Hi All
We have bought a block of land in Tapping WA for 180k. The house we are putting on is also costing us approximately this much. So completed it shoud be around 380k with landscaping, floors, painting etc allowing about 20k for this.
I am told that similar houses currently sell for 500k in Tapping. So pre CGT profit is about 110-120 or maybe 80-90k after tax. We have held the title for over a year so we believe would be allowed the 50% CGT allowance.
What I would like to know is the feasibility of renting this as an investment property. I have scoured the websites and a rent of $350 pw seems reasonable. My boss has shown me a list of all items that we could claim as a tax deduction and he reckons we wouldn't be too short and the property could cost us as little as $50 a week to hold onto. We have an interest only loan of about 7.4% for the bulk of the loan (except a 35k deposit).
Not sure what to think of the current WA market also and maybe rent could be the better option.
I know the ideal is to have a cash flow positive property but I just would like to know if anybody believes on the rough figures above that it is best to sell or hold on to this property for future capital growth.
Thanks
The ideal is not necessarily to have cashflow positive property, but to make money. Maximising profits should be the goal. So what you have to do is work out if you think the property is going to increase in value over the short and long terms. If you sell, what are you going to do with the money? If you are going to buy another property, then you are essentially selling one to buy another = stamp duty, CGT, Legals, agent fees etc.
One option instead of selling is to access the equity and repeat the process.
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
Yes that was my thinking. The only concern is to have enough money after this to buy our first home.
I just wanted to know if people think this is a feasible option. I assume the property will appreciate in the next 10 years or so. Most properties do to a greater or lesser extent.
I am also not sure if the 50 pw is ballpark for my out of pocket expenses.
I guess the long and short of it. Should I sell this house to buy our own first house or keep it and use the equity to buy our own first house. We are looking at a house price of 500k as our first house also. We want to live in the Wollongong region. So can we afford both or should I just sell ?
You must be logged in to reply to this topic. If you don't have an account, you can register here.
