Hello all - not made many posts in the past - but there is a first time for everything.
I am completely confused as to whether to purchase a new home to live in and turn our PPOR into an IP or just stay put and buy another IP.
We all want positive cash flow IP's but if we turn our current PPOR into an IP it will be really, positively geared and then we will have a massive non tax dedictuble Mortgage on our own home? Not to mention the extra tax paid on the positive gearing.
We do need a larger house but it's not an urgent requirement. If we wanted to take out a new mortgage from our current PPOR and take the capital to the new home would we need to affectively 'sell the property to ourselves; and if so would we then need to pay stamp duty on both properties ?
We are not huge income earners (combined gross income of just over $100K) so the tax breaks won'y be massive and if I was to take time off to have a family we would be down to one income for a time.
So I need the advice of a good accountant, our accountants are wonderful but they don't see the long term goals we have - we need someone who is more property focused that can structure it correctly for us from the start. Any suggestions from my fellow Apprentices would be great too regarding how to structure the loan.
Naturally I don't mind paying the extra stamp duty now if it means we would be ahead financially in the long run.
I am just very confused - Any suggestions would be great - I really wanted to get some advice from the accountant this week.
Thanks Guys :)
As a person who owns no properties at all this would be my take on things . From what I have learnt thus far is turning the property into an IP going to get you the best return with the least risk in the shortest possible time? Is it better to pay the stamp duty on this property to transfer it or sell and buy something that may have a potentially better return / growth ? Or depending on your goals buy multiple properties and or renovate/ develop the properties . Do you have the ability to use the equity from the current place to use it to manufacture increased returns on the place or is it in pretty good nic? How much of an emotional factor is there to the property would you be able to accept it being a house/ investment or even selling it rather than being your home? Just my thoughts hope it gives you some hhelp victor
The early bird catches the worm, but the second mouse gets the cheese.
You raised some good points. We did see the accountant and the capital gains tax we would pay on selling the property would negate the selling of it at the moment ( it is a PPR but was an ip when we first bought it so we have to pay approx 50% CGT on it. You are right there are emotional issues. I don't have a problem renting it out but I don't want to sell it anyway even if it was not for the CGT. We will look into the matter further still deciding whether its to be a financial or lifestyle choice yet. Sometimes I think when you have too many options it can be confusing and you just get stuck. Thanks for your post its good to have input from others.
Kathleen