Hi Everyone,
Long-time reader, first time poster. Also a big thank you to all the professionals on this site willing to assist.
A bit about myself, based in Victoria 27y.o. currently earning about $70k per annum. Total savings $90k, long-term goal (15-20years) leave of a passive income from IP and work as a hobby/part-time.
I’m posting in this forum in hope to learn from others mistakes/experiences and knowledge.
I’m a bit torn on which way to go and my situation is as follow. I recently purchased my first home for $290,000k, if you include stamp duty cost’s and fee add an additional $13,530 on top hence total purchasing costs $303,530k. PLEASE NOTE: I plan into moving into this house next year so it will be left vacant for 12 months.
Option a)
Put down a 20% deposit and avoid LMI, apply for FHOG Stamp duty concession and reduce costs from $13,530 down to $7469 (total saving $6k), leave remaining money in offset account hence total loan is $207,469 with monthly repayments of $870/month. Move in after 12 months and use equity to purchase first IP, not to mention I should be able to save another $20k on top of meeting the minimum repayments of $870/month.
ADVANTAGE:
a) CGT exemption in the future IF I decide to sell (mind you in the future I am more likely to subdivide (650m2 block) and rent out the current house as well as the unit in the rear) hence having 2x IP
b) $6k from the government (state revenue office) i.e. your tax’s and mine
DISADVANTAGE:
a) No tax benefits
Option b)
Put down a 20% deposit (I’d prefer) or 10% (meaning I would pay LMI), for arguments let’s stick to 20%. This would mean my loan would be $232,000 leaving me with cash in the bank of $18,500 and monthly repayments of interest only of $970/month. I can than rent the property at $300 per week hence after agent fee’s, insurance and interest negatively geared.
ADVANTAGE:
a) Tax benefit
b) Can save more money
DISADVANTAGE:
b) CGT exemption no longer applies
I’ve done some strenuous research and what I have concluded is that it’s a shame that I’m based in Victoria.
Open to any suggestions.
Cheers,
Yiannakis
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