All Topics / Help Needed! / How can I turn PPOR into an IP that can be negative geared?
I am getting more confused the more I read.
We are living in my PPOR which I have had since 1998 as a PPOR. We refinanced to build an IP last year and both the PPOR and IP loans are kept separate, and are both IO loans.
So our lovely new IP house has tenants in it and it's negative geared, great, no problems.
But we are wanting to move into a bigger PPOR now our family has grown to add a child and may be growing again soon, but simply can't afford to do so we don't think.
We asked the bank some time ago if we could refinance and the most they could give us was 50K. That is just sitting there ready for us to use but it's not enough to help us reinvest anywhere or renovate our existing house to turn it from a 3×1 into a 4.2.
We don't have enough equity to borrow more and to be honest, we couldn't afford to sevice any extra of loan repayments anyway using our own income. We are servicing both loans comfortably now that interate rates have dropped on our variable loans. But 5 months ago, we were living month to month only just making enough to get by.So I am trying to work out if there is any benefit to us moving out of our PPOR and turning it into an IP, with us renting elsewhere. Realistically, i expect we are going to be looking at paying $450 per week to rent a house elsewhere that suits our needs, and we would be able to get $350 per week to cover our PPOR if we turn that into an IP.
BUT, in doing that, we would be positive gearing the property as the loan amount of the PPOR is 225K, is that right? It's an old property, and needs maintenance so doesn't that mean as a positive geared property, we couldn't claim any expenses incurred to maintain the property? And we couldn't claim stuff such as rates etc?So does anyone have ideas whether I could explore some options on how I could turn my PPOR into a negative geared property? Or any other solutions you can think of given the info I have supplied?
Thanks in advance.
Oh, the other thing to add is that the PPOR is in my name only as I bought it before I married. But I am not the main income earner and only work 10 hours a week. So I guess I am also trying to understand if that has an impact on whether it's worth turning the PPOR into a negative geared property or whether my ideas of us moving out to rent elsewhere are even worth considering.Lilmiss
Firstly welcome to the forum and I hope you enjoy your time with us.
Without full financial detailed information it is difficult to work out any fugures for you but remember serviceability is one of those things that changes with lender to lender.
If you care to post some actual figures or email me if you prefer to keep them off the forum i can crunch the numbers for you.Richard Taylor | Australia's leading private lender
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