Hi All,
Just another average family trying to provide for the kids and our retirement.
My hubby and i are exploring the above; our situation is as follows:
PPOR valued at 700K
Amount owing 400K.He is at the highest tax rate. I am a stay at home mum. We are thinkig of renting elsewhere (for the same amount )and using the tax savings (thru negative gearing) to buy an IP.
1) How do we utilise his tax position to the maximum? The PPOR is in both our names. Do we need to transfer it to a trust so that he can claim 100% tax benefits? (i am not working and have no tax bill to offset)
2) I understand stamp duty might come into the picture. Can anyone give me an idea of the amount? We are in Sydney. Any other auxillary costs?
3) Lastly, has anyone done this before?Is this common?
Would appreciate if someone could give me an idea of the total costs involved ( a breakdown) so that we can decide whether the pain and angst is worth it.
Thanks!
lee
Hi Lee
Must admit i think you maybe slightly confused in your thinking. Certianly if you sell the property to a Trust then you will be able to claim the interest on the loan as a tax deduction.
You quiet rightly point out the stamp duty issue and for an exact cacluation you might like to check out the OSR site http://www.osr.nsw.gov.au
If however you decide to rent them you are paying dead money and getting nowhere. Remember when you negatively gear a property you still can only claim back any expenses at the highest marginal tax rate.
Would you not be better off to ensure that you structure your loan on the family home correctly and then purchase an IP using the available equity.
With your husbands income and the rent received you should be able to reduce your loan term quickly if it established correctly.
Doing things this way you won’t have the added expense of Stamp duty on the transfer of the PPOR to your new Trust and the costs of moving.
Suggest you consult an independant mortgage broker before doing anything else.
Cheers Richard
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Agree with Richards wise words..we’ve turned a PPoR into an IP but our situation was different and it worked well..
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