hey guys
i currently own a property in newcastle returning $360 a week in rent.
I have recently renovated the garage, kitchen, bathroom and repainted the house inside and out turning from what looked like an old granny home to a more modern look.
I originally paid 265K for this property and the real estate agent is looking hopeful of gettin minimum 350k to around 375k. This in turn could give my house around $400 rent a week due to these upgrades.
Now my parents home is situated in an area that is less valued due to the location but the house is immaculate, everything renovated. bigger land, double garage etc and overall a tidier house that they will sell to me for 310k when its worth around 330 – 340k on the market.
Im currently trying to decide if i should try and keep my rental property and buy my parents house as well, financially i can get only another 100k loan but im new to equity value of current properties etc. My rental has 235k left on it as i have been adding extra repayments to it. My girlfriend and I will be moving in together at my parents should i choose to purchase it. Should i just sell my rental property and buy my parents house where ill only have around 200k to pay off and eventually use that as an investment, keep my rental property and just rent somewhere, OR try to have both houses, my girlfriend may consider going in with me to buy my parents house as well. I just am almost finished my rental ready for the market and the area is fantastic and i know its going to keep going up in the future as it is adjacent to high value suburbs. My rental is in Cardiff South while my parents property is in East Maitland.
Any help would be greatly appreciated, whether with tips about my situation to tips with banks to allow me to achieve getting both these properties.
Sorry if it seems im rambling and all over the place, just on a break from work and rushing to get my question across
Oh dear! You have been paying down a rental property loan. This would cost you thousands of dollars in extra tax and interest over the years.
You should speak to a broker about your borrowing capacity as you may be able to afford both. Get some tax advice too about how to structure things so as to save some tax.
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
Agree with Terry- not good paying down the investment as you now need to borrow more. What is this $100 loan based on?
Speak to a good broker. The fact that you are going to live in it makes a difference as you won't be paying rent so your outlay shouldn't change much.
I would definitely keep the IP. A good broker should be able to make it happen (of course I make this assumption without knowing your income).
well i can redraw the money back as i have been to do up the house… i know i stuffed up after i saw my accountant.
the 100k loan is based on my current loan i have at the moment plus what i can add to the loan towards another house
My girlfriend is heavily considering going in with the other property that we want to live in.
Im just a beginner to all of this and if a broker can give me a better insight then ill try to see someone
also is it better just to share rent with my girlfriend and not get my parents house at all and keep this investment property.
Also as interest rates rise wont that affect the house value and drop it?
also can you please explain to me why paying extra on my house loan affects my tax and interest in a negative way.
thanks guys for all the help
ClintBlakemore wrote:well i can redraw the money back as i have been to do up the house… i know i stuffed up after i saw my accountant.the 100k loan is based on my current loan i have at the moment plus what i can add to the loan towards another house
My girlfriend is heavily considering going in with the other property that we want to live in.
Im just a beginner to all of this and if a broker can give me a better insight then ill try to see someone
Its tax advice you need.
Redrawing money out of a loan = new borrowings so the interest on that part won’t be deductible if you use it to acquire a new main residence.
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
As Terry said. Bad idea paying off an investment loan. A redraw is not the same as storing money in an offset account. Withdrawing money from an offset account is just a withdrawl transaction. However a redraw is a borrowing event. In your case, borrowing money to buy a non-investment product ( a house for you to live in ) so the interest on the redrawn funds would not be deductible.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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