PPOR to IP Advice Needed

Viewing 8 posts - 1 through 8 (of 8 total)

Retals
Participant
@retals
Join Date: 2014
Post Count: 5
October 25, 2017 - 8:52 pm
Hi all,
I am after advice on structuring loans for a new PPOR. Before I lay provide the scenario below, I am aware that making a freehold PPOR into an IP generally is generally not a wise move financially. None the less, the scenario is as follows:
Current PPOR Value: $400K
Rent Achievable on this property: $370.00 per week
Current Cash/Savings: $100K
New Property Purchase Value: $620K
Is it possible to try and make the current freehold PPOR, cashflow neutral as an IP? This would mean I would re-mortgage a portion of this home on interest only and put this sum into the new property, this reducing the new PPOR payments. However, can the loan interest be used as an expense with the property currently being freehold?
Any advice on how to structure the above would be greatly appreciated.
Thanks,
Scott
Benny
Moderator
@benny
Join Date: 2002
Post Count: 1,416
October 25, 2017 - 10:06 pm
Hi Retals,
Terryw, a contributor with a wealth of knowledge, has laid out a scenario that exactly fits your situation (i.e. you have paid off your PPOR, but now want to move out of it and rent it). Go here to find an introduction to his topic :-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/page/3/#post-5037656
Once you have clicked on that link, read the post, then click on its link to go to Terry’s topic – his ideas are worth gold !! Let us know how you found his advice – did it suit your circumstance?
Benny
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
October 26, 2017 - 7:55 am
Who is the property owned by Scott ?
If jointly with a spouse then a couple of things you can do.
Probably the question most asked over all 15 years i have been involved with the forum so you are not alone.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Retals
Participant
@retals
Join Date: 2014
Post Count: 5
October 26, 2017 - 1:01 pm
Hi Richard,
The current PPOR is jointly owned with a spouse.
Thanks,
Scott
- This reply was modified 7 years, 2 months ago by Retals.
Retals
Participant
@retals
Join Date: 2014
Post Count: 5
October 26, 2017 - 1:03 pm
Hi Benny,
Thanks for the link. I will have a read through Terry’s advice tonight and let you know.
Regards,
Scott
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
October 26, 2017 - 5:39 pm
Remember security for the loan doesn’t determine deductibility of interest. It is the use that counts.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
October 26, 2017 - 7:49 pm
Ok Scott certainly opens up a opportunity to go some way towards what you are wanting to achieve.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Jaxon
Participant
@jaxona
Join Date: 2014
Post Count: 284
October 27, 2017 - 3:20 pm
aside from the above advice,
“Is it possible to try and make the current freehold PPOR, cashflow neutral as an IP?
firstly, if you had more rental return yes possibly. for e.g. 10k on reno and increase rent by $40PW your far closer to that goal.
really comes down to the exact specific situation and how you want to tackle it, but depending on a stack of variables you could come out far ahead then if you do the stock standard approach.
Kind regards
Jaxon Avery
Jaxon | Jaxon Avery – Financial Adviser
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JPA Financial Services Pty Ltd