Advice on property investment

Ldack on 11/02/2014 - 11:57

Hello everyone

I want to get into property investment. As per my current condition I bought a 2 bedroom unit close to parramatta station.It is my PPOR. I have loan of 290,000 out of 320,000. And I have saving of 100,000 in offset account.

My enquiry is to whether to used my saving to pay-off my current loan and use my equity to buy my new house.

OR

RENT out my current property as interest only loan and use my saving to buy a house

OR

Is it worth it to sell to avoid CGT and with the result profit buy a house

I will real appreciate your finance advice and which way I will better off in tax.

Thanks for your time

Financial

Comments

  • ESEMCE on 11/02/2014 - 12:32
    +1

    1) Speak to an Accountant and talk about the possibility of refinancing while you're living there to maximise your equity.

    2) I am not an accountant, so anything further is completely unqualified..

    3) If you can afford the repayments and your offset account is properly set up according to the ATO, then keep the unit as an investment property and negatively gear it.
    You have a certain amount of time (7 years?) before CGT becomes applicable to your former place of residence.

    • humilem servum tuum on 11/02/2014 - 12:43

      FYI six years as per ATO website here http://www.ato.gov.au/Individuals/Ind/Treating-a-dwelling-as…

      • CyberMurning on 11/02/2014 - 14:05

        what about if after 5 years you move back in, will the 6 years rule kick back in or you have one year left?

        • mini2 on 11/02/2014 - 14:33

          Talk to your accountant so you can sue them if they got the info wrong.

          You've got no recourse for any misinformation obtained through a forum.

          EDIT: besides, tax consultation IS a valid tax deduction anyway…no point skimpping on this when the tax man is helping you to pay for it?

        • ESEMCE on 11/02/2014 - 14:48
          +1

          Yes I believe so.

          "If you are absent more than once during the period you own the home, the six year maximum period that you can treat it as your main residence while you use it to produce income applies separately to each period of absence."

          Emphasis added - from the link above

          But it has to become your Primary Place of Residence again..
          (ie changing all your billing Addresses, drivers licence - should be enough evidence that it is your PPR)

        • CyberMurning on 11/02/2014 - 15:30

          yea i thought so, but some accountant (including my ex acct) thought differently

        • horsome on 13/02/2014 - 00:48

          An amount of cgt will apply to your new property if you use MRE on the former property.

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