Family investment properties

on November 22, 2014 General with 0 comments

The holidays are often a time that people reflect on ways that they may be able to give their family members a little extra help.

With the price of Australian real estate continuing to climb, especially in capital cities, a lot of people are considering the challenges that will face their children when they want to enter the property market.

It is not uncommon for parents to purchase investment properties with the intention of one day passing them onto their children. If this is something you are considering, here are a few things to think about:

Location
You should look at schools, employment opportunities, transport infrastructure and, most importantly, planned future developments. Remember, many of today’s hot-spot suburbs were not as popular fifteen
years ago, and you’re in this for the long game.

Cashflow
If your rental income is below what you expected you might be forced to sell the property before you intended, losing out on long terms gains. Make sure that the type of property you buy fits the demographic
profile of the area and make sure that your property manager is first class.

Tax strategies
If you are planning on passing a property onto your children one day, ownership through a family trust is a potential option. The advantage here is that when the property is positively geared or disposed
of with a capital gain, the benefits can be distributed to the family member with the most favourable tax circumstances.

However, the disadvantage here is that if the property is negatively geared the losses generally cannot be distributed to members, and can only be used to offset future earning within the trust.