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Thanks guys
That was my first step and I was upfront with the local agent who has been sending out flyers offering valuations and had a large number of sales in the area in the past 12 months however they still wanted to come around and run through their services (which I was happy to do). However they only wanted to give the high sales in the surrounding area not all sales in my suburb or the straight out RP data print out and I was hoping someone may be able to assist without me needing to spend an hour with another real estate agent (or wasting their time).
Sam
Hi Barry
Sounds interesting, do you have any more info. Location, property age etc.
Cheers
SamYes. Google maps search will back this up however it doesn't give the shortest route as the default search result. 13.3km according to the search I just did.
Terryw wrote:Some points to consider:
By thinking about what to do for 4 months you have missed out on $5000 in rent!
If you sold and put $130,000 into your home loan you may save around $6,500 in non-deductible interest per year.
If you kept it you would get any future capital growth – now may not be a good time.
If you had the loan IO with a 100% offset account you may still have a high loan on it and it could have saved you more tax.
Looks like you have the not ideally set up either. What if you move out of this one after paying the loan down – you would have a similar problem. Far better to maintain a high loan with money in the offset.
I would probably be inclined to keep it for now. Talk to your accountant about setting it up a bit better. Eg. you could set up a LOC and use that for all expenses freeing cash to pay down your own home loan ( would be better off going into a 100% offset account!)
Hi Terry
Thanks for your input, I enjoy reading your other posts and value your input.The loan on the IP has 100% offset facility included but it not being used at present as all of the available cash was withdrawn to put into the new PPOR. The IP loan has worked very well for a PPOR over the past 5 years and has minimal costs to get out of if need be (about $400 total all fees included).
The plan is to stay in the new PPOR for 10-15 years minimum. There's no offset facility on the PPOR loan but there is free redraw so any extra cash we have is 'parked' in the loan effectively working the same way as an offset account.
The LOC idea has me intrigued. Is it possible to set up a LOC on the IP and then withdraw funds to put into the PPOR and still claim an interest deduction on the IP loan. I thought that you could only claim a deduction on funds used for investment purposes. Could you please clarify? Does the use of the LOC lead to issues down the track in relation to increasing the baseline value (I know this isn't the right term but hopefully you know what I mean) of the IP if we sold it?
Thanks
SamHi pully
Thanks for your comments. The property has been "looked after" by my brother for the past 4 months whilst we worked out what to do with it. You're spot on re Centrelink and I have spoken with them and been advised that as long as the property is neutrally greared then there shouldn't be any issue as there will be minimal income after expenses.
I'd consider my job pretty secure (Local Government) and worst case I should be able to pick up another position pretty easily in the event of something unfortunate (touch wood).
Initially we bought the first property with the intention that it would become a rental when we upgraded down the track (we actually rented the property for 12 months before we bought it about 5 years ago). Since then we've been to a few seminars re property and can see some of the advantages with negative gearing.
I can sleep with the knowledge of the debt and we should be able to accommodate an interest rate rise of about 2% without needing to cut expenses. If the property is rented then that is pretty much out of the picture expenses wise as it should look after itself. The $300k on the new place is the tricky bit but within our means at present.
Thanks bjaust and maree_bradross
In answer to your questions
– The loan on the IP is currently interest only
– the IP is currently held in both of our names
– I'm skirting the 40% tax bracket and a vehicle salary sacrifice is the only thing keeping me from going up to the next bracket.
– I'm assuming that the accountant seems to think that a newer property may appreciate in capital value faster than our old one and obviously would have the added benefit of being able to depreciate the building cost as well. Fixtures and fittings I know we can depreciate but the property is too old to depreciate the building itself.Anyone else have any thoughts on the options or questions I should be asking?
Availability of the property for rent is a "relative" term because a relative has been staying there for the past couple of months. I know this is a slippery slope but I'm sure it's not the first time it's been done.
Thanks duckster
the ato link was good. I'm relieved to see that we have some time up our sleeve. As we are in first home buyer territory with a tidy property, 2 agents who have seen the property have advised that it would likely sell at the first 1 or 2 open inspections if the asking price is reasonable market rate. It would be great to sell by end of September.The property we moved into was an investment property for the previous owner and so we were hit with having to refund a proportion of land tax paid by them (it was only about $40) at settlement.
Thinking out loud, is there any benefit in not trying to claim a refund for this ($40) in order that the new property be treated as an investment property between settlement (early May 2009) and the end of June. In which case could interest charges and various other costs be claimed for the larger loan for the 2 months before the end of 08/09 financial year?
From 1 July 2009 onwards the new property would then be the new PPOR.
Hi bzmum04
Please keep the story going. I feel like I’m hanging on the edge of a good book or tv series where they finish with the dreaded line… to be continued.
Good work
