Greeting everyone,
A long time reader of this forum but only recently joined. I am seeking opinions on what is the best option suitable for my scenario.
I am married with 3 kids all under 10 yrs old. Both myself & wife work. My wife does part-time work during school hours. Our combinded income is around $110k (me $80k & wife $30k pa). We have cash saving around $170k. We live in the inner city in Sydney (9km from CBD). We own our own home with approx value @ $800k. The house is late victorian cottage (almost 100 yrs old not unique in this area) that has been renovated & extended several times. Currently has 3 Bed Rooms, 2 baths & toilets, & car port only. Land is small less than 400 SQM. Approx 1200m to main train station.
We have always wanted to live on acreage, we have friends and families that currently live on acreage in Outer Western Sydney. The life style would suit our family. The acreage properties would be in the price range of $700k to $1.3M
Some of the options are:
1. My initial thought was to sell our current home + cash saving + home loan and move to the new acreage property
2. Keep current home & rent it out. Apply for big Hloan to buy the acreage property say around $900k max. Obviously, this option would mean that our current fully owned home would become an investment property and we are liable for capital gain tax in the future and rent received will also become as Income. So it seems not ideal.
3. Keep current home & take on boarders i.e rent out individual room and splits the expenses etc. Then buy the acreage property & move the wife and kids there. Use the rent to pay off the acreage property. It would means that I myself would need to live in this property Monday to Friday, this would be ok as it is close to my work. So now I now have 2 PPOR. Is this possible. Obviously, if this is possible it would helps us pay the big loan on the acreage property, and in due course we would eventually sell the inner city property when prices returned to normal.What are your thoughts & opinions.
Thank in advance.
SydneySider
A bit more info our current property is in joined name (me & wife)
Thank,
SydneySiderI would advise against option 2. Now is definately not the time to be taking on a lot of added debt.
Consider whether the new property is an asset or a liability. Also keep in mind that there is a good chance that property in Australia is set to follow the large downward corrections seen in the USA and the UK.
High immigration rates and housing shortages wont save us from the correction. The property prices reached in the last 5 to 8 years were grossly overinflated through unsustainable debt levels. This could not and will not be sustained by the job market. Unemployment rates of up to 15% are on the cards and there will be many many more owners forced to sell!
Hi, is this possible? Buy acreage property now. Use it as IP and improve as in what you'd like when you transfer family there. While it's an IP, milk all the tax benefits you can get eg. if you renovate, the renovation cost can be partly recovered by tax claims.
Then, say in 2 years' time, you move into acreage property [having claimed GST + depreciation] as well as sell your current PPOR at optimum price.
By deferring your move, you can save quite a lot of money but of course, you miss immediately living where you want.
You'd have to do your own sums, I don't know whether it'd work for you.
KY
Thank Neilvs & KY.
From my searches, the acreage property will rent for much less than the our inner city one. Income from land rental is minimal. My thought was that income from boarders can be tax free, I'm not sure of this though. I have seen people around our area hosting oversea students for periods of time between 3 to 12 months stay. Income from these were tax free or so I was told anyway. There are lots of long terms international students living in our area and we could easily convert our house to accommodate them as boarders. I will still be living there part of the time. Can you claim 2 PPOR?
It is getting very small in our current home as there are 5 of us now with only 3BR & small yard for the children to play.
I do not want to over commit hence why we looked at taking on boarders to help pay for our acreage property.
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