I live in The Byron Bay area and have a home mort outstanding of $50,000 on a prop worth $550,000. My wife doesnt work (is a stay at home mum). We own an investment duplex purch just over 2 years ago for $300,000 (current val approx $385,000) and a tenant that pays $275/week leaving me $125/week to top up the mortgage. I am currently paying 50% tax on my income. My question is should I sell the investment prop and wipe out my home mort completely and then start again with another investment property or should I stay as I am. Thanks for you help.
Hi Stuart
How much do you need to pay for the mortgage for your duplex? My suggestion is – if that duplex is generating you a net positive cash flow, then you should keep it ( start again only if you some other investment opportunities which can generate better return on investment)Just some thoughts
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If you take a long term view – keep both. Bt selling the investment property you would loose a bit an capital gains tax and still owe money on your PPOR.
Also make sure the investment property is an interest only loan.
Hi Stuart,
Agreeing with Yack – there seems to be little point in selling the IP as it won’t even clear the PPOR debt after selling costs and CGT are taken into consideration.
As such I belive you are better off hanging onto both properties and ensuring that all legal steps are in place to minimise your IP outgoings and maximising the paying down of your PPOR.
1. Ensure IP is interest only.
2. Make sure you have a QS report done (if appropriate) to maximise legal deductions.
3. Submit a PAYG Variation advice to assist with the cashflow.
4. Set up an offset account linked to your PPOR loan for all income to reduce your monthly interest bill. This can be further enhanced with the use of credit card to pay all bills, thus retaining cash in your offset account for as long as possible which helps to further reduce your monthly interest bill.Having said that you do need to ensure the plastic doesn’t go into melt down and that what is put on the card is paid off every month.
Derek
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