All Topics / Help Needed! / help needed turning current home into invest property

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  • Profile photo of chrisb57chrisb57
    Participant
    @chrisb57
    Join Date: 2008
    Post Count: 5
    May 4, 2009 - 2:46 am

    Hi Guys,
                    im after some advice i currentl;y own an apartment in Glen Iris in Melbourne which we live in which has shown good growth over the past 10 years we bought for $160k now worth around $440k anyway we will be in a position soon to pay off the mortgage and we are thinking about making some lifestyle changes. Moving to an outer suburb into a larger house.

    Anyway my question is we want if we can to keep the apartment and rent it out, we want to buy a place for about $400k, and use the apartment to borrow against then using the rent to pay off the new place.

    Also would we be able to borrow enough?

    Or would we be better to sell the apartment, buy a new place and use that to buy another investment property?

    Any advice appreciated.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856
    May 4, 2009 - 10:01 am

    Chris, you are faced with a couple of choices:
    Sell the current PPOR, capitalise on the profits and invest in a new home & or investment property
    Keep PPOR and borrow for a new PPOR, renting out your current unit
    Keep PPOR, buy another IP and rent elsewhere.
    (there are other choices as well).

    Selling the current unit will give you an untaxed capital gain (if it hasn't been rented), so you will have a good deposit/amount of capital to make your decision with.

    If you decide to rent out the current unit, you will be able to claim some deductions for interest however, these will be minimal..

    You could refinance and use these funds to buy another IP (or more). The income derived could be used to pay your rent in an area where you would like to live.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    May 4, 2009 - 12:47 pm

    Whatever you do, don't pay off that loan. you will end up paying more tax on the rental income and will have a higher loan on your new property which will mean more interest which you cannot deduct.

    I would change the loan to interest only asap.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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