In­vest time in get­ting it right

Western Suburbs Weekly - - Business -

Q: My brother has sug­gested that we buy an in­vest­ment prop­erty to­gether. What are the risks as­so­ci­ated with this? An­drea, West Leed­erville.

A: A lot of younger peo­ple are wor­ried whether they’ll ever be able to get a foothold into the prop­erty mar­ket.

That’s why some are look­ing into pool­ing their money with fam­ily mem­bers to buy a prop­erty, ei­ther as an in­vest­ment or for some­where to live.

It ab­so­lutely makes fi­nan­cial sense to buy a prop­erty with your brother, how­ever there are a num­ber of things you re­ally need to get right up­front be­fore you take the plunge as a bad fi­nan­cial de­ci­sion in­volv­ing fam­ily mem­bers can take a very, very long time to re­solve.

Hav­ing the right own­er­ship struc­ture is re­ally im­por­tant, with a rec­om­mend- ed frame­work for sib­lings own­ing prop­erty to­gether be­ing ten­ancy-in-com­mon.

Ten­ancy-in-com­mon al­lows two or more peo­ple to have an equal in­ter­est in the one prop­erty, which also means you each share li­a­bil­ity for the prop­erty.

You also need to keep on top of the fi­nances, as it’s the money side of buy­ing prop­erty with some­one else that can make things com­pli­cated.

It’s of­ten the on­go­ing costs that cre­ate the most ten­sion, so hav­ing a sink- ing fund, where you both con­trib­ute a set amount to cover re­pairs, and the mort­gage when the prop­erty isn’t be­ing rented may help to make things eas­ier.

Agree­ing up­front on what the process will be when one of you wants to sell the prop­erty will save an enor­mous amount of heartache.

Like any in­vest­ment, it’s also vi­tal that you un­der­stand the tax im­pli­ca­tions in­volved. It’s worth en­gag­ing a tax ac­coun­tant to help you with this.

Troy.macmil­lan@twd.com.au

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