Hi all
Just after some educated opinions on what might be the best path to go down
I am currently renting on the north side of Brisbane
my dilemma is that i would like to buy a PPOR for around the 400k mark and also invest in an IP soon after maybe 2
I currently have access to personal cash of Approx 160k plus the option of selling shares worth approx 60k
My thoughts were buy PPOR with 20% deposit I:E 80k and leave the other 80k in an offset account to reduce interest payments
Then use the equity in the PPOR to purchase an IP
Is this a feasible option or would i be better of using the 160k as a deposit on the PPOR
and then using a line of credit to purchase the IP
I am also in a high paying job with zero debts so cash flow is not a problemyour thoughts ,ideas ,strategies would be most welcome
Cheers micman
Hi Micman
One of the goals of property development is to reduce non tax deductable debt and increase tax deductable debt.
With this goal in mind, I would pay as much as you are comfortable onto your PPOR (Reducing your non deductable debt) and then set up a Line Of Credit for the investment property(s) and borrow 100% uning your LOC as a deposit (increasing your deductable debt).
Don
Personally, I'd keep renting and buy a number of IP's with a strategy to increase your wealth over th long term. You do not get any incentive tax wise with an PPOR. With the cash available you will have more chance of maximising your purchases using say 85% LVR loans without having to pay LMI.
I am not sure what your strategies are e.g. buy & hold, buy add value and sell etc! So that may changed my opinion. You may also want to consider the structure you buy in e.g. your name, company, trust structure.
Its probably good to keep your shares if you have strategy there, as you can always sell the if you need more cash for IP's as shares are liquid, where as property takes take to convert into cash.
Get a good accountant that understand property and invests in it too, same with a mortgage broker who can help you with finacing strategies also. Avoid cross collateralising loans against several properties, and get your structure and strategy sorted out first and formostly before you buy anything! Cannot stress that one more!
You sound as though you are well positioned to maximise your results with the cash and what sounds like a good salary package, but money does not mean you will succeed. Lots of research, and the right strategy and at the right time will maximise you results.
Only ones mans opinion!
Cheers
SimonHere is your solution:
First Permanent (a lender owned by Merrill Lynch) has just brought out an investment loans that is 100% No Deposit PLUS lends you all the Stamp Duty – Best bit is they DON'T REQUIRE ADDITIONAL SUPPORTING SECUIRTY of any kind (such as your family home or other IP). They also offer 3 years interest only and variable or fixed for 3 years (plus will lend on a 50 years term)No other lender in Australia has a loan like it. Given the benefits it delivers, its 8.8% p.a.interest rate is good too (tax deductable anyway). No Cross Collateralising of Properties on No Deposit + Stamp Duty Lent. Fantastic – Details @ http://www.firstpermanent.com.au
Yes I am sure it is just what Micman needs a 106% LVR at 8.8% with access to possibly $220K of deposit.
Be real if you are going to offer structured advice try not to promote your own products all the time.
This forum is here to share information and voice ideas and opinions not to advertise your own products.
Must admit you can see when times are tought new mortgage brokers arrive on the scene push their barrow for a week or two and then disappear.Richard Taylor | Australia's leading private lender
okkamooie wrote:Hi MicmanOne of the goals of property development is to reduce non tax deductable debt and increase tax deductable debt.
With this goal in mind, I would pay as much as you are comfortable onto your PPOR (Reducing your non deductable debt) and then set up a Line Of Credit for the investment property(s) and borrow 100% uning your LOC as a deposit (increasing your deductable debt).
Don
Sounds like a good idea Don.
Micman, maybe you could sell your shares, place the money into the home loan, and then borrow to buy similar shares – watch out for ATO though. This would help reduce non deductible debt.
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
Simon C wrote:Personally, I'd keep renting and buy a number of IP's with a strategy to increase your wealth over th long term. You do not get any incentive tax wise with an PPOR.
Simon, what about the CGT exemption for main residences? that sounds like a good incentive to buy a PPOR.
But I agree that renting can be a good thing and it is possible to have the PPOR and not live in it – rent it out and get the CGT exemption.
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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