This is my first posting and I’ve done a bit of a read and a search of the forum but couldn’t find a previous topic where my question was addressed. Apologies if I haven’t searched hard enough.
I have to make a decision in the next 24-hours and my accountant is N/A due to pending birth of first child. Have exchanged contracts to purchase new home but due to sluggish real estate market in Canberra, have not been able to sell current home. Settlement date on new home is end of September (4.5 weeks).
The mortgage on my current home is $100K, with a realistic property value of $350K; Applied for mortgage on new home (with a different lender from my home loan) of $150K, property is valued at $415K.
Initially, I was planning/hoping to sell current home and thus transferring equity into new home and would then look at purchasing IP in the future (recently sold IP to gain access to the $50K profit (after CGT applied) as house was 25+ years old so no great depreciation benefits; very -ve geared and costing me heaps from month to month). Used this profit to pay for Solicitor’s costs, Stamp Duty on new house, sales reports for current home etc.
My current dilemna – Do I borrow additional $250K on new property (taking home loan to $400K), get tenant into current home (converting it to IP) and make profit there to assist paying for new property loan repayments (rental income would be $17K PA, with loan repayments <$10K PA); Or, do I increase loan on current home to $400K, get tenant into current home (converting it to IP) and use the released funds from IP to pay balance on new home and thus keeping personal home loan at $150K? End result, in both options is that I will owe $500K, but have equity of $265K Not sure which is financially a better decision to make.
Am aware (or was led to believe) that for Tax purposes, if I increase the loan on my current home, even when converting it to an IP, that I can only claim interest as a tax deduction for the amount applied to my current home loan value ($100K).
Any ideas would be greatly appreciated.
Feefifofum
Hi,
I’m no accountant but here are a few thoughts that may assist you:
a.Keep the loan of your PPOR (the property y plan to settle in Sep)as low as possible as repaymnets will be in after tax $.
b. Delay settlement if possible to give more time to sell the current property.
c. Discount the price of the current property for a quick sale / quick settlement.
d. In Vic the vendor can seek use of deposit $ once contract goes unconditional.
Good luck.
hrm
Hi,
sorry i Can’t be of much help now that your 24 hr deadline has passed but I would suggest meeting with lender either from the bank or a private Mortgage lender/broker (there are some great ones on this site) and getting them to consilidate your loans.
Kind Regards,
George.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
Have made a few +ve moves in the past 48 HOURS – am seeing Mortgage Broker tomorrow and have finally managed to commit accountant to seeing me Thursday. Have managed to hold off loans officer gettig me to sign anything yet until have spoken to accountant! On top of this, the vendor of my new place has contacted me and wants to rent back off me for 3-months plus so that answers some of my prayers! Will allow me a few additional months to offload (oh, I mean sell) my PPOR.
Wish I’d found this forum months ago when I had a different Real Estate issue!
Have very much enjoyed reading all the comments and messages flying around cyber-space and will visit often[sunny].
Cheers
Feefifofum
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