Soundbite Episode – Fundamentally flawed: Why the optimum tax-free cash property investment strategy’s reality is the elephant in the room

Fundamentally flawed: Why the optimum tax-free cash property investment strategy’s reality is the elephant in the room

There is allegedly a beautiful little property investment strategy that allows us to receive a ‘tax-free income replacement’ for life from just a couple of investment properties. Spoiler alert: the problem is that it is fundamentally flawed! Join me as I lift the lid on the realities of this optimum tax-free investment strategy and why it is in fact extremely risky, unpredictable and ultimately doomed to fail. Or, then again, perhaps I have got it all wrong, in which case, you can correct the error of my thinking. Either way, you will want to hear what I have to say this week…it could save you a whole heap of trouble when you need it the least a couple of decades into the future. Best you find out now though I say…even if it means coming last in the Mr Popular in Property awards this year!

Resources mentioned

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Today’s must do’s

If you are thinking of following the ‘hold forever-refinance-spend the tax-free cash’ strategy…then think again! Revisit this show and take a look at the show notes to see what perils may await you, decades down the line. Do some digging to see who has been caught out by the recent tax changes that scupper this refinance and spend the cash strategy. Whatever you do, do it deliberately having weighed up all of the options…before it’s too late and can’t be undone!

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Transcription of the show

Hello and welcome to another edition of The Property Voice Podcast, my name is Richard Brown and as always it is a pleasure to have you join me again on the show today.

On a recent trip to south-east Asia, I did manage to get up-close-and-personal to an elephant or two. As an aside, the video footage did suggest a slight wariness on my part, at least to begin with, when I attempted to feed one a whole pineapple and wondered if I would see my arm again! But, this only serves to illustrate that we really should respect the elephant…whether in nature or in the corner of the room in the case of the metaphorical one!

So, today I want to talk about the elephant in the room that surrounds what many describe as an optimum tax-free property investment strategy…the buy, hold forever and refinance merry-go-round for tax-free cash that is.

If you are tempted to give this strategy a go, then let me share with you some of the potential realities associated with this ‘tax-free income approach’ right now…

Property Chatter

I have heard it said in some quarters, of late and of old, that there is a beautiful little property investment strategy that allows us to receive a tax-free income for life from a couple of investment properties!

Sounds terrific doesn’t it?

Firstly, how does it go…well, I am happy to share the model with you freely as follows:

Step 1 – Buy an investment property, probably using a mortgage to maximise the leverage benefits

Step 2 – Wait around 10 years, which is around the historic long-term average for property prices to double

Step 3 – Remortgage the property based on the higher value to release some of that in-built equity…tax-free!!

Step 4 – Spend that tax-free cash released on your lifestyle: a car, a holiday, new clothes or even your weekly grocery bill…basically in whatever way you want to

Step 5 – Rinse and repeat every ten years or thereabouts

Step 6 – Add in additional properties along the way to create more regular tax-free income replacement piles of cash

Step 7 – Ride off into the sunset without a care in the world Your browser does not support the audio element.