Hi all, need some help regarding financing.
My PPOR is paid off. I bought it for $400k, now its worth $430k. I've been pondering upgrading to a nicer house to live in and rent my current PPOR out. The house I'm looking at is $550k. Now I'm wondering is it possible to transfer the equity of my PPOR into the new house so I can negative gear 100% the $430k house?
Also regarding stamp duty. will I save $ on stamp duty if I bought land and build? I heard you only have to pay stamp duty on the value of the land?
Thanks! have a nice day.
No you cannot transfer equity like that.
If the property is in VIC you could possibly sell it to your spouse for no stamp duty. if NSW full stamp duty would apply. But it may still be worth at as your spouse could borrow 100% and then claim the interest.
On a loan $400,000 that would amount to another $24,000 pa in tax deductions (approx).
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 Sam
You can access equity in your current property to purchase your next.
You can also turn your current unencumbered property into an investment property.
However, you can't claim any interest against the unencumbered property.
Why? Because deductibility is determined by purpose – the purpose of the equity release is to fund a new PPOR, which isn't a deductible purpose.
People fall into this trap all the time – with some careful structuring from the start, it can be avoided.
I wrote this article for Australian Property Investor on this topic. Hopefully it helps.
p.s – depending on your state, a spousal transfer may be possible.
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 thanks for your advise! Unfortunately I have no spouse! I may have to sell it to buy new house. Thanks again!
Jamie just read your article, genuis! I'll have to keep that in mind next time!
No worries – glad it helped
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]
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