I have 2 Ip's gross value – $700000. I owe approx $400000, P and I and currently receive $675 gross rent per week. I currently live in separte accomodation but I will soon be looking to live in a place of my own.
My questions:-
1. Do I move into one of my properties-kick 1 set ot tenants out?2. Or do I convert the investment loan to Interest Only and buy my self a place to live in- on a P and I loan
I'm confused
Please help
Hi Furnz,
Well that is not a simple as just giving you an answer to one or the other.
It will depend….. (of course it will).
If you move into the one of the properties I am sure you know you will lose you tax benefits, this in not a good enough reason to invest in the first place but as you are already in this situation you need to decide what you want to get out of the property.
Is it cash flow (they don’t sound like they are positively geared)?
Is it capital gain (punters game)?
The most valuable thing or major thing I got our of Steve’s books is that it is up to YOU to create the value in your investment. This is a major reason why so many people get into property vs. share as they can ADD / CHANGE / DIVIDED etc.
As P & I Vs I only.
If it is for investment proposes why you would want to pay principle payments unless it is like a force saving plan or to build equity faster. I would go for interest only but again ask yourself why am I doing thins and you will have your answers.
Happy Days,
Beck
Hi Furnz,
If I was you I would leave your tenants in place and if I was to purchase a property to live in I would suggest you purchase it in the name of a Trust and pay the rent to reside there. There are all sorts of good reasons why you would do this. Discuss these reasons with your accountant and if he is unsure of where to move with a Trust, get a new accountant. I understand how confusion can reign in such situations but that is why it is always a really good idea to have a great accountant who can guide you through the best steps for you to take. On our properties we only pay the Interest, but this is what suits our plans and expectations best.
Have yourself a great week.
DebbieSounds more like a lifestyle choice.
I would change both loans to IO anyway, and get a 100% offset account on one of them – the one you may live in.
If you have lived in one previously, you could probably class this as your main residence and to avoid CGT while still renting yourself. But whether this is more beneficial than living in your own proptery will depend on the rent you are pay, receiving and the loans on the property etc.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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