Hi Everyone.
Was pleased to stumble across this forum moments ago.
Although I am unable to contribute to this forum at this point I do hope those of you who can contribute would be able to help me with a bit of advice.
I live in Brisbane with my wife. We built our current residence 5 years ago (the title is in my name only) and were looking to sell this residence to make a bit of money and built a new owner occupied property in another area.
The problem is that I was not happy with the recent property valuation by a local real estate agency and we have decided not to sell this property now, however this area does attract a good rental income so I am now considering the possibility of renting this house out and taking out another mortgage to build a primary residence for us to live.
So, as a starting point i'd like to get some advice on how to proceed from here.
-I have another real estate agent coming to give me a 2nd opinion on the resale price and potential rental income
-I have spoken to my mortgage broker and have an appointment with him this week to kick off a pre-approval and loan structure
-I have found a block of land that I am prepared to put an offer on
Presumably I need to speak to an accountant at some point. When should I do this? Should I look for a specific accountant (i.e one that specialises in property taxation and CGT) or would the typical accountant know these things as a default?
Can I trust that my mortgage broker is going to set me up with the best mortgage to suit my needs as opposed to setting me up with a lender that will pay him the highest commission?
As mentioned earlier I am married and the title for this property is in my name. My wife is currently not working (as she is completing her diploma) so from a tax / mortgage point of view am I better to put the title in my name only or are we better to do this as a joint venture?
Thanks so much
If you are contemplating renting your existing property I would suggest converting your existing loan to interest only and part surplus funds in an offset account linked to your home loan. If the property does become a 'rental' long term then you have maximised your tax position through this simple strategy.
A good accountant will be able to provide assistance on CGT and effective taxation on your now IP. Basically all expenses such as loan interest, rates, insurance, rates, property management, depreciation and repairs are tax deductible. At the same time you will need to declare all rental income.
Up until the time you move into your new home your existing property will be CGT free. Depending upon the numbers you may be able to extend this – talk to y our accountant about this option. While speaking of accountants try and avoid 'franchise' type accountancy operations. Look for someone who knows property tax matters.
The wider general Brisbane market has been somewhat stagnant for a while now so it is not surprising you are disappointed by the price estimation you have received so far.
Can you trust your mortgage broker? Like any organisation there are good and bad and only you will know whether or not you trust him/her. Make sure the broker doesn't try and cross collaterilise your loans if at all possible. The kicker in your grand plan may be you are buying vacant land and a number of banks see vacant land as a greater risk and tend to lend lower percentages on such property.
PS while I understand you are somewhat disappointed with expected sale prices received to date. Consider the benefits of selling anyway and ploughing all of the profits into the new property. Having a large level of non-deductible debt is not a great thing either.
Definitely get a few opinions. In most areas (and like with most things) it pays to get an excellent REA rather than a mediocre one. Since you have already been through the process of building it sounds like you may not need any advice on this.
If you are converting your PPOR to an IP I would be cautious of paying too much of it down as it will become tax deductible. I would consider transferring the existing loan to an IO and link it to an offset account and then have all the funds deposited into that account.
Mortgage Brokers generally get paid the same commission regardless of the lender so it is unlikely that they will choose a lender that pays the highest commission. Some of the smaller lenders or non mainstream lenders tend to pay a higher commission.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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