Hi there,
I was just looking for some advice. I am turning 27 years old this year, but am still currently living at home. I actually want some independence and want to move out of home, but I want to do it in the best financial way possible.
I’ve got a pretty good job (I.T. Consultant) and also mid last year bought myself a 2 bedroom apartment investment property in a pretty good suburb and am getting pretty good rent (although still slightly -ve geared).
I am wondering what I should do now that I want to move out. I want to keep the investment property as an investment, so that I can get tax deductions out of it, and get the good rent from it. But rather than renting somewhere to get out of home, I am wondering how long would I need to wait to possibly use my investment property as equity to help me buy another property to live in? And is there any good way to get there? Your help would be greatly appreciated!
Thanks.
Simon
99% of ppl dream of their perfect life
1% of ppl live their perfect dream
Join the minority!Hi Simon
If you do not have the deposit for the new property loan, have a look at pulling equity from the apartment.
Regards
StevenMortgage Broker
[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Thanks for that,
I was thinking about that but since I have only owned the investment property since mid last year I was not sure the bank would consider using it as equity, or is it more dependent on the increase in market value?
Also, for any new property, would I miss out on the First Home Owners grant as I already own a property, even though it is an investment not a place of residence?
Thanks.
99% of ppl dream of their perfect life
1% of ppl live their perfect dream
Join the minority!Hi Steely,
As long as you havent lived in your IP post July 2000, you are still eligible to have the FHOG. Though if you do acquire another property, for the sake of your own PPOR, make sure your partner, has has no interest in property pre July 2000 or has had interest in her own PPOR or with someone else, which binds her to having interest before.
Cheers,
sisHi Simon,
Do you have a redraw facility on the apartment loan? If you don’t, a refinance with a LOC or redraw may be an option, Six Months growth may provide enough equity for your deposit on the new property,
Regards
StevenMortgage Broker
[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Thanks for the replys again ppl,
I do in fact have a redraw facility. In terms of equity growth, what is the easiest/cheapest way of getting a property valuation?
Simon
99% of ppl dream of their perfect life
1% of ppl live their perfect dream
Join the minority!Hi Simon,
A Real Estate Agent may do the valuation for free, However,for a refinance a lending institution will do there own valuation, and are usually at a more conservative level,
Regards
StevenMortgage Broker
[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
VictoriaPLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.
Simon,
Which lender are you currently using? Most will revalue on application for the next purchase.
For your own idea get an appraisal as Steven suggested. This will give you a feel for what it may value up as although as mentioned earlier these appraisals are not valuations.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Ask your bank which valuers they use because you are interested in purchasing another IP and would like their assistance so you don’t pay too much. If you use them to value your current IP, even if they assign the valuation to you personally, there is more chance that there will not be any conflicting valuations, when they offically revalue. I have re-financed my loan and most financial institutions, from my conversations seem to be doing internet valuations. Not sure what the base data is (maybe others in the forum know what information source these figures come from) however, if your property falls in a small % range around comparable sales, they will accept it sight unseen. Even those dreaded inner city apartments, of which I ahev ercently re-financed.
Ona slightly related topic, have you had a TDS performed on your IP & S15-15 tax variation??
James
No I haven’t in fact.. not only that.. I’m not sure what they even are
I guess I probably should know.. can anyone help me out there?99% of ppl dream of their perfect life
1% of ppl live their perfect dream
Join the minority!Hi Simon,
A TDS I pressume is a Tax Depreciation Schedule. This is done by a quantity surveyor, who makes a report on claimable depreciation for your taxation purposes. It is most helpful if your unit is built post 1985.
Now the S15-15 tax variation….hmm I’ll assume this means the form you can fill out to have your weekly tax reduced (from your pay) I think you need to estimate what your yearly income is going to be.
You can pay less tax if you are making a loss on your investment.
You should speak to your accountant about this one.
You can probably tell I’m no expert, but I thought I might try to answer you question anyway! []
Hope I helped a little,
Sue []“Be careful not to step on the flowers when you’re reaching for the stars”
Tax depreciation schedules are provided by quantity surveyors. You are entitled to tax deductions up to 40 years on various items, with regard to building & depreciation allowances. For example, things like dishwashers, cabinetry, carpet, window furnishings, air-conditioning units etc. I have recently undertaken this for one of my IP and this has provided me with another $7500 of tax deductions for the year, reducing every year for 40 years. http://www.aqis.com.au confirms all registered QS in your location.The cost of these reports are approx $600 plus GST (tax deductible as well!)
A tax variation allows you to vary your PAYG tax payments according to the amount of deductions your property is entitled to. Your accountant should do this for you (easiest way). Essentially after submitting the tax variation request, once approved by the ATO, they send a leter to your employer asking them to vary ie reduce your tax payments in
your pay. Instead of doing the claim once a year at tax time, you get the cash flow benefit of reduced tax each pay day. For example if your total tax deductions are $10,000 and you are on the top marginal tax rate, this equates to a tax reduction of about $93 per week. (10000 * 0.485/52). The best use of these additional funds is to put it in an offset account so as to reduce interest payable on your loan.
Hope this helps.James
Simon,
Having a think about your situation and think you should consider the following.
Your savings are tied up in the current property. With some growth and some repayments your loan will be well under the 100% mark.
Consider moving into the place and claiming the FHOG. I think that this can be done since you have owned it less than 12 months. Ring your solicitor.
Use the apartment as security to buy another investment borrowing every cent you spend on the new place.
This may well be more efficient tax wise as you may have the larger loan on the new IP and the smaller on the old one.
Obviously we would need some more info to tell if this strategy is viable. Just some food for thought.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi,
I always like Simon Macks suggestions, but I think this one is particularly good for a number of reasons:
a) the apartment isn’t a cash cow but seems to be located in the right spot for you, and more importantly
b) any funds you draw against your IP loan for the purpose of buying a PPOR cannot be classed as part of your investment loan, hence you cannot claim the interest component as an expense. This can be very costly.
Would be interested to hear whether your solicitor believes you can get the FHOG if you move in, I believe you should be able to. Also ask your solicitor whether you can get a rebate on the stamp duty that you paid at the time of taking out the loan too, as it is discounted for FHO’s.
Happy investing!
[
]
Mel
[email protected]
I guess I probably should know.. can anyone help me out there?
]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
