澳洲Australia property Advice on my situation much appreciated |


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Hi All,

I am in a fortunate situation but want to make sure I make the right choice from here.

I have a nice 1 bedder in Ultimo (next to Sydney CBD) that I live in worth upwards of $550k and only $150 left on the mortgage. It would rent for around $550 a week.

I am planning on moving out with my girlfriend. We were looking at renting and I realised we would be paying around $800 a week for what we want. Chuck in a couple hundred more a week and I can buy a place instead.

I figure I can borrow and afford an interest only loan of around $700k (with girlfriend chipping in rent). I am after a 2 bedder - in the unlikely event we break up (don't laugh!) I could get a flatmate in.

Then I realised that my equity would be tied up in my flat and the mortgage would be on the house. If I could sell my flat and buy a similar one fully mortgaged, then buy my house with a big deposit, I would get a greater deduction on the flat. This is true but obviously you need to think about agent fees and stamp duty, plus the hassle. I calculate I'd deduct about an extra $20k interest a year from my tax if I did it which only translates to about $7k in hand.

So my options seem to be;
1) Buy a house and rent my flat. Easy but miss out on extra deductions
2) Buy another investment prop, sell my flat and then buy a house (live in girlfriend's flat in the meantime). Same result, more deductions, more hassle.
3) Use my equity and loan in another way altogether???

Currently leaning towards option 1 as I really love my flat and it's easier. I have a nagging feeling I'm not thinking of all the potential scenarios though.

Really appreciate any thoughts.

Thanks,
J  

评论
So what's your question? I wouldn't worry about the deductions too much just think about what makes you the most money over the long-term from capital growth.  

评论
jimboy77 said: ↑
Then I realised that my equity would be tied up in my flat and the mortgage would be on the house. If I could sell my flat and buy a similar one fully mortgaged, then buy my house with a big deposit, I would get a greater deduction on the flat. This is true but obviously you need to think about agent fees and stamp duty, plus the hassle. I calculate I'd deduct about an extra $20k interest a year from my tax if I did it which only translates to about $7k in hand.

So my options seem to be;
1) Buy a house and rent my flat. Easy but miss out on extra deductions
2) Buy another investment prop, sell my flat and then buy a house (live in girlfriend's flat in the meantime). Same result, more deductions, more hassle.
3) Use my equity and loan in another way altogether???

Currently leaning towards option 1 as I really love my flat and it's easier. I have a nagging feeling I'm not thinking of all the potential scenarios though.

Really appreciate any thoughts.

Thanks,
JClick to expand...
hi J

What you're experiencing is a very common amongst people that have had poor non-existent credit advice.

you have probablyalready worked out from reading the forum that if you had an interest only loan when you first bought your place, with 100% offset account, you would now have 300 K cash (guess) to put towards your new non-deductible purchase, and would therefore need to borrow 300 K less on the new purchase.

I can see where your approximate 20,000 in tax deductions come from, it's that 300 K or estimated above.

What can you do

you have covered all the obvious things.

There is the opportunity, to regear your property with a spousal sale ( that might not work though with a girlfriend), or a sale to regear the property to a unit trust.

both of those would obviously incur a significant sum of stamp duty, the cost recovery of that would be determined by your income tax bracket, but I doubt it would be less than two to 3 years.

There are a couple of other ways that you can make this work, including some debt recycling, capitalisation of interest et cetera, but without knowing full details no one can give you any specific advice at this time

Thanks

Rolf  

评论
From your user name I'm guessing that you're 35, and that would suggest your girlfriend is in her early to mid thirties. If so then children are likely to be on the agenda sooner rather than later due to her biological clock.

I've got a couple of friends who were in an almost identical situation a few years back, though the flat was in her name. They got married, she kept her flat as an IP, and they bought a modest house about a mile up the road from it.

These days they've got two small properties each worth around $500K and three young children. They desperately need more space.

At the time I thought that the sensible thing to do would have been to sell the flat and buy a large family home for around the $1 million mark (they could get four bedrooms for this in their neighbourhood), which would have met their needs for the foreseeable future. In general, the more money you spend, the better the bang for your buck.

The husband recently told me that he agreed with me on that front, but the wife vetoed it.

So if you're in the same situation, I'd be tempted to sell up and buy a much bigger place. Not necessarily in the short term, but once you're both pretty certain you're going to be together for the long term.  

评论
Thanks for the responses - there were a couple of pretty spot on guesses in there as well..

I'm also thinking of another option of having my girlfriend move into my flat and saving some more money for 12 months or so. She is also paying off her own 1 bedroom apartment so it would help her out as well.

I guess the issue is that if I buy a house I can afford right now, in the areas we want, I will get something I don't want to live in long term and the point Gramsay made about children in the near future has crossed my mind. Maybe I should save more now and get something better later..

Thanks for your help, I may post back when I get to a stage where I have more specific questions...

Cheers,
J  

评论
jimboy77 said: ↑
Thanks for the responses - there were a couple of pretty spot on guesses in there as well..

I'm also thinking of another option of having my girlfriend move into my flat and saving some more money for 12 months or so. She is also paying off her own 1 bedroom apartment so it would help her out as well.

I guess the issue is that if I buy a house I can afford right now, in the areas we want, I will get something I don't want to live in long term and the point Gramsay made about children in the near future has crossed my mind. Maybe I should save more now and get something better later..

Thanks for your help, I may post back when I get to a stage where I have more specific questions...

Cheers,
JClick to expand...
one sensible approach may be to convert both your loans to interest only and have 100% offset facility against those lines and park any spare cash in those.

At the very least this will prevent you from further diluting what little tax benefit you have left.

Thanks

Rolf  

评论
Work out which property gives the best tax result (incomes and expenses compared) then move into the other.
Marg  

Property Investment

Australia property Selling Hints | Sydney

澳大利亚Hi folks I recall ready somewhere about what are some simple tricks for making your place more attractive during a home open. Im seriously thinking of selling my little pad and want to maximise my efforts. Any hints greatly appreciated. 评论 ...

Property Investment

Australia property Re-zoning | Sydney

澳大利亚What would the chances of a NSW Local Council allowing a community titled development (homes, community buildings, etc) on an area zoned Protected Agricultural land? Does anyone have experience in this area? Looking at the local council LEP, ...