Get Off the Grass!
Hi Scott,
I am an avid reader of the Barefoot Investor. I have recently come across a company which claims they can help me pay off my principal place of residence in record time (through negative gearing, deferred investment mortgages and claiming a monthly tax return instead of waiting for the end of the year, showing a loss). Have you heard of anything like this?
Will
Sure, I’ve heard of it.
Let me explain the pitch: you buy an investment property with an interest only loan. You let the debt build up, and use the rent to pay down your home mortgage. Then you write to the tax office and tell them you’re losing money (it’s called a PAYG variation), so your boss doesn’t take as much tax out of your pay. Then your investment properties go up in value and you live happily ever after. The end.
There’s only three problems with this strategy:First, someone will invariably be trying to flog you an investment property (and trouser a commission), or flog you a lot of debt (and trouser a commission), or in most cases both.
Second, every single company I’ve seen that offer these deals are not people I’d trust to mow my lawn. And I’m not even that fond of my lawn. Hell, my dog defecates all over it. But I still wouldn’t trust them to cut it.
Third, I’ve never seen this work in real life. It only seems to work in the marketing brochures. That may have something to do with the fact that you’re aim is to get out of debt, and these morons’ solution is to get you into a lot more debt.
Scott