Hey guys,
looking for some experienced feedback. My partner and I have a property in Melbourne which was paid down quite a bit as i bought it 11 years ago. My partner bought into it and we renovated it whilst living in it. We took some equity from it, whilst my work situation was going really well, to buy a property in Brisbane (through an advocacy) We were naive and let them pretty much do everything for us without doing the numbers. Turns out that the property is negative $190 per week. It’s killing us and to vendor finance it wouldn’t cut it along see the fact that my work has really shut down here in Melbourne.
We were wondering if it would be wise to either take the ‘ballsy’ approach and let the equity from both places cover the shortfall OR sell the one here in Melbourne to pay down the one in Brisbane so it’s then positive? Keeping in mind we can now go back to reload at my parent place for now.
Mill Park (Melbourne) and Moorooka (Brisbane) are where they are located, we are not sure if it’s worth the stress to ride the storm or cut the loss and move on?
Any help would be great
Kind Regards
GlennWhich one is the better investment? What’s the CG prospects looking like for the Brisbane property?
Some major tax implications and considerations I see here including CGT – PPoR (?), capitalising interest and getting rid of non-deductible debt to pay down deductible debt.
If you live at your parents’ place would the rent from the Melbourne property cover the shortfall on the Brisbane one? What are your work prospects like in the future? Is your partner working?
Kinnon Bell | Kinetic Funding
http://www.kineticfunding.com.au
Email Me | Phone MeMortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.
I am not an accountant. But depending on your interpretation of recent ATO statements around capitalising interest, and where you think the property market will go and the rent on your Melbourne property… you could do something like this:
– Move into your parents and live rent free! Yay.
– Refinance everything to interest free loans to minimise repayments.
– Rent out your Melbourne place, which I imagine might be positively geared. Use the cash for whatever you need if positively geared, otherwise it’s a tax deduction and since you just refinanced you have a new account to figure out your deductions for tax time.
– Draw a LOC on your Melbourne property. Put the rent from Brisbane in this account. Pay the interest from Brisbane into this account. Do not touch the account for anything other than investment expenses. Since it’s negatively geared it will slowly go up, but the interest should be tax deductible… again, not an accountant, but would love some advice on whether this is ‘legal’ according to the ATO in 2014.This should buy you some breathing room, so if you think there is capital growth it might get you through to better times or better job prospects. Definitely discuss with an accountant about whether they think it will fly though as it’s purely based on my readings lately.
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