Hi All,
My first post so please don't bite
I have built a new home (massive headache) and am now deciding what to do with my current PPOR.
If I rent the house out I will be making income of $450 per month before taking out any costs (Management fees, taxes, rates,etc). This will mean my new home mortgage is going to be about $400 per month more than if I sell it and throw the profit straight onto that loan.
My question is what are the issues I am going to be hit with if I turn my PPOR into an investment? Am I going to get smashed by Capital Gains Tax if I decided to sell in 12 months time?
Just trying to work out if I am better off to sell that home or hold it.
Any advice would be great
You won't get smashed by CGT unless it have MASSIVE growth in the next 12 months.
You get a valuation done before you make it a rental and you pay CGT on the growth from then.
Hard to answer as you've given very little detail. What is the house worth? Is there deductable debt, is it likely to experience CG in the next few years etc etc.
Hi dvestate,
Would be advisable to do the maths accurately to make an informed decision. Is there a loan on the current PPOR which is deductible? Depreciation, all expenses to be offset against the generated rental income. Then you would get a better idea of whether the property is draining money.
If so, you also need to factor whether there is opportunity for capital growth in the future to overcome the negative gearing that you are comfortable with.
Cheers
Tom
The house will be generating income, my mortgage on the property is 200K, it is worth about 340K and will bring in rent at $400pw
In terms of asset growth I would expect it to be modest over the next 5 years
You need to assess whether it's got the attributes to make a good investment.
What's the market like for selling at the moment in your area? If things are moving slowly and prices are being discounted by a fair bit than I'd consider holding until the market improves.
As mentioned above, have a valuation carried out on the property so you can accurately determine your CGT costs if/when you sell.
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]
dvestate wrote:The house will be generating income, my mortgage on the property is 200K, it is worth about 340K and will bring in rent at $400pwIn terms of asset growth I would expect it to be modest over the next 5 years
I
f you were to sell this house that would mean approx $120k cash you release could be paid off the new main residence loan saving you non deductible interest – will you have a loan on the new one?
What state is the old one in?
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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