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This has now sold. Thanks very much.
Hi Pvasi,
Might be recapping on the advice you already have, but if you wanted the easiest solution in the short term at least, it might be to just redraw/draw a loan on your rental place so you can move the money from that into your new PPOR, as there are no tax benefits from the interest you pay for your PPOR loan. Conversly, its better to pay more interest on your rental to offset the gain and thus reduce the tax you'll pay. I'm a novice myself, but thought I'd share anyway.
Brian
What are the chances of you making a good enough profit to be worth renovating it, sell and then have a whole lot extra for your place in Wollongong? The PropertySystems kit is pretty good for helping with costing and all that and can be a good way to may quick cash, as well as the benefits of selling your PPOR to avoid capital gains tax.
If looking at it from a purely money perpspective then renting in Wollongong will be the better option for you and either keep your current place or reno and sell and get a couple of other places to start building your portfolio. But sometimes its nice to live in your own place. One trap people fall into though is buying their dream home too early and then being stuck in debt, unable to continue investing. Better to invest smartly in what you can afford and then in a few years you'll be in a much better position to buy in Wollongong, provided all goes well. I am quite an amatuer myself though, but these are just a few thoughts from someone who has gotten 3 properties so far by not buying the big one first up, and now if I chose could.Dan42 wrote:Be aware though that if the first property is held in a trust and is negatively geard, you can't offset the losses against your own income, as you would if the property was held in your own names.
Just wondering then, is it better to have a property in your own name, as well as the rest in a discretionary trust. That way you could potentially put all your excess funds (If you have interest only loans and offset accounts) into the trust fund to make those properties as positively geared as possible, and the property in your own name as negatively geared as possible to offset your income?
Thanks for the comments guys, very helpful. I’ll definitely look more into it.
I think it all depends on what you can afford. if you are on a great salary and can afford to service the debt of negatively geared properties then that seems the best way to make the big bucks.
However, there comes a time when if you have enough negatively geared properties then you'll end up hitting the wall in terms of finances, and it may be a good time to get properties that pay for themselves, as a least you have some cashflow and even though the properties may not increase in value at the same rate as the neg geared, they still will, costing you nothing to keep them in the meantime. Sounds simple, but I'm new at this game and this is the general gist I am getting from my research.
Having said that, I would feel much more comfortable with positively geared properties in general.
