All Topics / Help Needed! / Query n PPOR and IP

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of leyashyashleyashyash
    Member
    @leyashyash
    Join Date: 2012
    Post Count: 2
    August 17, 2012 - 10:35 am

    Hi,

    I have a PPOR valued at 350,000 on which I have a mortage of $200,000.I have been staying here for 4 years. I am looking at buying a investment property valued at $500000. I plan to rent this IP for 6 months and then move into this property and convert my current PPOR as Investment property.

    Would this be a good plan? What are the drawbacks of going this way?

    Thanks

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544
    August 17, 2012 - 12:08 pm

    Biggest drawback is the larger mortgage is all non-deductible.

    Often this is a big hand brake on wealth creation.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271
    August 18, 2012 - 12:10 am

    Hi Leyashyash,

    The longer you can stay in the smaller mortgaged property the better. Higher IP mortgage means higher negative gearing benefits. Are you taking the equity from your PPOR to fund for the new IP purchase? Are you going to 80% LVR ot 90% LVR?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of leyashyashleyashyash
    Member
    @leyashyash
    Join Date: 2012
    Post Count: 2
    August 18, 2012 - 1:59 am

    Hi,

    I am taking equity from my Ppor and 80% lvr..

    To meet loan criteria can i show new property as IP and after settlement rent existing Ppor and live in new property? So in other words after settlement change new property to Ppor and old one to IP.

    Thanks

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    August 18, 2012 - 2:22 am

    Yes you can but can still only claim the interest on the current mortgage of $200,000.

    Wont make any difference on where you secure the new loan it the purpose that dictates the deductibility.

    If the property is jointly owned a spousal transfer is worth considering depending on where the property is located.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 18, 2012 - 3:00 am
    leyashyash wrote:
    Hi,

    I have a PPOR valued at 350,000 on which I have a mortage of $200,000.I have been staying here for 4 years. I am looking at buying a investment property valued at $500000. I plan to rent this IP for 6 months and then move into this property and convert my current PPOR as Investment property.

    Would this be a good plan? What are the drawbacks of going this way?

    Thanks

    One draw back is that your new property will be subject to CGT

    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

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271
    August 18, 2012 - 1:20 pm

    Ok so your LVR on your new property is going to around 88% assuming that the value of your current PPOR is $350k. How have you determined this amount? Have you recently done a valuation or are you estimating?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

Viewing 7 posts - 1 through 7 (of 7 total)

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