Hi Lea,

   Don't lose sight of the fact that buying and selling any property costs you extra $$.   So, like many of the others, I'd say "take it easy" with selling them off right now – with the IP's being cashflow +ve there really is no rush.  

   And, if you aren't already aware, do check out Offset accounts which can be useful in helping you to pay off a PPOR, and/or allow further investment when the time is right.

Benny

Hi Catalyst,

   Wow, wow, and wow !!   NICE job !!   It looks like a new pin – thanks for sharing,

Benny

Hi AT,

  I would think any easement would be showing on the Registered Plan for the property.  Note that I don't know this absolutely, but I do expect these should be showing.

  If you can find the Lot # (from a Rates Notice of the property you are buying), or get a Rates Notice from your parents.  Get their Lot #, then use Google to search the "Parish" etc and gather the Lot # of the target property from the Google map.  Check that the Google map shows your parents' Lot# correctly first as a check. 

  Once you have that, the Land Titles Office will likely sell you a RP over the net for around $20 – today !!.   That should then accurately identify the dimensions of the easement. 

  After that, the Local Council would likely have their own bylaws re what can be built on top.   e.g.  Since they may need to access the drain at some unknown timeframe into the future, they won't allow a structure to be built across it, but a concrete driveway "might" be OK, given they can dig it up if necessary.

Benny

Hi NHG,

  Might be good to mention a location (otherwise you might be shelling out for airfares….  )

Benny

Hi Kate,

   Below is what I "think" is right…  but I am not an adviser of any kind.  I can't help with question 1, so let's see what others say……

  If you were already writing it down via an earlier Depreciation Schedule, the remaining WDV (Written Down Value) can be claimed in this FY as a lump sum.

Benny

Hi Niccy,

  It is the "purpose of the loan" that is important.  Your words seem to say that you have purchased Prop #2 as a place to live.  In that case, I would tend to agree that you wouldn't be able to claim the loan as for investment purposes.

  But do you HAVE TO move into Prop #2? 

  If you can stay where you are, then $100k of the $104k should be deductible – BUT you have an account with "mixed" personal and investment monies.   I'd suggest getting that put right.  Talk to your accountant, or one of the advisers on here. 

Benny

Hi Ferdinand,

  It seems to me like you (and your wife) would be wise to sit down in front of someone like Richard to thrash out all of those aspects.  Even as a layman, I see a number of good possibilities for the two of you.  With a plan that is agreed to by both of you, you can do very well.

  Re the current PPOR becoming an IP later, that can work in many cases, but there may be better ways too – e.g. is the PPOR in a position where it "suits" being an IP, or would you be better advised to sell it, and use the proceeds to buy 2 IP's in better rental areas?  

  There are lots of ways to cut this cake – choosing the best way that suits the two of you is a good starting point.  Once you know which direction to head, your journey will be easier.

  It is great to see you looking to your future and sharing in the collective knowledge on here.  Well done,

Benny

Hi Johnny,

  And welcome !!   It sounds like you are in good shape, despite a little "untangling" to be done.

  I'm sure if you choose to utilise one of the Mortgage Brokers on here, they will be on top of everything.  But, should you choose to go another way (via a Bank, or another Broker somewhere), do consider your current situation re your PPOR.  Your words suggest you might be retaining it as another IP.  If that is to be the case (and even if it isn't…) do look at changing its current mortgage to Interest Only, and set up an Offset account against it.  This will do a couple of really nice things :-

1.  It will see you paying less and less Interest on your PPOR as the Offset balance grows.

2.  Should you then wish to buy another PPOR, you can simply withdraw the monies from the Offset as your Deposit/Costs on the new home, and the existing IO mortgage on the old PPOR is then ripe for a Tax deduction with the mortgage that you set up today (or soon).  

Since you have already paid off a chunk of your PPOR, there remains a lot of equity in that place which could then be harvested to buy another IP or two.

You look to be in really good shape to achieve your goal – "the ultimate goal is to have a reasonable second income from IPs whilst having the PPOR paid off."

Benny

Hi Schplak,

  Purely to "help you get your head around it", if all other variables are equal, then having four properties helps you out when a tenant vacates – you have lost just 25% of your rent until another tenant is found instead of 50%.  With 75% still coming in, hopefully your mortgages will still get paid without too much damage.  Conversely, with half your rent gone (if a higher value tenant leaves), covering the mortgages could be a bit of a stretch for a few weeks.  Having four properties could also help if you want "diversification" (not one of my hot buttons, but it can be a safer ploy for some).  

  At the lower end, anyone can afford to rent them, so you are less likely to have an empty place for very long.  Of course, some things won't be halved with a lower value property – e.g. conveyancing costs on purchase, rates, insurance, accountant fees at EOFY, maintenance, etc. 

  But then, rents of a cheapie are likely to be more than half of the more expensive property – just as well eh?    

  I'm sure there is more – but that should start a few thoughts going.  In the end, personal choice, abilities, goals, etc will dictate your path,

Benny

Hi NI,

  Jamie is right with this….

… but again, it is something that isn't a major problem.  e.g. If you decide you want to move out of this PPOR and rent it out, but have paid heaps off the mortgage while it was your PPOR,  there is nothing to stop you borrowing against this for more investments (thus having those new loans becoming tax deductible).

  The issue can be, if you are moving out of one PPOR and buying another, then any borrowings for the new PPOR will not be deductible (because it is not for investment).   Other than that, anything is fixable – and of course, you can choose to SELL your old IP, thus getting a CGT exempt sale.  

  Whatever move you choose, do run each scenario in front of your adviser before doing it – and it helps if you can "get a handle on it" from your earliest investing days (hence this post of yours, I guess).  Well done – keep on asking until you "get it" !!

Benny