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  1. #1

    Default General trust/mortgage/tax advice request

    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

  2. #2

    Default General mortgage /tax/trust advice reqd

    I have 400k property with 75k mortgage.renting at 360 per wk.just wondering first if I should pay off as quick as pos?also whether to put in a trust?

  3. #3
    Join Date
    Jan 2006
    Location
    Wellington
    Posts
    559

    Default

    Why do you want to pay off quick, do you not have better things to do with the money as this is the cheapest time ever to have a mortgage?
    Doug

  4. #4
    Join Date
    Aug 2010
    Posts
    358

    Default

    Gross Yield 4.68%

    I think it is a fair question- in this uncertain times paying down debt is the best advise anyone can give. - not to dampen anyones spirit risk aversion is a good strategy.

  5. #5

    Default

    So 2 diff opinions?yes I'd love to spend more money but just thought paying principal was better?

  6. #6
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,834

    Default

    I suspect that the comment, "better things to do with the money"
    was not at all intended to foster discretionary spending.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  7. #7
    Join Date
    Jan 2006
    Location
    Wellington
    Posts
    559

    Default

    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

  8. #8
    Join Date
    Aug 2010
    Posts
    358

    Default

    Agree with Doug, ask yourself what is it that you are trying to achieve, what your long term goal is then hopefully it will make sense.

  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,592

    Default

    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

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  10. #10
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,592

    Default

    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.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

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