Hi All,
My wife and I have just purchased a new home and we are deciding on whether we should rent out our current property or sell it. We have a few questions.
a) Our current Mortgage on the property we intend to sell is small in comparison to the selling price and as a result it would be positively geared if we rented it. Is it possible to transfer all of this equity across to our new property so it is negatively geared.
b) The bank is telling us that we can only service the loan if we rented out the new property. How long would we need to rent it until we moved in if we chose this option?
c) I understand you can only gear (positive or negative) a rental property, what defines a rental property. Lets say for arguments sake you moved between your rental property and primary place of residence every 6 months resulting in reversing of their roles. Could you claim all repairs/improvements/interest as tax deductions on both properties (this probably wouldn’t work in practice but should assist in making my point)
d) Is it possible to change from ‘Joint Tennants’ to ‘Tenants in common’ after a home has been purchased?
Thanks……
There are definate advantages to owning 2 properties instead of one. Firstly you get capital growth on two properties…not just one property. Secondly, as you will be renting the second property you get the advantage of rental growth, which means each year you can make more and more money from rent.
Do you want to be a property investor? That is the question you need to ask before you hold your property or sell it. If you want to invest in property and want to continue investing then you might want to keep it, or you might want to sell it so that you can use the money to invest in more lucrative property deals.
It is a hard question to answer whether you should sell it or not. Think about your investment goals and what you want to achieve. Your old home is now becoming an INVESTMENT so look at it like you would look at any other investment. If it gets you closer to your investment goals then consider keeping it, if it doesn’t get you closer then it might be time to sell.
Sorry I can’t answer the technical questions, but I hope my insight has helped.
Ryan McLean | On Property
http://onproperty.com.au
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