Finance advice
Philippe Brach

Investing tips for single-income couples

By Philippe Brach

What's yours is mine and what’s mine is yours when you’re a couple, right? While this is likely to be the case in practice, many property professionals insist on one investing tip: Single-income couples should be keeping their finances strictly separate, especially from an investment point of view.

This doesn’t necessarily mean you need to have separate bank accounts and independent budgets. What it does mean is that you can structure your investments to make the most of tax rules and maximise your money.

There are a number of reasons why you and your family may find they are getting by on a single income. One partner could be taking some time out of the workforce because you are having children, or you could be taking time off to study. You may even be dealing with personal or medical issues that prevent you from working.

Whatever the reason, if it’s likely that your situation is going to remain the same with a single income status for at least the next few years, you may want to adopt some smart investment strategies to suit your situation.

Investing when on a single income:

Purchase in strategic names
For high-income earners, one of the most common and effective ways to invest in property is to negatively gear your investments, allowing you to obtain a tax refund. This in turn often makes the investment cash flow positive.

To best leverage a negatively geared investment, the property should be purchased in the name of the higher-income earning spouse, as they’ll be able to offset the full value of the ongoing tax deductions against their income tax.

Alternatively, if you’re buying a property that is cash-flow positive before tax – these are rare, but they do exist – then purchasing it solely in the name of the non-income earning spouse may be the better option, as they’ll pay zero tax on any earnings up to $18,000.

Consider investing in a family trust
By setting up a family trust and purchasing property in this entity, rather than in your own personal names, you could potentially shave a lot of money off your household tax bill. This is because distributions can go to lower-earning family members, including a non-earning spouse and children aged over 18 – as the trust does not pay tax, but the beneficiary does.

Note that when you use a family trust, you can not distribute a loss, so this type of ownership structure is not suitable for negatively geared properties.

Before deciding which buying structure to use, be sure you speak to your accountant or financial adviser for guidance on the best option for your specific situation.

Make sure you have income protection and life insurance
In my view, income protection insurance and life insurance is essential for every investor, as it is a form of risk protection against death or illness. But when you’re part of a single-income couple and you’re the sole breadwinner for your family, you simply can’t afford to be without income protection and life insurance.

Life insurance will pay out a lump sum to your partner if you die and ensure financial continuance for the rest of your family.

Income protection will cover you for up to 75 per cent of your regular income if you’re unable to work until retirement at age 65, which gives you the freedom and flexibility to recover and get treatment without being under financial pressure. There are cheap covers that only protect you for two years, and this is not enough.

Please note that none of the above strategies or tips are provided as financial or taxation advice, and are offered as suggestions for you to do your own research to assess their suitability for your situation.

You should always speak to your accountant to see how any financial decisions will impact your overall situation.

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About the Blogger

Philippe Brach

Philippe Brach

Multifocus Properties & Finance was established in 2005 with the aim of mentoring investors to create wealth and invest in their future by building an investment property portfolio.

The company is led by Philippe Brach who has over 25 years experience in the international corporate world specializing in finance, accounting and investment. He is a fully qualified and extremely experienced real estate agent, concentrating his attention solely on investment opportunities around Australia. In addition he is a highly regarded mortgage broker, being accredited with around 35 different lenders.

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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  • The pitfalls that he has seen people get into<\/li>\r\n
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    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1203 (52) {
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
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  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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