To Sell or not to sell family home

Hi V

Firstly congratulations on your decision to make the move north to sunny Qld. The area is god garden but keep that to yourself as otherwise the rest of Victoria will be up here.

If you sell the property you will realise the equity in the home and be able to use this as deposit on your new property. The problem being that the interest on the PPOR will be non tax deductible.

You will have the sale costs including agents fees and commission etc etc.

If you do not sell then the interest on your current home loan which will now be an IP will become tax deductible however i assume that you will now have to borrow 100% of the new purcahse price in Qld and the entire amount will be non tax deductible.

An alternative if you believe that the current area has good growth prospect and also feel it will make a ideal rental home would be to consider selling the property to an HDT. You would borrow the full value of the property and then with the difference between the value and the loan outstanding would use this as deposit for your home in Qld. The purpose of these funds is to buy an IP and therefore will become fully Tax deductible.

You will then only have to support a smaller loan on your new PPOR.

Downside is that you will have to pay stamp duty on the sale of the property from you to your HDT and the property will loose its GCT Free status which will last for the next 6 years.

In saying this you will have $330K of tax deductible interest and even having to pay duty on the purchase will not take long to recoup.Each year thereafter you will benefit that the inetrest on this amount is a a deductible expense.

Cheers

Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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