Hello all,
I am new to contribute to these forums but a keen reader! I am about to move into a new PPOR built in Adelaide, which when finished should be worth around $580000 with loan of $400000. I am keen to invest in property but wonder whether to sell the PPOR home to release the cash to purchase reno / investment OR stay and use the equity?
All advice would be most welcome.
BHi, as you havent moved into this property as yet if you sell it would be viewed as an investment and you will be liable for CGT.
I would personally keep this property and use the equity to start buying investments, then if you choose to sell later, you will reduce or eliminate your capital gains liability.Kylie S
Mortgage Consultant & Property Investor
0412614965
[email protected]I hate to disagree with Kylies but do not believe that the sale will trigger a CGT issue.
The property is nominated as your PPOR and stamp duty will have been paid accordingly. If as a result of other circumstances the property is sold then no CGT will be payabe.
In saying this there is a cost associated with buying and selling so would suggest you stay put and access the equity.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi please look up CGT on the ATO website as I believe it land is always a capital gains event, when you build on it, you need to hold the dwelling as a PPOR for the specific amount of time and can claim it as your PPOR as long as it is the only one
I understood your question as being your property has just been completed…is this correct because if it has and you sell now you will find you could very well be liable for CGT, if it has been built for 12 months and you have not earned any income from it (ie rent) then it is not a CGT event.
cheersKylie S
Mortgage Consultant & Property Investor
0412614965
[email protected]Hi,
My 20 cents.
I would have the property valued to its MAAAXXX and then use the equity to play Monopoly.
Which ever way you go the main point is to make sure your next investment is sound.Good luck! [specool]
Hi Santoriniwalk,
I don’t think you need to sell your new PPoR to “unlock” the equity to invest in other properties. You should take out a maximum LVR (90-95%) loan on the PPoR and use the equity to invest in investment properties. Also, I believe you would need to stay in the PPoR for atleast 12 months to be exempted from Capital Gains Tax. If you sell now, there may be CGT plus the selling costs.
With the $120k worth of available equity ($580k x 0.9 – $400k) you can build an investment portfolio of around $1 million.
Hope this helps and Good luck. Happy InvestingRegards
SanjivThanks for your replies everybody.
Just to clarify we will be moving in to the property this month and planned to stay in the property for at least one year before selling it (if we were to sell. My main concern as someone pointed out is the associated cost of selling the place.
My concern with staying in the PPOR and using the equity is that we will most likely have to start off with a negatively geared investment and will not have much extra cash to fund this.
To clarify the ATO position
You are allowed to have two PPORs for 6 months section 118-140, if the old PPOR is not used as a rental for 12 months before it is sold. The 6 months back dates from the date of sale of the old PPOR.
If you want your new place to be totally exempt from CGT you will need to use your PPOR on it from the time you bought the land so one of them is probably going to have a CGT problem.
Section 118-150 allows you to exempt the land before you build as your PPOR as long as you move into the house as soon as practical on completion and you live there for at least 3 months. Note this back dating of your PPOR to before you built can only go as far back as 4 years.Hope this clarifies the position.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
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