Hello Nucopia

Why don't you just use your cash for 20% of the price (to avoid LMI)  and costs and take out an IO loan on the new IP for the rest?
Make sure you have an offset account with this loan and put the rest of your cash into this.

This way you have:- a stand alone loan
                              no interest charges
                              easy access to your cash if you find another IP or want to go on a world trip.

From your post above I assume your PPOR also has no mortgage on it. 

I'm anything but an expert but this seems easy and logical to me.

Cheers
Elka

I am no expert in this area but think that statement may have been made in relation to property owned within a SMSF (both commercial and residential) or business property you transfer to your SMSF on retirement.

Commercial property attracts CGT just like residential when you sell.

Very basically the difference between what you bought a property for and what you sold it for, after taking into account all expenses associated with both processes, is your capital gain. If you have owned the property longer than 12 months you get a 50% discount and this amount is then added to your other income for the year and taxed normally.

 Obviously if you can manage to have lower income that year or have many deductions, you will pay less tax. The other possibiity is to spread the ownership so that the CG will be spread.

The easiest way to do this is via a trust as it gives you full flexibility to both allocate the income each year and the CG if you sell. However, seeing as you will be negetively geared,  a normal discretionary trust is not a good idea as all losses will be trapped in the trust and you will loose the tax advantages.

You might like to consider going to a property savvy accountant or financial planner before you buy anything. If you set up the right structure at the begining, both ownership and financial, it can save you heaps down the road. Depending on your age you may want to consider a SMSF too. Having a plan before you start is a great first step.

Hope this helps
Elka

Hello Oscar

I suppose selling the PPOR instead and moving into the IP and doing it up is not an option?
That would certainly solve the CGT problem

Just a thought
Elka

Thanks Scott. I wonder if that's true for all states. 

Hello Scott

Did you check with your solicitor that asking for an adjustment on land tax when you sell a property is legal? Tammys post on your thread about this topic was pretty clear. 

Thanks
Elka

Hello Robin

FTB = Family tax benefits

http://www.ato.gov.au/individuals/content.asp?doc=/content/21556.htm&mnu=1205&mfp=001/002

This is a link to the ATO site for explination and calculations. If you have never claimed this before I think you can claim up to 2 years back … just did a quick read so I might be wrong.

Hope this helps
Elka

Hello Paul

My sister was older than your wife when she had to start job hunting. She started in telemarketing but has since found two part time jobs that she likes better. It's just a matter of not giving up.

I would also advise keeping both properties for the reasons already mentioned. 

Given your ages I assume you have no children living at home with you any more. One possibility to investigate is whether, at least for a couple of years, you may be better off renting out your PPOR and renting something smaller/cheaper for yourselves. Not only will your living expenses be reduced but you will be able to claim all the expenses associated with your home ( interest, rates,water,insurance etc.)  against your tax as well as depreciation which is not an "out of pocket" expense.

You can rent out your home for up to 6 years without effecting it's CGT free status. In fact if you move back in for a few months before the 6 years are up and then move out again, you can start the 6 years all over again if you want to.

Renting out ones home is a very emotional decision that is harder for some than for others but it's worth considering. Check what you could get in rent for your home and what you would have to pay to rent something you could live in then sit down with your accountant and work out the tax advantages of the now deductible expenses on your home.

Below is a link to a post by Mortgage Hunter that stuck in my mind for several reasons.
 
https://www.propertyinvesting.com/forums/property-investing/creative-investing/25308?highlight=china%2Cebay&page=1#comment-142103

Best of luck with whatever you decide to do
Elka

Hello Linar

Just thought I would warn you not to start counting your profit yet. If the vendor has not yet noticed the mistake they probably will at settlement. Be ready for problems specially if you have by then sold either of the blocks in question and have a buyer waiting to settle as well.
 
Would be interested to hear the end of this story. When do you settle on the blocks?

Cheers

Elka

Hello Virgininvestor

Unfortunately I don't believe that you are allowed to ask the tenant to pay the usage charge without a separate meter.

I think you have 2 options.

Cater for it in the rent and advertise it as "water charges included" or something. But as you say, if you ask too much extra you will have a hard time renting the place out quickly.

and/or

See if you can persuade the 3 other owners to have the meters split. If yours is not the only unit being rented out then it may be easier to achieve. 

I own two units ( the only two on the block) which were on the one meter and just paid the usage charges for my tenants.

However last year, with the constantly increasing water bill, I decided to have the meters split. I should actually have done this years ago as it was less expensive and complicated than I thought. I had the meter split into 3. One for  each unit and one for the common garden area which I still have to pay. On the 3rd meter there are no service charges as fortunately there is no toilet involved…. just the garden. It cost me about $580 to get this done.

Maybe you can get a couple of quotes for doing this and then present the case for splitting out the meters to the other owners. If there is a common garden area then you may need 5 meters. If so, check with your water authority about service charges for the fifth meter.

Let us know how you go.
Elka 

Hello Virgininvestor
 
My understanding is that unless the place has it's own meter you, as the owner, will have to pay the water usage charge as well as the service chargers which you will be paying anyway. If it is on it's own meter then the water company can send the water usage charge directly to the tenant. At least that is the situation in Melb.

Hope this helps
Elka