Forum Replies Created
- Terryw wrote:Yes you should be talking to an accountant as you may be missing out a many deductions – are you claiming depreciation too?
I was thinking you may be able to claim even more by setting up a new LOC on your PPOR and then borrowing money to pay the interest on the loan, or at least, the shortfall each month. This will increase your deductions and free up cash to pay down your PPOR loan further.
Hi Terry, thanks so much for your reply. Yes we claim a heap of depreciation which is great. I'm really interested in your idea re the LOC. I've heard of this before, but I really don't understand how it works. I don't want to waste your time in explaining, so just wondering if could you kindly direct me to a website or other reference that explains how this strategy works? Many thanks.
Terryw wrote:I think you should be asking yourself when will it increase in value and if you sell can you make money elsewhere.If it is going to be costing you $40k pa and not growing by this amount, or not having the potential in the future to grow, then it is not good to hold it in hope. There is also the opportunity cost of holding it – you money is tied up and if you did sell that money could be invested elsewhere making a better return.
If you do decide to keep it talk to your accountant about borrowing to fund the short fall so that you could begin to claim more tax deductions which will help a little bit.
Sorry Terry, I didn't explain it accurately. It has cost us about $10k / year for the last four years ($40k total). I'm thinking if we continue in holiday renting it will be costing us more than that from now on. I haven't talked to the bank, but I was thinking if we sold it and had a shortfall we would just leave that loan open with the shortfall in it and then use the other available funds to invest elsewhere (maybe). I didn't realise we may be able to claim tax deductions on the shortfall amount when it wasn't earning anything, so that's good news. Think it might be time to talk with an accountant. Thanks so much for taking the time to respond.
IP Freely wrote:Who's to say that the tenant doesn't have a 6 month holiday? or 3 mths + option?Oh, good thinking. Funnily enough, in the last couple of days holiday bookings have increased. Might stick with the holiday bookings to the end of January and then go with this idea. Thank you.
