Hi EW,

If you are looking from a property, on the whole it is better to look for a house than an apartment. They generally have better growth potential.

As JacM suggests, regional areas might be something to look at, or have a look at some Melbourne suburbs that might be lowly priced, but are up and coming suburbs. Just need to do a bit of research.

In regards to borrowing, I don't know what the banks told you, but with the information you have given you would definitely be able to borrow much more than $400K if you wanted to. You just need to make sure that the loan is structured correctly to maximise your future deductibility.

Cheers

Tom

Now you know what to do with future renos. Can contribute to the reno costs.

Cheers

Tom

Are the loans stand alone or cross collaterised?

If cross collaterised, she may not see a cent of the 50K as the bank might divert it all to House 2.

Cheers

Tom

if you intend on doing a whole kitchen or bathroom, it would suggest a capital improvement instead of a repair, which would mean it can't be claimed in the one hit but is depreciable and also would form part of the cost base for CGT purposes.

Your accountant can confirm this.

Cheers

Tom

Hi dvestate,

Would be advisable to do the maths accurately to make an informed decision. Is there a loan on the current PPOR which is deductible? Depreciation, all expenses to be offset against the generated rental income. Then you would get a better idea of whether the property is draining money.

If so, you also need to factor whether there is opportunity for capital growth in the future to overcome the negative gearing that you are comfortable with.

Cheers

Tom

Don't tell me you're a follower of Wayne Swan and his "walk down the road to another bank" edict?

What about the cost involved with the discharge of mortgage, registration of new mortgage, existing lender discharge fee, new application fee, settlement fee, etc?

The way that Swan harps on about refinancing, it sounds as if it is free, but sorry to say that the costs associated with a refinance mean that any savings you make with a new lender may actually leave you out of pocket for a long time.

Cheers

Tom

Think they will drop tomorrow, only reason is that the next meeting is in Feb, so they cannot react in January if crap hits the fan with the US fiscal cliff, etc.

Also despite being an independent body, there is a lot of political and retail pressure on them to drop rates for Christmas.

But hey, might be totally wrong and nothing changes.

Cheers

Tom

The only way you can claim any deductions of your current PPOR is if you "buy" all or part of the property from your wife via a spousal transfer and become registered on the title. Different states have different rules governing costs involved in doing this. You would need to run the numbers overall to see if it's works out to your advantage.

Cheers

Tom

Hi mjm,

As Jamie said, you can't increase the loan just for the sake of it and expect it to be tax deductible unless the funds were being directly used for investment purposes.

Just to expand on his point about spousal transfer, since you are from Victoria you would be exempt from stamp duty if you went via that route though there might be CGT to pay as it already has transferred into an IP. With this one can buy the outstanding share from the other and borrow the funds thereby increasing the loan amount and making it deductible.

Cheers

Tom

Mick,

It would be there in the contract of sale, most likely under a section titled default.

Comes into play when the purchaser delays settlement. Can be quite expensive.

Cheers

Tom