Appreciate some thoughts on this. I have a neutrally geared 3 bed brick and tile house in Bald Hills brisbane. Very basic 1 car, 1 bed on 750m2 in awefull colours. Have to compete with new surrounding developments for tenants and growth but it been a nice reliable investment. There is enough equity in it now to pay out my own 50k home loan and save 20k in non deductable interest, a very appealing concept as i also think it will be flat for a number of years to come.
Should i sell it to acheive full home ownership and save non deductible interest, or keep a rough, but neutrally geared gem?
Sam
I guess one consideration is any possible CGT you might end up paying on the sale of the property.
If you make $50K clear and end up paying tax of say $25K then the exercise would not seem worth it.
Have considered alternatives like selling the property to a spouse or Trust and using the balance of the sale proceeds to reduce your debt on your PPOR. Again may have stamp duty and CGT implications but worth considering.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Richard
i am interested to know how you work out 25K of CGT may and i mean may be payable
regards
glenn
never never never sell
it raises a good point , the ATO gets you no matter what.
CGT is going to 25k in this case [sale-loan /2 x 47%].
So while there is sufficient cash to pay out my PPOR after fee’s+cgt, to save 25K of future interest, i’m really just giving it to them now in CGT .
I suppose i would also save the tax applied to the cash that would service the PPOR loan, which could be diverted to another property and become ‘good’ deductible debt.
Appears to be a dead heat to me, i’ll probably hang on to it and hope for continued small – modest growth in brisbane and expidite PPOR repayment by some other means [not easy with kids!]
Why dont you fix the awful colours and try to get higher rent?
Then make your loan IO and direct all cash into your homeloan. Even run an LOC model where you use your credit card for all expenses imaginable then sweep it clean from the LOC monthly during the interest free period. This can work well and you may knock over a $50K loan fast.
A step up might be to borrow $x00K from the home loan and buy shares, managed funds etc etc. Direct all income into the $50K loan until it is gone.
The bigger you think the smaller the $50K debt is.
You are on the right track by owning an IP tho – most people don’t.
Alternatively why pay out the debt? In 20 years time $50K will prob buy a TV set.
Just some ideas to get you thinking
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
all good stuff to chew on, thanks guys.
I need to assess my habitual distrust of any investment outside of property..
To go to the effort of combining 1-3% at best actual dividend cash income received only twice a year with franking credits and negative gearing claims to service the loan isn’t my cup of tea. if the loan is repayed in arrears, then somehow cashflow needs to service the loan, it doesn’t just magically happen each week or month because of franking credits and gearing.
My nuetrally geared investment house on the other hand gives me lots of cold hard cash each, and every week ,and the bank loves me for it.Originally posted by samnash:all good stuff to chew on, thanks guys.
My nuetrally geared investment house on the other hand gives me lots of cold hard cash each, and every week ,and the bank loves me for it.
So why sell it?
Maybe buy a few more. When you own $2M worth of IP’s $50K wont be an issue.
Just trying to get you thinking.
All the best
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Here’s another idea……
You can draw more equity out of your investment properties, buy more properties and use the cashflow from the positive cashflow houses to pay off your own home repayments …. You could then get a LOC on your PPOR and then only use the funds avaialable to buy only + CHFLOW properties. After all it is not so much about owning them … it is more about controling them and creating a lifestyle for yourself….
My thoughts anyway.
Cheers
Kiwi[baaa]
“It Won’t Happen Over Night …. but it Will Happen”To be honest i think that is a question for your accountant or a good financial advisor.
Anita Marshall
Advanced Finance Solutions
http://www.advancedfinance.com.au
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