Slowly being educated (from reading, seminars, forums and talking to people) in property investing and realised I’ve been buying the wrong investments with the wrong strategy. I am now trying to improve my financial position to allow me to start from scratch on some real investments with some cashflow.
I’ve brought a off-the-plan IP and living in 1 3br T/H. Now, I’m thinking of selling the one I’m living in as there would be no tax, besides, my IP price dropped alot.Losing heaps of money.
Do you think it I should just sell the IP (which is very hard at time) or just to sell the property I’m living in? Any recommendations will be appreciated?? [blink]
Kelly
If you have also lost money on the IP capital value, then I don’t believe there would be any tax on it either if you choose to sell (double check with an accountant).
Seeing there are always both buying and selling costs associated with property, I would do some research before rushing to sell.
Is is likly that your IP will continue to cost you money? Would it be more financially beneficial to move into your IP and rent out your PPOR? Can you increase the returns on your IP by getting creative?
It is generally smarter to leverage from your existing properties to purchase new IPs, as paper value can be worth more than after-cost liquidation.
I.e. on paper you might have a property worth $400k, but if you try to sell it in a slow market (especially an off the plan apartment that has several hundred identical units in the block as competition) you may only get $380k and then you need to pay the agent’s commisson, legal fees, etc leaving you with maybe $360k. If your mortgage is greater than this then suddenly you have no property but plenty of (non tax deductible) debt.
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