worth of premiums.

It happens. So they say. Not something for the faint hearted and not something to retire and relax upon.

Enuf ... I have no idea of their real state or whether this was a fishing expedition. At times, over the years have been asked and presented by a 60 year old with 50 k savings how they can retire on 50k a year by age 65.


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## willoneau (29 July 2019)

Fishing expedition , good point were details are lacking.


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## qldfrog (30 July 2019)

About income from 25 acres, forget it...
I live on 42acres and really though about it, lease horse agistment, farming,etc
What you can do is be self sufficient food,energy, water
This can be easily achieved at reasonable cost so great roi here
But no income as such
Unless you are ready to farm a market garden and that is a whole job, not a retirement
You can add a cottage and get a good income stream of that based on your local council regulations
$200k to build it up, around $350 net a week so 18k a year 9%return but a bit of work, maintenance and sharing your lifestyle property 
You will be taxed on it
Low risk and better than paying a body corporate managed unit


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## lindsayf (30 July 2019)

Thanks every one.
Yes of course this is a fishing expedition @kahuna1...fishing for ideas of which you, and others, are providing many.  Just to clarify, full retirement for us both is at least 10 years away, but I would like to reduce my hours maybe starting in a few years.
So Kahuna..how do I find a ‘real’ accountant. Happy to ditch the current one but wont be doing so without a good recommendation...do have some ideas on who to talk to re this though. 
Re the ‘Farm income’ ok yes @qldfrog i agree it is a bit unrealistic...but a bit of horse agistment ( of which there is good local demand) may provide a few thousand a year of near passive income.  That may be about it...and yes we can just enjoy the place..that is why we bought it after all.
There seems to be some emotion especially from Kahuna that I will blow the whole lot trading.
I like trading and I am very risk averse...I can assure everyone that there wont be significant capital lost through my trading activities because of this...really..relax..esp Kahuna. I can say this as a trader of many years experience...I am not a novice. 
And Kahuna, I get your strong message of conservatism and that our capital base is way too low to be looking at retirement within 10 years...fully agree. It is this awareness that has triggered this thread..I want to make good decisions over the next several years. 

All contributions appreciated.

Still on the road but home soon.


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## kahuna1 (30 July 2019)

Fair enough,
Just be careful.

Glad retirement a few years away, as to accountants and advisors, ask your friends ? Do a bit of research on the net and possibly find one. Yep some concern from me about trading, whilst in a bull market buying stocks the tide is always going one way, in a sideways or down market, the other.

Same for a financial advisor, quite different totally skill set to an accountant and even a chartered accountant. The fully qualified financial advisor his or her specialty is tax into retirement and structuring the assets to get the best return and nest egg you can. They as opposed to an accountant will be able to tell you exactly how to structure super and the nest egg into a tax free pension post age 67 in your case.

Most accountants and even good ones have not much idea about these issues. They of course will claim they do, but rarely ever do. I would strongly suggest NOT using any of the big banks financial advisors and a RG 146 is not a financial planner, you want someone with the degree !! Do not go and set up your own super fund .... its not needed and the not for profit super funds offer an ability to hold shares in a super fund with correct franking paid to you .... for 10% the price ...

That said, good luck. Accountants and lawyers come in all shapes and sizes and most, as someone who has been in both sides of this, the law and accounting and also financial planners ect, most, and with respect ... MOST are hopeless or barely competent. Avoid if you can but, well ... one needs advice and structure so YOU and your wife can choose what is the best and most effective way forward. One telling you that this is the only way to go .... often is total BS ... 

It will require as you seem to know a lot of work and some planning and that's a good thing !! A very good thing.


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## barney (30 July 2019)

kahuna1 said:


> accounting and also financial planners ect,  … *MOST are hopeless or barely competent*.




Sounds like a job I would have been good at

Good thread gentlemen.

Speaking in *general* terms …. Refinancing the Investment property loan/s to pay your home off seems the most logical plan of attack in the short term.

If you are servicing those new (tax deductible) loans easily …. perhaps it may be time to purchase another IP??  …..  Current Interest rates are no barrier and you will gain a further tax advantage.

After you retire, sell one of your IP's every few years (you now have 3 thanks to me)  and live the dream growing spuds and cauli flowers on your block of dirt!


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## Smurf1976 (30 July 2019)

kahuna1 said:


> The fully qualified financial advisor his or her specialty is tax into retirement and structuring the assets to get the best return and nest egg you can.



Nothing personal to anyone  but I think a big problem with the industry is that's not really what most would have in mind.

A plumber does plumbing, right? They know what to use and how to do it first and foremost and cost is secondary yes. Same with anything from building to medical.

First thing many would expect from a financial advisor is advice on what to invest in.

Second is how to go about doing it in practical terms.

Tax is after all only relevant after there's a profit on which to be paying it. Sure, don't pay more than the law requires but first and foremost is actually making money in the first place.


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## kahuna1 (30 July 2019)

Smurf1976 said:


> First thing many would expect from a financial advisor is advice on what to invest in.




Sorry my bad ,,,,, Planner not advisor ...

*Financial Planner* ... NOT for investment advice, not for what shares to buy or assets, but STRUCTURE ... best way to take best advantage of tax concessions of say super ... and best for transition of super fund from accumulation as you add to it ... to the pension phase and the best way around and to navigate the capital gains issue. For example, those shares you inherited ... whilst Capm gains gets a 50% discount where tax is concerned, it may be possible to get them into super somehow and whilst its 15% to get them in, and I suspect no way around that, when you sell them whilst in pension phase there is no cap gains or was no cap gains or tax post age 67. IT depends of course on what they are, what franking they attract if any ? whilst the hit of 15% ... verses paying top marginal rate on the 5% of income seems a bit harsh ... if your say saving 2% a year over 12 years, and then at the end can sell them ... not incurring CGT in a  pension phase of the super fund ... well ... over time your ahead.

