I have a 400k property with a 70k mortgage thus have large equity in it.i am wondering how fast to pay this off.i have just restructured to paying a p&i instead of int only but now wondering if that's best practice.i obviously make income so at tax time have to pay tax back.i guess I'm asking if I should pay it off quicker rather than relying on capital gain?also not sure if putting in trust is a goOd idea.i don't want to be caught with being stung at retirement by having too MUCH money if that makes sense.anyway I know I haven't explained myself too well but hopefully someone could give me some advice
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I certainly did mean to invest rather than to spend. I agree that these are uncertain times but this appears to be the bottom of an economic cycle with some signs of recovery. Even with a relatively short investment horizon of 5 years riding the cycle up should be possible. Commercial or residential Real estate, shares, all with some potential and with cheap money. Of course this does not mean that you should not buy with proper diligence, just that the environment should be positive.Doug
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should you put the property in a Trust?
- watch any depreciation recovery issues
- Look at the cost vs benefit? What is the real benefit from having a Trust? Are you at risk and is asset protection important to you?
Have a look at thread on 'trust experts' too
RossBook a free chat here
Ross Barnett - Property Accountant
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Hi Marje,
Do you have any other debt? Like on a personal house, credit cards, HP's etc. If so you want to try to pay these of first as they are either costing you more interest or giving you no tax deduction on the interest.
If the rental property debt is the only debt left, then in general you would pay it off. Until you find something better (better return) to put your money into, so maybe another rental, or other investments. You are saving about 6% on your rental mortgage, which is much better then getting 4% on a term deposit.
With lots of banks like BNZ, you can have a term deposit offset your mortgage. So this may give you a nest egg for emergencies, but still save you interest at the mortgage rate.
RossBook a free chat here
Ross Barnett - Property Accountant
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