Hi
We have a current long time PPOR which we own outright (value about 550K)..and now are wanting to move to another more desirable PPOR.My question is really about the best way (thinking of money cost savings etc) to accomplish this move.
We have thought about keeping our existing PPOR and renting it for about 550/week.
We would have to use the existing PPOR equity to finance the new PPOR pretty much 100% to about 700K.
Is this the best way..what is the best way to save on tax cgt ? thinking for the longterm….
Should I just try and sell the existing PPOR before purchasing the next…?
trusts ?
Hi and welcome to the forum.
The main issue with this approach is that you won't have any interest to claim on your IP because you've paid the loan off.
You could look at selling to a trust or a spousal sale to regear the debt but both options are likely to incur costs – just a matter of weighing up whether the costs are worth it.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie
hmmm yeah I guess we are stuck with not being able to claim…..I will have to have a chat to someone local about spousal and trusts costs…
Perhaps we could/should buy the new PPOR rather as a investment property (rent it for 12 months minimum) and then reevaluate the market (which seems to be toward the buyers right now)..perhaps the market picks up and we sell the our main PPOR and move into the new PPOR once the lease is expired.
I guess this way we could claim on the loan…oh but what about CGT if we did this…?
TIA
jkl999 wrote:Thanks Jamie
hmmm yeah I guess we are stuck with not being able to claim…..I will have to have a chat to someone local about spousal and trusts costs…
Perhaps we could/should buy the new PPOR rather as a investment property (rent it for 12 months minimum) and then reevaluate the market (which seems to be toward the buyers right now)..perhaps the market picks up and we sell the our main PPOR and move into the new PPOR once the lease is expired.
I guess this way we could claim on the loan…oh but what about CGT if we did this…?
TIA
No worries.
I'm not an accountant but I'd assume that if rented out for the first year and then it became your PPOR after that – then any CGT would be applicable to the first year of it being an IP…..I'd get confirmation from an accountant though….and if it were the case, I'd also make sure I got a valuation done after the first year so you know exactly how much CGT you'd be up for.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Which State is the property in?
The amount of duty will vary and maybe favourable in certain States.
Certainly worth doing the numbers.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thx again Jamie
Hi Richard
The properties are in the ACT
Those are big numbers. Interest on a $500,000 loan would be $35,000 pa. Dependng on your income selling could mean you have $35,000 pa less in non deductible interest
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
Hi Terry
my head is easily spinning at the permutations..I did not get your figures..my lack of understanding Im sureIm also thinking out aloud to spousal regear for 550K and then rent the current owned PPOR…but this triggers CGT event I guess..and stampduty ..Im assuming the ACT is not into free spousal transfer ?
I think I need some good accountants advice..anyone recommend in the ACT
cheersjkl999 wrote:Hi Terry
my head is easily spinning at the permutations..I did not get your figures..my lack of understanding Im sureIm also thinking out aloud to spousal regear for 550K and then rent the current owned PPOR…but this triggers CGT event I guess..and stampduty ..Im assuming the ACT is not into free spousal transfer ?
I think I need some good accountants advice..anyone recommend in the ACT
cheersPossibly not cgt on transfer if main residence dont think any stamp duty concessions in act unless the transfer occurs because of breakdown in relationship
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
I am with Terry as far as i am aware their is no spousal concession on the Duty in the ACT but remember you would only pay it on 50% of the value. so around $9000 with legals.
Of course in saying this you would only be able to claim interest on 50% of the $550K (going to take you circa 2 Years to get your money back based on a 30 cents in the dollar marginal Tax rate) also wheareas as a sale to a Unit Trust would give you a deduction on 100%.
Certainly worth doing the numbers.
Be surpised how many Spousal Transfer loans we do where after doing the numbers they work out favourably.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Terry
Thanks Richard
Im seeing accountant end of the week…will discuss the options Spousal/Trusts.
At the moment Im thinking getting a LOC set up (to help with deposit etc) and then a separate loan (offset)for the new property…seems like the preferred method Ive seen many others use here.
Im debating forgoing looking for a step up property and rather look at a couple of investment units.
Either way Im no hurry…and Im not going to sell this home …one way or another we will keep it as equity….hoping the market comes alive in a year or 2.
jkl999 wrote:Im debating forgoing looking for a step up property and rather look at a couple of investment units.It can be a pretty good option. Without knowing anything about your financial situation – upgrading to a new PPOR now may reduce your borrowing capacity and effect the ability to invest elsewhere.
If you invest your current equity wisely – you might be able to achieve the best of both worlds in the future (a few IPs and a new PPOR).
Are you looking to purchase locally?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie
Apologies for the late reply
To answer your question YES the purchases would be local
Cheers
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