Hi,
I currently own a flat in Marrickville which is losing me roughly a grand per month, and not appreciating too much. I’d really like to sell &
buy something that’s cash positive, but I’m worried I’ll get killed by the tax dept at closing.
What I’d like to do is sell up & buy a place or two that cost less & are cash positive. Will this be a problem for me ?
Muso Dave
PS This flat is an investment property for me.I’ve owned it for 3 years. I pay the mortgage fortnightly, pay an extra $50.00 each fortnight to pay down the principal.The monthly mortgage payment is roughly $1600.00, the tenant pays $220.00 weekly & the incidentals add up to about
$240.00 per month.Is the flat a I/P or your own? A unit that is costing you $250 p/w is a fair cost and if the capital gains are not going to be great I would suggest you sell and start looking around. How long have you owned the unit as this will have a big bearing on how much the tax dept likes you.There are positive cash flow properties out there but these are sometimes located in areas which arent going to show much capital growth. A few years ago it was easier to pick up positive cash flow properties in major regional towns that had good chance of capital growth but at present they are difficult to find. The good news however there is news that the market is turning into a buyers market and with that will come opportunities. I believe if we throw in a couple of interest rate rises more bargains will appear from those people who have over capitalised. Lets face it the realestate market has been great for the past 4 years, with low interest rates and good capital growth but lets see what happens with increases in interest rates and slowing of capital growth.[biggrin]
Martin
Hi Muso Dave,
I must say that I am in a similar position with a Melbourne (Malvern East)based 1 bedroom apartment and 3 BR townhouse in a bayside suburb. Together they are producing a cash outflow before tax benefits of about $16,000 and about $10k after tax. Eventually the tax benefits diminish and I have learnt that they should not be a prime driver, though helpful if they are there. I am now looking at selling one despite any capital gains as I agree with Steve (as per his neswletter today)that paying tax on disposal is not a bad thing. In my case it may reduce my negative cash flow with a view of then acquiring positive cash flow to balance things out a bit and move on from there. However, the only snag is that it may take time.
ChrisSounds alright to me. I would much rather a good IP in Marrickville than in whoop whoop. The figures you quote, are they before tax, PI loan with extra payments? If you just change it to interest only and put all extra payments into a 100% offset account, this should ease cashflow.
You would have had good gains over the last few years and it would be asham to sell it, just to buy another property or 2. CGT is a killer. What about just borrowing against the equity and buying positively geared property or 2 which will help offset the loss – if there actually is one.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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