Hi there
Currently I'm deciding which direction to go in investing. Currently i have a PPOR valved 200K with a 220k mortgage. An IP valved at 140K with 45K mortgage. Current repayments 550pw (105 is tax deductable) I am looking at buying an off the plan investment for negative gearing reasons 320k. To make things more comfortable finanacily i am thinking it will be best to sell the IP and and refinace the PPOR so i will only have 200pw mortgage + the repayments for the OTP. With this option i can pay off my PPOR in 10 years and then look at getting a third property. Or i can get a lower priced OTP, the IP and my PPOR but i won't get around to paying any off for close to the 30y unless i get a big pay rise. any opinions on the best approach
Thank you
kane
Hi Kane
I am assuming that moving into the IP is not an option.
The course of action will depend on various factors: the State in which the properties are located, original purchase price and date of purchase, your marginal tax rate, how the loans are currently structured etc etc
Would need some actual figures to make a recommendation.
Richard Taylor | Australia's leading private lender
Hi Richard
Both properties are in SA, the GCT on the IP will not be much as this was my PPOR until 12months ago. Currently getting between 85-100k a year so im at 41cents in the dollar. PPOR is at a variable rate and the IP is fixed but am willing to break.
Regards
Kane
Hi Kane
Ok i havent checked the SA stamp duty scale but have you considered selling the IP into a Unit Trust structure, borrowing 100% of the market valuation and using the net suplus funds (difference between the IP valuation and the current balance) to pay down your PPOR loan.
If you can get a higher valuation than $140K from a local real estate agent and can justify the figure then you should be able to raise around $100K. This would bring your PPOR loan down to around $120K and the whole $145K on the IP would be Tax deductible.
Couple of considerations being the stamp duty on the Transfer for SA and any potential capital gain made on the sale of the IP to Trust. On the basis these figures are acceptable then you are shifting the debt burden from non deductible to deductible interest.
This is a common method used by clients to achive what you are seeking.
Richard Taylor | Australia's leading private lender
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