Of course one needs the details and a really good financial planner, not the generic ones that work for banks ... who on the main ... whilst having on paper the qualifications, are less able than the ones who operate outside the high fee sell bank products with high hidden fee markets.

An advisor or broker and sorry for the confusion ... is no different quite often from a taxi driver giving you a hot share tip. Suggesting they have some crystal ball as to what is great or good share .. is not even remotely possible. I just went through all the LIC share companies in Australia and barely ONE .... after fee's added value or beat the index over 3.5 or 7 and 10 year time frames. Some were so shocking loosing 10% v the index it makes me wonder.

On the overseas side and infrastructure a few and these guys are worlds best, Australian ones stood out ... MFF ... golly ... overseas stocks but 5% above the index over ten years ... he is in the top 100 out of 10,000 funds globally ... MFG ... not bad but less ... both kind of associated ... I do like the MFG infrastructure fund and the listed version of it ... seems ok ... MICH ... but this is trading above the NTA so ... well whilst a good if not great return well above the index, being a scab I hate paying above NTA for anything.

PLANNER .... not Advisor. Sorry .... my bad


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## lindsayf (12 August 2019)

Minor update:
What I did not mention about our 25 acres is that it has a free standing (western red cedar clad, full of bush character) self contained granny flat that used to be used as a B and B / farm stay up until about 15 years ago.  We have used it as visitor space and for my wifes art passion. However due to the thinking triggered buy this thread and my wifes interest, we have decided to update and reincarnate it. It wont cost more than about 10k to refurb it and it is really a terrific bit of infrastructure to not utilise within our longer term financial plan.
Details tbc re how often we make it available, how we market etc.  but that is now in the picture.
That will mean we will need a new space for her art, but that is not really much more than an insulated shed so not too expensive.

I think I will need to go to Melbourne to access some quality financial planners and finance brokers.
Happy to recieve some recommendations.

Thanks


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## sptrawler (12 August 2019)

barney said:


> Sounds like a job I would have been good at
> 
> Good thread gentlemen.
> 
> ...




Be very carefull IMO, if you are considering rolling your PPR loan into your investment property loan, IF you are audited I doubt it would be allowed.
Just my opinion
There is a very fine line between tax minimisation and tax avoidance.


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## barney (12 August 2019)

sptrawler said:


> There is a very fine line between tax minimisation and tax avoidance.




Definitely get pro advice to confirm as you say Homer

What say ye @kahuna1  ??     Can you re-draw money already paid off an IP to pay off your PPR and then claim the interest on the "extended" loan as a tax deduction?


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## lindsayf (8 June 2021)

lindsayf said:


> I am looking for some ideas on how to approach finances to position myself and wife for retirement. Nothing anyone says will be construed as financial advice...I am just finding that accountants and financial advisers are limited and conservative in their offerings...at least the ones I come across.
> 
> So the gist is this:
> 
> ...



I was reviewing this the other day and thanks again for the ideas.
2 years have passed.   They turned out to be pretty good for us...and probably many here.  This despite my wife studying 2020 rather than working. We are still working and will be for another several years - especially my younger wife ..But she wants to, so all is good there.  Look above for the changes to our circumstances in 2 short years.
The figures in bold are the current figures.

I am currently preparing investment property 1 for sale.  There will be CGT but with the 50% discount pro rata'd for the % of time it has been let it wont be too bad.  And I can make a voluntary super in same FY contribution to minimise the hit.

Those funds will go towards the loan on the PPR - and will take the balance down to under 60k.

Interest rates will go up at some point so it seems a good time to do this with this unexpected CG.

Still happy to take ideas!


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## sptrawler (8 June 2021)

lindsayf said:


> I was reviewing this the other day and thanks again for the ideas.
> 2 years have passed.   They turned out to be pretty good for us...and probably many here.  This despite my wife studying 2020 rather than working. We are still working and will be for another several years - especially my younger wife ..But she wants to, so all is good there.  Look above for the changes to our circumstances in 2 short years.
> The figures in bold are the current figures.
> 
> ...



Sounds like you are doing fine  lindsayf, the last year should have crystallised your plan and shown that once in a lifetime events are happening much more often.
I still operate on a very conservative plan, which still allows for the worst and hopes for the best.


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## lindsayf (26 July 2021)

Still going to plan....with a very good dose of good luck.
Prepped it and Sold IP1 and got it unconditional just before we went into lockdown.
Sold after 3 days on the market.  Got 4 offers all above asking price. Accepted 415 without conditions with 30 day settlement  and they waived the cooling off period.  They were investors from Melbourne I understand.
Very glad I stuck to my market assessment and not the agents.  He would have put it on the market for 50k less than I insisted on.
Doesn't say much for the quality of the 'market professionals' assessment skills..but we all know they are more interested in a quick commission than the best price for the seller.  In this case both were achieved - more or less.


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## divs4ever (26 July 2021)

lindsayf said:


> Still going to plan....with a very good dose of good luck.
> Prepped it and Sold IP1 and got it unconditional just before we went into lockdown.
> Sold after 3 days on the market.  Got 4 offers all above asking price. Accepted 415 without conditions with 30 day settlement  and they waived the cooling off period.  They were investors from Melbourne I understand.
> Very glad I stuck to my market assessment and not the agents.  He would have put it on the market for 50k less than I insisted on.
> Doesn't say much for the quality of the 'market professionals' assessment skills..but we all know they are more interested in a quick commission than the best price for the seller.  In this case both were achieved - more or less.



 well done  ,  whether with it was good luck or not 

 enjoy


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