We have lived in our current home sinse building it five years ago. It is worth around$345,000 and we owe$200,000. We have just purchased a town house for $310,000 and we expect a weekly rent return of around$350 to $360 and it is negatively geared. Now this rental property although a bit smaller is a way better quality house than the one we live in and we were thinking we would like to live in it in a few years time.What is the best way to do something like this and not lose out financially.We are open to the thought of selling our current home if we moved into the ip and buy another property as our ip.
What you are asking falls into the category of financial advice. You should seek the answer from an accountant or financial advisor. Unless someone is FSRA licenced and knows your exact situation and risk adversion level they are not allowed by law to give you investment advice.
Duckster Financial Services
http://www.ducksterfinancial.com
Helping to make the great Australian Dream come true !Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Devo
Duckster is correct unless you are licenced you are unable to provide advice to such a question.
Thankfully i am licenced and although cannot admit to meet the “know my client rule” from such a post will attempt to provide a broad general and non specific answer.
It would appear that you are wishing to move into the new IP in a few years time at which time your interest on this property will become non tax deductible. In saying that at the same time the interest on your current home will become deductible.
Not an ideal situation.
My initial suggestion would be to esure that the loans are structured correctly and both interest only with the prime loan attached to a 100% offset account. This can be changed when you move into the other property.
At the time you may want to consider selling your current PPOR to your Trust and borrow 100% of the market value. Whilst stamp duty will become payable the entire loan will be deductible and the funds raised can be used to reduce the debt on the new non tax deductible loan.
Other consideration will be that your current home can be exempt from CGT for a period of 6 years even if you move out.
Please note this a broad statement answer and specific advice could be given at a later time.
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
You can move in but you can only claim one property as your main residence at any one time and get the CGT free threshold. So the new property will be liable for CGT if sold in the future, but this will be for the first years while rented.
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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