Advice please on

Hi everyone,
I've been around on Somersoft and this site for many years now but mostly just as a voyeur. I am looking for advice for my situation and any comments or suggestions you may have. Apologies in advance for my financial ignorance. I am a head in the sand, fingers crossed type investor.

Current situation:
5 properties.

#1 Adelaide City walk up apt rented at $340/wk Valued at 280K owing 170K

#2 Adelaide City walk up apt rented at $340/wk Valued at 280K owing 180K

#3 Adelaide outer sub House rented at $420/wk Valued at 450K owing $400K

#4 Redlynch Rise Qld House rented at $420/wk Value $440K was owing $200K but mortgage increased to $300 in order to fund purchase of property #5 - 18 months ago (now carrying 100K non-deductible debt).

#5 House in Bridgewater Adelaide Hills purchased for 380K +20K buying costs = total buying cost of $400K. current mortgage is $300K Potential rent ~$350/ wk Current property value ~$420K Currently has $50K in offset account.

Current employment income $100K / year

Last years tax return was a shameful $4K

My strategy for the last two purchases, properties #3 and #5 has been to buy as an owner occupier, live in it for a year, and then rent out. (Banks have been accommodating). That way I get to choose which is CGT exempt later. To protect this option, I will need to move back into properties again every 6 years. I would ideally like to purchase another property interstate next year in the same way. I prefer not to sell anything for the next 5 years but if Cairns ever takes off, I wouldn't mind grabbing that equity out because it would allow me pay off property #5 sooner, I have a loose plan to eventually make #5 my long term home.

Proposed plan
Rent out property #5 and move into property #1 which is close to work, this will save on petrol and travel time and will allow me to reduce accommodation costs and tax. I will be able to claim the interest on the $300K mortgage and claim needed repairs for property #5. It needs electrical work and plumbing repairs, probably a new roof in a couple of years. I would transfer my savings (50K) to an offset account against the mortgage on property 1. This would effectively bring my mortgage on property 1 down to $120K.

Questions:
a. Am I also able to claim the interest on the additional $100K which I borrowed against property #4 in order to purchase property #5?
and
b. Do I need to restructure the mortgages to do so? (not sure how they are currently set up).
c. Which of these properties (if any) would you suggest I consider locking into fixed rates right now?


Any thoughts, comments and advice on my plan would be much appreciated. I hope it makes sense. Thanks in advance.
JASA

 

1. 'negatively gear' is the wrong phrase. You could claim the interest against property 5's income. as long as not living in it.
2. no. you can apportion
3. up to you

 

Thank you your answer to questions a and b are great. To question c. not so much

 

Generally you will not want to fix the interest rates on any loans where you may possibly need to sell or refinance during the fixed term.