Hi
We have our eye on a property with water views. If we can get this at the right price we would like to live in it and let our current place of residence out. Is this the right thing to do ? Are there tax implications ? Is it costing us in the long run ?
The alternative for us should it prove ‘beyond our means’ would be to sell our house and make this new purchase our home.
Any advice greatly welcome. ThanksTo buy the waterview house and keep the current PPoR you would need to either have cash for the deposit, or use “available” equity from the PPoR as a deposit. Either way, you will have a large, non-tax deductible mortgage on it.
If you move out of your PPoR and rent it out the holding costs and interest on the loan become tax deductible.
But the holding costs and loan interest on the home with water views will not be tax deductible if you live in it.
If you want to invest, the best scenario there may be to sell your existing PPoR, buy the water view home, then use any equity in it to buy another I.P.
Hopefully, this way you would owe less on the waterview house than you would if you kept the current PPoR and borrowed the whole amount for the waterview house. You will have a smaller non-tax deductible loan to service.
Whether or not the financial scenario will work will depend on what you currently owe on your PPoR, what you will owe on the water view home, your incomes, the cost of the 2 properties, how much equity you will have in the water view home, how much rent there would be on another I.P you may buy.
You will need to sit down with a good accountant and/or mortgage broker to work out the numbers.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
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