Hi all – newbie investor (for a change, ha ha), looking for some much needed advice!
I bought a 3 br duplex in a burb about 11kms out of Melbourne in 2005, for fear of them slashing the FHOG then, ha! Then I went to work overseas so I rented it out. I just got back and I'm living with Mum. There's certainly some equity in it but I don't want to be a dummy and hold on to it since I'm thinking it might be better to sell considering my circumstances…
For tax purposes I'm to understand that if I sold it soon it's CGT exempt because it was my PPOR and I haven't bought any IPs.
What would you do? If I sell it this year I might have a chance of maximising the selling price before the FHOG ends, and it's CGT exempt. I wanted to renovate it a bit before selling (it's a rental, in good condition though) but I don't have a job yet and NO money!
The crappy thing is I locked my rates in last year for AWHILE (ahem) JUST before they came tumbling down (cry, newbie MISTAKE). But I'm thinking I could buy something else next year if the prices genuinely do come down…
Any suggestions? Thanks!! Sheran
Hi, you seem very sure that house prices will come down when FHBG ends. Did that happen when you bought previously? Do people stop living in houses when FHBG ends?
Sure, sell if you don't need a house but not to anticipate whether prices will come down or go up. It's something that we can only guess.
KY
sheranj,
You might need to check your loan. Do you need to pay a penalty for early repayment??I assume you actually lived in the house before you went overseas?
You will be up for selling costs, and if you buy again later – purchasing costs. So I hope you are going make lots of money on sale.
Rents have gone up, so maybe you are making a profit on house by renting, are you claiming all your depreciation costs?
You need to work out the long term gain or loss, so sit down with someone who knows the finances and put it all on paper, then look at it over a few weeks and add and subtract things that pop into your mind before actioning anything.
Good luck.
sheranj wrote:I just got back and I'm living with Mum.Sheran, I'm sure your Mother is just thrilled
sheranj wrote:There's certainly some equity in itExcellent – the market did move up in the last few years for you.
sheranj wrote:but I don't want to be a dummy and hold on to ithuh????? You have held it for only 4 years and it has generated some equity for you already but you think you'd be a dummy to hold it? What the?
sheranj wrote:since I'm thinking it might be better to sell considering my circumstances…What? you have some terminal disease? or are we just talking you have no job and no money? If the latter (as I suspect) then that is a very, very poor excuse to sell a growing asset. You'll spend the cash and in a short period you'll still have no job and no money + no investment property either. My suggestion is "get a haircut and get a job" and I say that in the nicest possible way.
sheranj wrote:For tax purposes I'm to understand that if I sold it soon it's CGT exempt because it was my PPOR and I haven't bought any IPs.Yep, probably right.
sheranj wrote:What would you do?I'd keep it – but I'm just a greedy landlord in it for the money
sheranj wrote:If I sell it this year I might have a chance of maximising the selling price before the FHOG ends, and it's CGT exempt.Yes, if you take the view that the market will drop from here and decide to sell there's no better time than when the free cash give-away is on.
sheranj wrote:I wanted to renovate it a bit before selling (it's a rental, in good condition though) but I don't have a job yet and NO money!Dreamin' – you don't have any money remember and it is tenanted. What are you thinking of doing? Turfing the tenant out while you do a reno and then not collecting rent?
sheranj wrote:The crappy thing is I locked my rates in last year for AWHILE (ahem) JUST before they came tumbling down (cry, newbie MISTAKE).That was NOT a newbie mistake – plenty of experienced investors did the same thing. Yes its a crappy situation to be in but no-one really saw the GFC thing coming or coming as fast as it did. (except for those experts who have correctly predicted 17 of the last 3 recessions that we've had). All indications were that interest rates were heading skyward and you acted to protect yourself – you are to be congratulated for that. Don't beat yourself up.
sheranj wrote:But I'm thinking I could buy something else next year if the prices genuinely do come down…2 things wrong with this thinking:
1. No lender is going to lend to an unemployed person or someone with a short work history in the current credit crunch environment
2. Hoping that prices will come down is not a weath creation strategy and it might prove to be a fallacy.
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